| 4.7.2007 Labour Contract Law Clarified Economic Compensation The Standing Committee of the National People's Congress (NPC) adopted the Labour Contract Law of China on 29 June 2007. The new law will come into effect on 1 January 2008.
The law has clarified the method of calculating economic compensation made to workers, which is an issue of great concern to Hong Kong companies. Under Article 46 of the law, an employer should make economic compensation to an employee if it revokes or terminates the labour contract under certain circumstances. The amount of the economic compensation should be calculated according to the duration of service and wage of the employee concerned (Article 47).
Article 97 stipulates that the starting date for the calculation of the economic compensation should be the effective date of the new law (i.e. 1 January 2008). Before the implementation of the new law, any employer making economic compensation to an employee should do so in accordance with the relevant rules at that time.
For the full text of the Labour Contract Law in Chinese, please visit:
http://www.npc.gov.cn/zgrdw/common/zw.jsp?label=WXZLK&id=368169&pdmc=110106
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