The new Chinese Labour Law

Today I went to a seminar about the new labour law that became active from January 1 in China. I had some sort of idea about what the new law was about (that it was in favour of the employees and about giving them more securities) but I didn’t know just how much it favoured the employees! Western companies that still haven’t implemented the new law in their company should really act fast!

This is one example of how the law can hit an unprepared Western company in the face.

A Chinese man was working for an European company. He had a monthly salary of 1200 yuan. His job was to sort nails –he had to separate the bad ones from the good ones and the good ones were put in a box and sent to Europe. However, he somehow managed to put some bad nails with the good ones and those were sent to Europe, leading to a 300 000 yuan loss for the company. The Chinese worker was fired, but felt that he had been mistreated and went to the court.

And who do you think the court favoured? Yes. The Chinese worker.

Why? Well, because in the European company’s contract with the employee, there was no specification of what ‘a great company loss’ actually was. The Chinese judge simply didn’t consider 300 000 yuan to be a big loss for the European company, and therefore favoured the Chinese employee. The European company ended up having to pay him a severance fee.

Obviously, it’s very important that Western companies include a clause in their company handbook/ employee contracts about what they consider to be a great company loss. (I would recommend people to write something really low, like 3000 yuan).

Anyways, this was just one out of many things I learned today. I thought I’d share this knowledge.