The Labor Contract Law of the People’s Republic of China was adopted by the Decision of the twenty-eighth Session of the Standing Committee of the tenth People's Congress on June 29, 2007 and shall come into force upon January 1, 2008. In comparison with the Labor law enacted in 1994, under this law protection laborers shall be improved and management costs of human resources undertaken by employers shall go up accordingly.

It is estimated that upon the effectiveness of this law great adjustment shall be made in those regulations on labor contract made by local governments and legislative mode on labor relations fixed on. And management concept of human resources held by employers shall be faced with subversive challenges, which certainly will have a deep effect on employers’ human resources management and comprehensive management. Some investors from abroad stand against this law, for the role of workers union under the leadership of the Communism Party of China shall be emphasized and workers union shall be entitled to sign collective contract on wage and welfare on workers’ behalf. However, most medias from abroad make a positive evaluation of this law, because it is demanded in this law that employers should sign a written contract with their employees and temporary workers should be limited which shall help more and more laborers obtain a long-term employment guaranty. More important, public opinions have been widely asked for since the first draft was published by China government on April, 2006. Although some provisions that multinational corporations request to retract at their utmost are still retained in this law, they express satisfaction with government’s permitting public’s participation and accepting public opinions in the process of legislation. We’d like to list out some provisions in the Labor Contract Law to show its difference with the Labor Law enacted in 1994: 1. If, prior to the renewal, a fixed-term employment contract was concluded on two consecutive occasions, an open-ended employment contract shall be concluded. 2. If an Employer fails to conclude a written employment contract with a Employee within one year from the date on which it starts using the Employee, the Employer and the Employee shall be deemed to have concluded an open-ended employment contract. 3. If an Employer fails, in violation of this Law, to conclude an open-ended employment contract with a Employee, it shall each month pay to the Employee twice his wage, starting from the date on which an open-ended employment contract should have been concluded. 4. The employment contracts between staffing firms and the Employees to be placed shall be fixed term employment contracts with a term of not less than two years. Staffing firms shall pay labor compensation on a monthly basis. During periods when there is no work for Employees to be placed, the staffing firm shall pay such Employees compensation on a monthly basis at the minimum wage rate prescribed by the People’s Government of the place where the staffing firm is located. 5. Staffing firms shall inform the Employees placed of the content of the placement agreements. Staffing firms may not pocket part of the labor compensation that the Accepting Units pay to the Employees in accordance with the placement agreement. Staffing firms and the Accepting Units may not charge fees from the Employees placed Now we’re focusing on studying in detail effects that the Labor Contract Law may bring about on China's labor legal system in existence so as to assist our clients in renewing their management system of human resources.