On 29 February 2016, the head of the Ministry of Human Resources and Social Security (MOHRSS), Yin Weimin, addressed some publicly expressed concerns that the Employment Contract Law (ECL) imposes too high a burden on companies and makes the labour market too rigid. He said that although the ECL has had a positive impact on regulating employers’ activities, safeguarding the employers’ and employees’ legal rights, and establishing harmonious labour relations, it also might have created a less flexible labour market, increased labour costs for companies, and might not be adaptable to the changing labour situation.
Given these concerns, according to Yin, MOHRSS is open to comment from various channels and will consider the pros and cons for the potential amendment of the ECL. He did not specify which exact rules in the ECL would be subject to consideration for amendment, although when deciding how to make the law (and the labour market) more flexible, the restrictions on termination, or the imposition of open-term employment contracts on companies, are likely to be key points of discussion.
Shortly before Yin made these comments, Finance Minister Lou Jiwei also shared his views that the ECL failed to provide protection for companies, and that rigid rules which potentially had an adverse impact on the flexible labour market should be removed.
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Business Law Digest is compiled with the assistance of Baker & McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker & McKenzie by e-mailing Danian Zhang (Shanghai) at: danian.zhang@bakermckenzie.com
