On 18 September 2008, the State Council promulgated the Implementation Regulations of the Labour Contract Law.

The Labour Contract Law was implemented on 1 January 2008.

The regulations clarify several provisions of the Labour Contract Law, but leave other areas unclear.

1. Execution of labour contract

Under the Labour Contract Law, if a written labour contract is not executed between a month and a year from the commencement of work, the employee is entitled to double salary payment. Article 5 of the regulations clarifies that the employer is not required to provide such compensation when the failure to conclude a contract is the employee's fault. But the employer must have notified the employee in writing. In this case, the employer may terminate the employment through written notice and only owes the employee their regular salary.

An employer is still obliged to conclude a written contract after one year, when the employment term will be deemed open ended. However, any double salary payment is limited to one year.

2. Consolidated calculation of employment period

Article 10 provides that when someone is "arranged" to work for a new employer, the time spent at the previous employer will be considered part of the employment period at the new employer.

One result is a higher severance payment, which is calculated based on the employment period. However, former employment can be ignored if the previous employer has already made a severance payment.

3. Professional technical training

To balance the interests of employer and employee, the Labour Contract Law allows an employer who provides professional technical training to require a minimum service term. An employee who fails to fulfil the term is obliged to pay liquidated damages based on the amount spent by the employer on training and the duration of the unfulfilled service term.

Article 16 clarifies that such training expenses include training fees, travel expenses and other direct costs spent on training. Employers should prepare for future claims by retaining evidence of training expenses.

Article 17 clarifies that if the labour contract term expires before the service term does, the labour contract term must be extended until the expiration of service term, unless otherwise agreed by the employer and the employee.

Article 26 specifies that an employee is entitled to unilaterally terminate a labour contract with a service term (and is not liable for liquidated damages) due to an employer's fault under

Article 38 of the Labour Contract Law. But the employee must pay liquidated damages if the employer unilaterally terminates due to employee's fault under Article 26.

4. Termination

The regulations state the right to terminate not only open-term labour contracts, but also fixed-term contracts and contracts that expire upon completion of a certain job.

According to Article 18, an employee can terminate by giving 30-days' prior notice to the employer. Therefore, it is no longer possible to bindingly agree on a longer notice period. A statutory list of reasons that allow either side to terminate indicates that the parties are not allowed to formulate their own.

The regulations also cover the following: the basis for calculating a severance payment, applicable standards when a place of employment differs from an employer's place of registration and the requirements concerning full-time time employment of staff by dispatching companies.

However, they leave several questions unanswered, including the definition of the requirements of a seconded position (i.e., temporary, auxiliary or substitutable) and a specification of the process for formulating employer's internal rules and regulations under Article 4 of the Labour Contract Law.

Reliable sources indicate that the Ministry of Human Resources and Social Security is formulating detailed implementation rules. It remains to be seen whether these will provide further guidance on the open issues.

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