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Jiangsu Province Adopts New Labor Contract Rules

By Dezan Shira & Associates
Posted: 14th May 2013 08:51
Jiangsu Provincial People’s Congress released the new “Labor Contract Rules of Jiangsu Province (hereinafter referred to as ‘Rules’)” on January 2013, which are the first labor contract regulations issued by a local government since China’s Labor Contract Law became effective in 2008. The Rules are scheduled to take effect on May 1, 2013, and have made several changes to different aspects of Jiangsu’s labor contract regulations. Detailed information can be found below.
Establishment of Labor Relationship

According to the Rules, where an employer arranges its employee to participate in pre-job trainings or studies, the labor relationship with such employee shall be established from the date of the participation in such trainings or studies.
Suspension of Probation Period

The Rules allow probationary periods to be suspended if the employee has an illness or non-work-related injury and needs to stop working to receive medical treatment.
Suspension of Labor Contracts

Labor contracts can be suspended under the following circumstances:
  • Where the employer and the employee mutually agree to suspend the contract
  • Where the employee is held in custody under the suspicion of committing a crime
  • Where the labor contract cannot be performed temporarily due to force majeure
  • Other circumstances as stipulated by laws and regulations
During the suspension period, the labor relationship with the employee shall be retained. However, the employer is not obliged to pay remuneration to the employee under such circumstance, and the suspension period shall be excluded from the employee’s service period.
Renew of Labor Contracts

The Rules provide that if the employee continues working with the employer upon the expiration of the labor contract, the employer shall renew the labor contract within one month; otherwise the employer shall pay double salary to the employee.
Moreover, if the employer fails to renew the labor contract in writing with its employee within one year since the termination of the labor contract, it shall be deemed to have entered into an indefinite labor contract with the employee.
In addition, where the employer and the employee agree to extend the term of the employment contract, and the extended term is over 6 months, it is deemed that the parties have renewed the labor contract.
Termination of Labor Contracts

The Rules allow the employer to terminate the labor contract in a case where the employee suffers from an illness or a non-work-related injury and, upon the conclusion of medical treatment period, is unable to handle the original work or other work assigned by the employer. However, the employer shall pay the medical allowance to the employee if they have been confirmed by the work capability appraisal committee to have lost or partially lost all of their work capability.
Notice of Termination

The Rules requires employers to inform their internal trade unions when they unilaterally terminate the labor contracts with their employees. For the enterprise which has not established a trade union, it shall notify the trade union in the area where it is located.
Payment of High-Temperature Subsidies

The Rules impose mandatory obligation on employers to pay high-temperature subsidies to employees working under high-temperature conditions in accordance with the national or local standard.
Protection over Interns

The Rules prohibit enterprises from arranging interns working for an accumulative period of over 12 months. During the internship, interns shall work no more than 8 hours per day or 40 hours per week, and they shall receive compensation no less than the monthly minimum wage as announced by the local government.
Language of Labor Contracts

The Rules no longer require a labor contract to be concluded in Chinese. Contracts can now be drawn up in any language as mutually agreed by the parties. However, if the labor contract is written in both Chinese and a foreign language, the Chinese version shall prevail where there are discrepancies between the two.
In addition, the Rules have reflected the most recent development of China’s Labor Contract Law by including a full chapter detailing various aspects regarding labor dispatch.
As the Rules have already come into effect on May 1, 2013, enterprises located in Jiangsu province are suggested to review their employment mechanism and adapt to the latest legal requirements.
This article was first published on China Briefing.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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