배움과 공유의 시간

With the implementation of the labor contract law in 2008, China's labor law has shifted to a way that puts emphasis on protecting workers' rights and job security.
As workers' claims for various compensation for company misconduct became legally possible, labor lawsuits became frequent and the threshold for lifetime employment was lowered, which severely restricted the exercise of personnel rights. The time has come when it is difficult to operate a business properly in China unless the labor law is clearly understood and systematic personnel management is done.

1. The changing times of the labor law system

The Labor Act (1995) and the Labor Contracts Act (2008) are at the center of Chinese labor laws in line with the Korean Labor Standards Act. However, special attention needs to be paid to the fact that the labor law and the period in which the labor contract law were enacted are different. First, let’s look at the background of "labor law."
As the Tiananmen Square Civil War broke out in 1989, the reform-opening policy that had been pursued until then faces a major hurdle. The temporary suspension of reform and opening gained momentum again in the wake of the Namsun Ganghwa in Dengsopyeong in 1992, and the Kang Taek-min and Joo Yong-ki administrations, which were inaugurated just in time, began to pursue reform and openness policies in earnest.

Under the banner of the doctrine of Zen Buddhism advocated by Deng So-pyong, it was at that time that an extreme wave of economic commerce swept across China. The 1995 Labor Act is China's first basic labor law, which was enacted under this period. At the time of legislation, workers were not subject to protection from capitalists because the majority of workers were under the ironclad employment system of state-run companies. In addition, the need to support economic growth and absorb large amounts of rural workers rushing to cities existed, so such an era situation was reflected in the labor law as it was.

Age of Labor Law - Pro-business legislation focused on economic growth
The labor law applied the "principle of contract freedom" of labor-management equality to the fullest extent, as in civil relations, without considering the special nature of labor-management relations in unequal relations due to the inherent imbalance of power.

Based on this, companies were able to improve their employment elasticity and curb labor costs low by repeating their one-year labor contracts, and at that time, Chinese labor officials were mainly engaged in administrative work such as hiring and leaving. In other words, in the era of labor law, because the reaction to the "iron rice bowl" employment practices of the Mao Tse-dong era in the past allowed unlimited employment of short-term contracts based on the "principle of contract freedom," businesses had to concentrate only on production and operations, which in turn contributed greatly to China's growth into a "world factory."

Labor Contract Law - Pro-labor legislation focused on social stability
However, in the shadow of high economic growth, workers who have become socially weak have begun to complain as the gap between the rich and the poor has deepened day by day. The Hu Jintao-Wonjeobao government, which emerged in 2002, shifted the idea of state affairs from "economic growth" to "a harmonious society" and put forward a "pro-people policy" aimed at stabilizing social stability and governing power. In the labor sector, legislation was initiated to protect the weak from the strong capitalists, and the results were in the form of a series of pro-labor legislation, including the labor contract law.

By the way, the Labor Contracts Act, which took effect in January 2008, turned China's labor law environment into a labor-friendly one. Since the Labor Contract Act is a pro-labor law enacted by slanting to workers to correct the imbalance in power between labor and management, companies have been reduced from strong to weak, placed under restrictions in exercising personnel rights and greatly raised labor management risks.

Since then, eight years later, in 2016, workers have contributed to protecting their rights, but there have been moves to revise some rigid provisions in the future, as voices of concern have erupted from the government’s high-ranking and industrial circles that the flexibility of manpower employment and rising employment are causing corporate competitiveness and foreign companies to withdraw.


2. Labor contract law and personnel management

Labor Contract Act - Special Act on the "labor contract part" of the Labor Law
The Labor Contract Act was enacted as a special law, separating only the parts of labor contracts from the labor laws. Thus, the Labor Law, a comprehensive law that defines labor relations comprehensively, remains in effect after the Labor Contract Act took effect. However, due to the advent of the Labor Contract Act, the previous provisions of the Labor Contracts Act, which relate to labor contracts or contradicts the prestigious provisions of the Labor Contracts Act, are suspended.