China's Employment Contract Law has been in effect since January 1, 2008. Foreign businesses expressed their comments on the law during the legislation process. How should they implement the law? A foreign lawyer in a Beijing-based law firm gives his advice in this regard.
Mark Wells, an Australian lawyer at Zhenbang Law Firm, suggests that foreign businesses comply with the law in their medium and long term interests; pay careful attention to the articles about labor outsourcing; and wait for guidelines in the article about the confidentiality of trade secrets and IP-related secrets.
Mr. Wells believes most foreign businesses are "good apples," as Chinese labor authorities check them more often than they do Chinese companies.
"But it is irrelevant to make such comparison --- who complies with the law better," said Mr. Wells. Foreign companies are guests coming here under invitation and license of the Chinese government. If they do not comply with the law and exploit Chinese workers, they will have to leave the country.
For foreign businesses, in particular, "it's worse than not complying with laws in your own country," said Mr. Wells. A widely shared view among international lawyers is that foreign companies have more of an "obligation" to follow the rules of the host country than those in their own countries. The same goes for Chinese companies if they go to invest in another country.
"Noncompliance is like ‘waving the red flag' saying ‘come and get us, we are doing bad things to workers in China'," said Mr. Wells.
And it is good for the reputation and brands of a company if it always does the right thing for its workers and community. From a lawyer's perspective, Mr. Wells would never advise any of his clients to take any aggressive strategies to "beat" or "go around" the laws.
Mr. Wells advises foreign companies to pay careful attention to Article 91, 92 and 94, which all cover labor outsourcing, because foreign companies use hiring agencies more. According to those rules, companies using hiring agency services and the hiring agencies are held jointly liable if they get in trouble with the employees hired through these agencies.
Therefore, foreign companies in China will have to deal with the disputes of employees who are hired through outsourcing agencies like Fesco (Beijing Foreign Enterprise Human Resources Service), the leading human resource service organization for foreign businesses in China. "Workers can fight with you (foreign companies) directly, not Fesco," said Mr. Wells.
The law also has provisions about the protection of trade secrets and IP-related secrets. Employers can negotiate and reach confidentiality agreements with former employees who have the access to such secrets --- mostly senior technicians and managers. Under such an agreement, an employee is obliged to keep secrets and face an employment restriction after he/she leaves the company, on the condition that the company pays the employee a certain mount of money, on a monthly basis, within the confidentiality period.
"If you value your own IPR, then you need to think about how your are restricting the person's freedom of employment after they finish working for you," said Mr. Wells, who thinks the article is fair.
However, he hopes that the implementation guideline will make the article clearer. Ex-employers, said Mr. Wells, hold a very strong position in the negotiation. How much should they be paid? What if they demand two hundred or three hundred percent of their salaries or even more? And for how long should the employer pay its ex-employees for keeping secrets? Mr. Wells hopes all those issues would be defined in the guideline to be issued in a few months.
"It's a matter of negotiation. … but we have to wait for the government's guidance or a court case for further clarification," he concluded.
By People's Daily Online
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