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From Special, page 3, issue no. 342 Nov 19th 2007
Translated by Ren Jie
Original article: [Chinese]

On November 14, the EO spoke with Guo Jun, vice-director of the China Labor law Society and a draftee of the Labor Contact law, Labor Law, Union Law, and Corporate Law. In hits interview with the EO, he claims that the forthcoming details for the controversial, recently promulgated Labor Contract Law will provide more precise suggestions and guidelines for dealing with employment law issues.

The Economic Observer: What do you think about the drastic response by many businesses to the Labor Contract Law? Was that expected?

Guo Jun: Businesses are afraid of the Law primarily because they misunderstand it. For example, they often misunderstand the terms like non-periodic employment contract and economic compensation. I believe the Law will not influence businesses as much as the Labor Law because the former doesn't focus on working standards and conditions, and will not cut down working time or increase the minimum wage.

It should be said that the Law has many positive features, but it's possible that experts are focusing on how it is unfavorable to businesses, which in turn makes businesses nervous. Some feedback has reflected businesses' concern for their own welfare. Before, labor issues were in a disorderly state, with many companies regularly breaking the law. The new Law is something that they simply aren't used to.

As a result, I believe that the Law increases the cost of irregular businesses. Companies refusing to sign contracts end up paying double the salary only a month later. But the law reduces the cost of legal business, because they have more leeway.

In addition to the misunderstanding, some businesses also fail to correctly assess the value of labor relationships. Some entrepreneurs think they should have complete power over their companies. But now they are restricted in their power, and they are focusing on “negatives” and increasing costs. But these costs are essential, and they will result in greater benefit to the companies.

EO: How do you feel about the behavior of businesses like Huawei?

Guo: At first glance it would be easy to assume that Huawei is in the wrong, and that the company is shuffling its working hours makes it easy to suspect that they are breaking other laws as well.

But as long as the company never coerced employees into compliance, and thus did not break the law. Labor contracts are constructed through negotiation and can be alternated or canceled through negotiation. If we're talking about the ethical treatment of workers, businesses should exercise social responsibility and try to best satisfy employees. On that level, Huawei should be scrutinized.

There's both a high and a low road to how the law can be observed by companies, and businesses can choose between them. While we can judge on an ethical level which they choose, we cannot assume that they are also breaking laws. That said, if there was one person that's forced out of Huawei, and 7,000 or 8,000 are voluntary, that the one person was forced out is illegal.

So we can't simplify Huawei’s behavior and summarily label it as illegal. Only after an investigation can that judgment be made. I believe that this kind of phenomenon amounts to an excessive response to the law.

EO: What is the All China Federation of Trade Union's response to the Huawei issue?

Guo: I have not directly participated in the response to the Huawei incident. From my understanding, the Guangdong and Shenzhen trade unions have done a lot of positive work. On this foundation, Huawei's attitude has taken a positive turn, and showing its interest in improving management and building up an employee congress, etc.

Because I haven't thoroughly investigated the matter, I can't say anything with finality. But businesses have acted inappropriately. If Huawei has coerced employees, then yes, it's broken the law. But if not, even though many contracts were changed arguably without reason, as long as it was done within the scope of the law, we can only judge them on ethical grounds-- not in court.

EO: Some of the questions about operation left unexplained in the Labor Contract Law will be explained in the detailed rules. Can you tell us more about them?

Guo: Departments are currently busy researching, and we hope that results will come out before official regulations are established on January 1st 2008. The question has not yet been presented for public discussion and many of the details remain unconfirmed. For example, when signing non-periodic contracts, the definition of “consecutive ten years” still has to be refined. And what is is “consecutive double-signing”? Many questions have yet to be answered by the legislature.

However, some questions cannot be solved by detailed rules. The legislature should make laws to explain them.

We can not expect the Law, or its forthcoming supplementary details, to be a panaccea. New situations and points of clarification will arise in the future. Related parties must continue their work and issue regulations in the mean time. Legislation is a process that demands constant perfection.

EO: What is the Government Labour and Social Security Department's opinion?

Guo: It is still under discussion. We hope to ask for suggestions from labor unions and businesses after the labor department issues a general opinion.