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2. Implementing


Implementing Regulations of the Labor Contract Law of the People's Republic of China

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09-18-2008 State Council Effective

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NATIONAL Order of the State Council No. 535 2008-09-18

Labor Contract ( Labor & Personnel Law->Labor Contract )

Implementing Regulations of the Labor Contract Law of the People's Republic of China Order of the State Council No. 535 September 18, 2008 The Implementing Regulations of the Labor Contract Law of the People's Republic of China adopted at the 25th executive meeting of the State Council on September 3, 2008, are hereby promulgated and shall come into force from the date of promulgation. Prime Minister: Wen Jiabao Implementing Regulations of the Labor Contract Law of the People's Republic of China Chapter One General Provisions Article 1 These Regulations are formulated to thoroughly implement the Labor Contract Law of the People's Republic of China (hereinafter referred to as "Labor Contract Law"). Article 2 People's governments at various levels and relevant departments of the people's governments at or above the county level including the labor administrative departments as well as labor unions shall adopt proper measures to facilitate the thorough implementation of the Labor Contract Law and promote a harmonious labor relationship. Article 3 Partnerships and foundations such as accounting firms and law firms that are lawfully established belong to the employing units provided in the Labor Contract Law. Chapter Two Formation of Labor Contract Article 4 Where a branch established by an employing unit prescribed in the Labor Contract Law obtains its business license or registration certificate in accordance with the law, the branch may conclude a labor contract with its workers in the capacity of an employing unit. Where the business license or

registration certificate has not yet been obtained in accordance with the law, the branch may conclude a labor contract with its workers with the authorization of the employing unit. Article 5 Where a worker fails to conclude a written labor contract with an employing unit upon written notice by the employing unit within one month of use of labor services, the employing unit shall terminate the labor relationship with such worker in writing without economic compensation thereto and, however, labor remuneration shall be made to such worker on the basis of the actual working period. Article 6 Where an employing unit fails to conclude a written labor contract with a worker within the period of more than one month but less than one year of use of labor services, the employing unit shall pay two times of monthly wages to such worker in accordance with Article 82 of the Labor Contract Law, and conclude a labor contract with the worker. Where the worker fails to conclude a written labor contract with the employing unit, the employing unit shall terminate the labor relationship with the worker in writing and pay economic compensation in accordance with Article 47 of the Labor Contract Law. For the purposes of the preceding paragraph, the starting date for the calculation of two times of monthly wages to workers by employing units shall be the day following the first month of use of labor services to the day preceding the conclusion of a written labor contract. Article 7 Where an employing unit fails to conclude a written labor contract with a worker of more than one year of use of labor services, the employing unit shall pay two times of monthly wages to the worker from the day following the first month of use of labor services to the day preceding one year of service in accordance with Article 82 of the Labor Contract Law, and a non-fixed term labor contract shall be deemed to have been made with the worker upon one year of use of labor services, and the employing unit shall conclude a written labor contract with the worker immediately. Article 8 The register of employees as prescribed in Article 7 of the Labor Contract Law shall include the name, gender, citizen identity card number, household registration address and current residential address, contact method, mode of use of labor services, the starting and end dates of use of labor services and the expiry of the labor contract of the employees. Article 9 The starting date for 10 consecutive years of service as prescribed in Paragraph 2 of Article 14 of the Labor Contract Law shall be calculated from the date of use of labor services by the employing unit, including the years of service prior to the implementation of the Labor Contract Law. Article 10 Where a worker is assigned to a new employing unit from the original employing unit other than for personal reasons, the years of service with the original employing unit shall be calculated together with the years of service with the new employing unit. If the original employing unit has paid economic compensation to the worker, the new employing unit may not

