10. The Labor Contract Law: Construction of Harmonious Labor Relations

The Labor Contract Law of the Peoples Republic of China was promulgated at the 28th session of the Standing Committee of the tenth National Peoples Congress on June 29, 2007 and was put into effect on January 1, 2008. The reasons behind unharmonious labor relations vary. First, legal written labor contracts are rarely signed, making it impossible for employees to effectively protect their legitimate rights and interests during labor disputes. Second, more than 60% of signed labor contracts were short-term contracts, rarely lasting more than a year. Thirdly, employers often use staffing agencies. Fourth, government labor supervision teams cannot meet demands. The formulation of the Labor Contract Law was necessary to solve the above problems and build harmonious labor relations. The Labor Contract Law also outlines provisions for any penalties incurred by employees which cannot exceed the expense of training provided by the employer.