News

Labor Dispute Mediation and Arbitration Law of the People’s Republic of China Adopted – Effective May 1, 2008

10 February 2008 – Beijing, China – Promulgated by the Standing Committee of the People’s Republic of China and effective on 1 May 2008, the Labor Dispute Mediation and Arbitration Law of the People’s Republic of China (the "Law") will become effective on May 1 of this year. In combination with the recent Labor Contract Law (effective January 1), there are many major changes which will affect employer/employee rights.  

We summarize the pertinent points below:

Labor Mediation

The Law clearly favors mediation as the preferred method of labor dispute resolution. Mediated settlement agreements for salaries, medical fees for job-related injuries, severance and penalties may be entered into court for enforcement.

Limitation Period

Under the Labor Law, the previous limitation period for bringing a dispute was 60 days after the dispute occurred. The new limitation period is 1 year after the employee knew or should have known that their rights had been infringed, however, if the dispute occurs under an existing labor contract, the limitation period does not start until the labor contract has expired or been terminated. 

Arbitration 

Arbitration is now free of charge. Arbitration also is now final for employers in the following instances: salaries, medical fees for job-related injuries, severance, and penalties, where the disputed amount does not exceed an amount equal to 12 months' local minimum wage.  

Evidence

Strengthening the previous laws in favor of employees, the Law now puts a positive obligation on employers to provide evidence which is in their control, the failure of which may result in a negative inference against employer.

The Law significantly improves the rights of employees and employers must take additional measures to protect themselves against possible liabilities.