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Tianjin Issues Implementation Regulations on Labour Contract Law

  • China
  • Employment law - HR E-Brief

03-06-2013

Tianjin has issued new regulations on the implementation of the Labour Contract Law (the “Regulations”). These came into effect on 1 May 2013 and the important changes include:

1. Contract renewal: Notification obligation

It is confirmed that the 30-day timescale for concluding a written contract also applies to contract renewal. Where an employer has not complied with this obligation, it will have to pay double salary to an employee from the second month following the expiration of the original term. Of course, if the employee refuses to renew the contract, then the employer may notify the employee in writing about the expiration of employment and pay the required severance pay.

2. Overtime work: Payment rate for under comprehensive working time schedule

Same as for employees under the standard working time schedule, an employee subject to the comprehensive working time schedule must be compensated at the rate of 150% for his/her overtime work . Overtime is constituted, if the total of the employee’s actual working hours during the approved calculation period exceeds the amount of hours which would have to be worked during this period in a 40 hours’ week. If work is performed on public holidays, the compensation rate is 300%.

3. Post-contractual non-competition obligations: Monthly compensation and liquidated damages

The Regulations expressly forbid any compensation for post contractual non-competition obligations to be paid during the term of employment. The amount of compensation and any liquidated damages for an employee’s breach shall conform to the principles of fairness, justice, proportion and reciprocity.

4. Dismissal due to material breach of internal rules and regulations

Where company’s internal rules and regulations do not clarify what constitutes a “material breach”, an employer may not dismiss an employee by referring to the statutory termination ground of material breach of internal rules and regulations (Article 39 (2) of the Labour Contract Law).

As of 1 July 2013, new Entry-Exit-Law will come into effect. In addition to this, the Chinese State Council has released draft regulations on the entry and exit of foreigners (“Draft Regulations”) for public comments. Important developments include:

Eversheds Comments:

Tianjin companies should particularly check their internal rules and regulations to ensure that what is considered a material breach is identified and clarified. A non-exclusive list setting out acts of material breach should be considered for clarification purposes.

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