calculate the years of service of the worker with the original employing unit when calculating the years of service for economic compensation upon dissolution and termination of labor contracts in accordance with the law. Article 11 Unless a consensus is reached between a worker and an employing unit, where the worker proposes the conclusion of a non-fixed term labor contract in accordance with Paragraph Two of Article 14 of the Labor Contract Law, the employing unit shall conclude a non-fixed term labor contract with the worker. The contents of the labor contract shall be determined on the principles of legality, fairness and equality, consensus through negotiation, and faithfulness and creditworthiness. Where a consensus cannot be reached through negotiation, reference shall be made to Article 18 of the Labor Contract Law. Article 12 Where the people's governments at various levels and relevant departments of local people's governments at or above the county level provide public welfare posts with job allowance and social insurance allowance for placement of personnel with difficulty in finding jobs, the provisions on non-fixed term labor contract and payment of economic compensation as prescribed in the Labor Contract Law shall not apply to such labor contracts. Article 13 Employing units and workers may not agree on other conditions for termination of labor contract other than such circumstances of termination of labor contract as prescribed in Article 44 of the Labor Contract Law. Article 14 Where the place of performance of labor contract is different from the place of registration of the employing unit, the lowest wage standard, labor protection, labor conditions, occupational hazard protection and the average monthly wage standard for workers of the previous year of the locality shall refer to the provisions of the place of performance of labor contract. Where the relevant standard of the place of registration of the employing unit is more favorable than that of the place of performance of labor contract, and the employing unit and the worker agree on the application of the provisions of the place of registration of the employing unit, such agreement shall prevail. Article 15 The wages of workers in the probation period must not be lower than 80% of the wages of the lowest rank of the same position in the same unit or 80% of the wages agreed in the labor contract and the lowest wage standard at the place of the employing unit. Article 16 The training expenses prescribed in Paragraph Two of Article 22 of the Labor Contract Law include the training expenses with proof of payment for professional training of workers of the employing unit, the lodging expenses during the training period and other direct expenses associated with the training of such workers. Article 17 Where a labor contract expires but the service period agreed between the employing unit and the worker in accordance with Article 22 of the Labor Contract Law has not expired, the labor contract shall be extended to the expiry of the service period. Where there is an agreement otherwise, such agreement shall prevail.

Chapter 3 Dissolution and Termination of Labor Contract Article 18 Under any of the following circumstances, a worker may dissolve a fixed term labor contract, a non-fixed term labor contract or a labor contract the service period of which is the completion of a certain task in accordance with the requirements and procedures prescribed in the Labor Contract Law: 1. where the worker and the employing unit has reached a consensus through negotiation; 2. where the worker notifies the employing unit with a written notice of 30 days; 3. where the worker notifies the employing unit with three days' notice within the probation period; 4. the employing unit fails to provide labor protection or labor requirements as agreed in the labor contract; 5. the employing unit fails to make full payment of labor remuneration in a timely manner; 6. the employing unit fails to pay social insurance premiums for workers in accordance with the law; 7. the rules and systems of the employing unit fail to comply with the provisions of laws and regulations and harm the rights and interests of workers; 8. the employing unit forces the worker to sign or amend the labor contract in contrary to the true intention of the worker by deceptive, coercive means or taking advantage of the worker; 9. the employing unit excludes its statutory responsibility or the rights of workers in the labor contract; 10. the employing unit violates the mandatory provisions of laws and administrative regulations; 11. the employing unit uses coercive means such as violence, threat or illegal restriction of personal freedom to force workers to work; 12. the employing unit violates rules and directives and forces workers to work under risks which endangers the personal safety of workers; or 13. other circumstances that allow the dissolution of labor contract as prescribed by laws and administrative regulations. Article 19 Under any of the following circumstances, a worker may dissolve a fixed term labor contract, a non-fixed term labor contract or a labor contract the service period of which is the completion of a certain task in accordance with the requirements and procedures prescribed in the Labor Contract Law: 1. where the worker and the employing unit has reached a consensus through negotiation; 2. the worker is proved not to comply with the employment requirements during probation period; 3. the worker is in serious violation of the rules and systems of the employing unit; 4. the worker is seriously derelict of duty and practices graft which bring significant harm to the employing unit; 5. the worker establishes labor relationship with another employing unit which seriously affects the completion of tasks of the unit, or fails to rectify upon notification by the employing unit; 6. the employing unit forces the worker to sign or amend the labor contract in contrary to the true intention of the worker by deceptive, coercive means or taking advantage of the worker;

7. criminal liability is pursued against the worker in accordance with the law; 8. the worker suffers from illness or is injured other than for work-related reasons, and cannot engage in the same capacity after completion of the medical treatment period nor other work separately arranged by the employing unit; 9. the worker is not competent for the job and is still so after training or adjustment of job position; 10. there is a significant change to the objective circumstances on which the labor contract is based leading to the non-performance of labor contract, and after negotiation between the employing unit and the worker, no agreement can be reached on the change of contents of the labor contract; 11. the employing unit is restructuring in accordance with the provisions of the Enterprise Bankruptcy Law; 12. there is serious difficulty in the production and operation of the employing unit; 13. there is a change of production, significant technological innovation or adjustment of operation mode of the enterprise and personnel are made redundant even after the change of labor contract; or 14. other circumstances where there is a significant change to the objective economic circumstances on which the labor contract is based leading to the non-performance of labor contract. Article 20 Where an employing unit chooses the method of making one month of wages in lieu to dissolve the labor contract, such wages in lieu shall be determined in accordance with the wage standard of the worker of the previous month. Article 21 Where a worker reaches the statutory retirement age, the labor contract is terminated. Article 22 Upon the termination of a labor contract the service period of which is the completion of a certain task, the employing unit shall pay economic compensation to the worker in accordance with Article 47 of the Labor Contract Law. Article 23 Where the employing unit lawfully terminates the labor contract with work-related injury, the employing unit shall, in addition to paying economic compensation in accordance with Article 47 of the Labor Contract Law, pay one-off work-related injury medical treatment subsidy and disability employment subsidy in accordance with the provisions of work-related insurance of the State. Article 24 The proof of dissolution or termination of labor contract issued by the employing unit shall state the time limit of the labor contract, the date of dissolution or termination of the labor contract, the position and the years of service with the employing unit. Article 25 Where the employing unit dissolves or terminates labor contract in violation of the provisions of the Labor Contract Law and pays compensation in accordance with Article 87 of the Labor Contract Law, no economic compensation shall be made. The calculation of compensation shall be calculated from the date of employment. Article 26 Where the employing unit and the worker agree on a service period,

