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Guangzhou Company Labor Contract Draft

Guangzhou's draft labor contract law,a bill that has triggered national debate about how to protect employees' interests, was submitted to the national legislature Tuesday for a third reading.

The Standing Committee of the National People's Congress (NPC),China's top legislative body, convened here for a four-day regular legislative session. The draft labor contract law, aimed at establishing "stable and harmonious" relations between employers and employees, is one of the top items on the agenda.

The revised version details the establishment, revocation, revision and termination of labor contracts. If enacted, it will be the country's first specific law governing labor contracts.

The first draft was submitted to the top legislature for review at the end of 2005.

In the interests of stable labor relations, the amended draft requires employers sign a written work contract from day one.

The draft also gives work units the right to lay off employees if they need to change production lines, or in cases of technological innovation or change of management.

The rights of employees are emphasized in clear standards for severance pay and clarification of collective contracts.

Despite the efforts to strike a balance between the interests of employees and employers, the draft has sparked heated debates throughout China. Foreign business communities, in particular, have been very active.

Both the European Union Chamber of Commerce in China and the American Chamber of Commerce in Shanghai (AmCham Shanghai) submitted letters to the NPC last year, suggesting that the law might have a negative influence on foreign investment in China.

Disagreement exists among the drafters as well. Some say the law should give more protection to employees, because they are in a relatively weak position, but others contend that it is more important to balance the interests of the employees, the employers and the government.

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