NPR's All Things Considered did a piece recently on the new labor contract law in China. The show barely skimmed the surface of the new law, summarizing it as "a new law requiring businesses to give workers written contracts and pay compensation if they're fired." The NPR segment focused mostly on a couple of labor activists who had been attacked for educating workers about their new rights. For instance, it opens with this sad story:
Companies say the law will raise costs, and some may be fighting back — literally: Labor activist Huang Qingnan, who was promoting the law, was stabbed in broad daylight. He says hired thugs were behind the attack.
For the past few years, Huang has been teaching workers in the southern boomtown of Shenzhen about their rights. He had been distributing brochures on the new labor law to workers late last year. One afternoon, two men came at him with knives on a crowded street.
"After the first cut, I started fighting back," says Huang, who added that he was cut on his arms and chest.
Huang lost so much blood after about a minute that he fell to the ground. Eventually, two friends who were with him threw bricks at the attackers and chased them away.
Today, Huang spends much of his time limping around his apartment in fluffy pink-and-blue slippers. A hunk of flesh is missing from his left calf, the result of a stab wound and a botched surgery.
So who was behind the attack?
"The factory owners," Huang says. They "don't want to lose their profits."
But instead of painting a grim picture of workers' rights here, Huang is surprisingly upbeat.
"I'm optimistic about the future," he says. "Because our workers, their consciousness is increasing."
Articles like this NPR story take travesties that are occurring in China and portray them as the norm, they make comments like "China is a communist country in name only," which have no real bearing on anything whatsoever, and they never delve beneath the surface. These horrible sorts of acts are happening in China and all over the world, but there is also another story about China and that story is about a country that is building a rule of law system and a citizenry that is learning the law and learning to trust the courts, which are enforcing the laws.
Our previous posts-- A Reason to Have Faith in China's Legal System and Another Reason to Have Faith in China's Maturing Legal System-- shared some of our thoughts about the growing role the law plays in the lives of migrant workers in China and how that role is helping to change the Chinese perception of the law. A story from Reuters has come out to further bolster those arguments entitled, China Migrant Laborers Learn The Law to Win Rights, and instead of telling horror stories about labor rights activists who have been beaten up or stabbed, this article focuses on the successes migrant workers are achieving by utilizing the law. Here is a snippet of that article:
Qi Yunhui didn't even graduate from middle school, but on a recent afternoon he addressed the Shenzhen Intermediate People's Court with the confidence of a seasoned litigator.
When he came to Shenzhen in 2002, the fast talking native of China's central province of Hubei worked in a leather shoe factory. Now, he is part of a new and growing breed of "citizens' agents", former workers offering cheap legal aid to fellow migrants involved in labor disputes.
In the past five years or so, these self-taught "barefoot" labor lawyers have proliferated, filling an important niche in a country where migrant workers are increasingly caught in a dilemma -- they are encouraged by the leadership to know their rights, but lack effective, efficient channels to protect them.
"We want to encourage people to go to court," Qi, 30, said over dinner with five toy factory workers he was representing in a case over unpaid overtime.
The more people learn the law and see their rights enforced by the courts, the more people will rely on the courts in future transactions. This means greater enforcement of contracts and IP rights for foreign investors in China. We're witnessing the transition in China from a seemingly lawless and guanxi based system to a rule of law system. Within the next 20 years it won't be who you know in China that matters but who wrote your contract or who is representing you in court. The time to get in on this is now.
An article by Steve Dickinson at China International Business entitled, Power To The People, (h/t China Law Blog) has a more detailed explanation of the new labor contract law, which I've taken the liberty of partially republishing below:
The LCL makes the following important changes to prior employment practice in China: All labor contracts must be in writing. The LCL imposes significant penalties on the employer for failure to enter into a written employment contract.
All employers must maintain a written employee handbook setting out the basic rules and regulations of employment. This requirement applies to all companies regardless of size and number of employees. The failure to maintain an employee handbook means that an employer will effectively be unable to discharge employees for cause, since “cause” must be determined with reference to the employee handbook.
Severe limitations are imposed on the use of term contracts. Under Chinese law, an employee can be discharged either at the expiration of a term contract or for cause. To avoid the need to terminate for cause, employers in China have typically engaged employees under a series of short-term contracts. This practice is no longer possible under the LCL. The employer is permitted to enter into a maximum of two term-contracts with the employee.
If the employee continues on after the expiration of a second term-contract, the subsequent employment contract is deemed to be an “open-term contract.” Under an open-term contract, the employee is employed until he chooses to terminate the contract or reaches retirement age. The employer can only terminate the employment contract by discharge of the employee for breach. This means that once the relationship has shifted to an open-term contact, the result for competent employees is effectively “employment for life.”
The LCL imposes severe restrictions on the use of probationary periods in the employment relationship. Probationary periods are permitted, but the length is limited based on the term of the employment contract, with an absolute maximum set at six months. Furthermore, an employee can only be subject to a single probationary period by a single employer. Wages during the probationary period must also be no less than 80% of the contract wage.
Non-competition agreements restricted. Many foreign employers require most or all of their Chinese employees to enter into non-competition agreements that restrict their right to work for a competitor after termination of employment. The LCL imposes significant restrictions on the use of these agreements. The most important restriction is that non-compete agreements cannot be imposed on all employees. Only senior management and other employees with access to critical trade secrets can be required to enter into a non-competition agreement. The agreement must be limited in duration to two years, must be limited in geographic scope to a reasonable area and the employer must pay compensation to the employee during the period that the non-competition restriction is in effect.
The LCL imposes significant penalties on the employer for failure to comply with its provisions. These include administrative fines, awards of double wages and liability for actual damages. And virtually every violation of the law gives the employee the right to sue the employer for penalties and damages in the local employment arbitration bureau or in the local courts. The LCL has been actively publicized and employees are well informed about their rights under the new law. Growing numbers of Chinese attorneys are taking a strong interest in representing employees under the LCL in filing group claims against employers. It is this sort of employee “self help,” rather than administrative sanction, that is likely to be the greatest threat to employers under the new law.
Learn it, use it, and become part of the future in China.