Lu is an accountant with a foreign firm in Beijing. Of late, the scope of her work has extended beyond pouring over numbers and deciphering financial records. On top of her usual tasks, she has to attend legal courses.

In meeting rooms in star-rated hotels across major cities in China, participants like Lu – top management at their companies – sip coffee and tea as legal experts click through Powerpoint presentations and break down the new Labor Law for them. Their goal: prepare for the tectonic changes that will occur when it comes into effect on January 1st, bringing with it new clarifications and obligations regarding the relationships between employers and employees.

Since its passage, employers have scrambled to gather tips and strategies to face the changes, which will impact recruitment and layoff policies, compensation, payrolls, and provisions in employment contracts.

It also says that employers can no longer unilaterally amend employment policies, but rather, they need to obtain consent from a majority of their employees or the labor union prior to changing policies that directly impact the interests of workers.

This has led to a rush for companies to adjust employment policies and draft standard contracts before the implementation deadline to ensure that they would not be put at a disadvantage.

Capitalizing on Concerns

The legal community has quickly come to the employers' aid by churning out a wide range of courses related to the law. Now, a search on the internet for courses available returns tens of thousands of results, mostly in cities like Beijing, Shanghai, Guangzhou, and Shenzhen.

The courses cost between a few hundred to a few thousand yuan per head. Most courses focus on strategies to avert risk on the part of the employers.

"There is less academic debate about the Contract Labor Law now as we have entered the practical stage. Firms are more interested in knowing how to apply the law," says lawyer Duan Wei, who had been invited by various chambers of commerce and companies to give talks on the law.

Some consulting firms have capitalized on concerns and developed Labor Contract Law guidebooks.

For example, the China Labor Disputes Net (www.btophr.com) has published a guidebook priced at 1,880 yuan that recommends strategies on drafting employment contracts, collective agreement, contract termination, compensation issues, trade secrecy, and legal liabilities of various parties.

A spokesperson for the firm that authored the guide reveals that sales were "encouraging" and that the firm has received "positive response" from employers, but declined to comment further.

Apart from sourcing experts' opinions, personnel in the human resource management have started using online forums as a platform to share strategies and exchange ideas in dealing with the law.

The 40,000-member strong ChinaHR forum (www.zhongguohr.com) is a hive of such activity, swelling with both questions and suggestions.

One of the hot topics on the forum concerns a provision of the law obliging employers to enter into an unlimited-term employment contract with workers who have served under two fixed term contracts.

After analyzing the above clause, one member of the forum laments, "Japanese-invested firms usually sign a one-year fixed term contract with employee. That means after two years, the company must decide to offer an unlimited term contract or to call off the employment. Two years is too short to monitor and assess quality worker."

The member suggested that companies in similar positions offer a longer fix-term contract to delay the obligation and gain more time to properly assess workers. For example, a three-year fixed term instead of a one-year contract, could delay the need for an unlimited-term contract from year 2010 until 2014.

On the issue of economic compensation, another member points out, "Upon the expiry of an employment contract, if the employer refused to renew the contract, a sum of compensation to the worker concerned is required, unless the worker has explicitly expressed his or her intention not to resume the contract. This clause in the law has led to higher employment cost for employer."

The member cautioned human resource personnel to obtain written acknowledgement from workers, who agreed not to resume employment contract, in order to protect employer from making compensation.

Checks and Balances

Lawyer Duan Wei says based on his sessions with clients in the past months, foreign firms proved to have more initiative in keeping abreast with the law. That is partly due to higher legal awareness among foreign investors and tighter scrutiny placed on them because of their foreign-invested status.

"Employers may have an upper hand over those employed, but, when compared to enforcement officials, employers may be the weaker ones. The law can bring about a win-win relationships between employers and employees, but that all depended on well-balanced enforcement," says Duan.

Based on the latest statistics released by the China Labor Market Information Center, foreign invested firms' demand for labor only made up 8 percent of the market. In addition, firms with funding from Hong Kong, Macao and Taiwan investors demand for labor formed 7 percent of the market. This shows that foreign invested firms only employed a fraction of labor in the market.

Foreign investors have expressed concerns that the law might not be enforced uniformly and objectively, and called for the government to ensure a level playing field between Chinese companies and foreign invested firms.

The European Union Chamber of Commerce in China is of the view that the key challenge in China remained the compliance by employers and the enforcement by authorities of existing Chinese laws.

"The Chamber encourages the Chinese government to focus its efforts on improving the implementation of existing regulations and suggests that the education and training of enforcement officials should be substantially strengthened, especially at the local levels," the chamber said in a written statement.

James Zimmerman, chairman of the American Chamber of Commerce in China, specifically pointed out a provision in the law that held labor bureau officials liable administratively and criminally if found guilty.

"If a labor bureau official fails to perform his or her duties or acts illegally and causes harm or losses to the employees or employers, he or she is personally liable.

"This provision will put pressure on the labor officials to enforce the law uniformly and objectively," said Zimmerman.

While there is a provision to pressure enforcement officials to toe the line, there is also a provision that asserts weight on the employers to act in a responsible manner, as the Government offers rewards upon verification to those who alerted the authorities on any violation of the law.

The mechanism of checks and balances has been established. Now all that remains is for the players involved to play their roles accordingly.