and the worker dissolves the labor contract in accordance with Article 38 of the Labor Contract Law, there is no violation of the agreement of the service period, and the employing unit may not request the worker to pay liquidated damages. Under any of the following circumstances, where the employing unit and the worker dissolves the labor contract with an agreed service period, the worker shall pay liquidated damages to the employing unit in accordance with the agreement of the labor contract: 1. the worker is in serious violation of the rules and systems of the employing unit; 2. the worker is seriously derelict of duty and practices graft which bring significant harm to the employing unit; 3. the worker establishes labor relationship with another employing unit which seriously affects the completion of tasks of the unit, or fails to rectify upon notification by the employing unit; 4. the employing unit forces the worker to sign or amend the labor contract in contrary to the true intention of the worker by deceptive, coercive means or taking advantage of the worker; or 5. criminal liability is pursued against the worker in accordance with the law. Article 27 The monthly wages for economic compensation as prescribed in Article 47 of the Labor Contract Law shall be calculated according to the wages that shall be payable, including hourly wages or piece wages, and pecuniary income such as award, allowance and subsidy. Where the average wages of the worker in the 12 months prior to the dissolution or termination of labor contract is lower than the local lowest wage standard, reference shall be made to the local lowest wage standard. Where the worker has not worked for 12 months, the average wages shall be calculated in accordance with the actual months of service. Chapter Four Special Provisions on Labor Deployment Article 28 The labor deployment unit established by the employing unit or the unit thereof or through partnership that deploys workers to the employing unit or the unit thereof must not establish a labor deployment unit in accordance with Article 67 of the Labor Contract Law. Article 29 The employing unit shall perform the obligations set out in Article 62 of the Labor Contract Law and protect the lawful rights and interests of the deployed workers. Article 30 The labor deployment unit must not employ the deployed worker on the basis of non full time employment. Article 31 Where the labor deployment unit or the deployed worker dissolves or terminates the labor contract in accordance with the law, the economic compensation shall be made in accordance with Articles 46 and 47 of the Labor Contract Law. Article 32 Where the labor deployment unit dissolves or terminates the labor contract of the deployed worker illegally, reference shall be made to Article 48 of the Labor Contract Law.

Chapter Five Legal Liability Article 33 Where the employing unit violates the provisions on establishing a register of employees of the Labor Contract Law, the labor administrative department shall order rectification within a time limit; if no rectification is made within the time limit, the labor administrative department shall impose a penalty of more than CNY2,000 and less than CNY20,000. Article 34 Where the employing unit fails to pay two times of monthly wages or liquidated damages to workers in accordance with the provisions of the Labor Contract Law, the labor administrative department shall order payment by the employing unit. Article 35 Where the employing unit violates the provisions on labor deployment n accordance with the Labor Contract Law and these Regulations, the labor administrative department and other competent departments shall order rectification. Where the circumstances are serious, penalty shall be imposed in accordance with the standard of more than CNY1,000 and less than CNY5,000 per deployed worker, and where harm is done to the deployed worker, the labor deployment unit and the employing unit shall assume joint and several liability. Chapter Six Supplementary Provisions Article 36 In handling the complaint and report regarding the violation of the Labor Contract Law and these Regulations, local people's governments above the county level shall make reference to the Regulations on Labor Protection and Supervision. Article 37 Where a dispute arises between the worker and the employing unit regarding the signing, performance, change, dissolution or termination of labor contract, reference shall be made to the Law of the People's Republic of China on Mediation and Arbitration of Labor Disputes. Article 38 These Regulations shall come into force as of the date of promulgation.


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