In June 2009 the Hong Kong Legislative Council introduced the Employment (Amendment) Bill. If passed, the bill will make it a criminal offence for an employer to ignore an award by the Labour Tribunal or the Minor Employment Claims Adjudication Board (MECAB). The bill is designed to deal with employers who unscrupulously ignore awards by the Labour Tribunal or MECAB. Under the current law, an award simply creates a debt between the employer and the employee and which needs to be enforced by the employee. Under the new legislation, failure to comply with such an award will constitute a criminal offence.

The Guangzhou Municipal Labor and Social Security Bureau has issued a circular stating that the standard for monthly unemployment insurance benefits is raised 15% from year 2008. The raised amount shall be RMB 791. Taking effect in September, the new standard covers four areas including Huadu District, Panyu District, Conghua City and Zengcheng City.

Shenzhen recently issued the Circular on Leveraging Social Insurance to Ease Businesses’ Burden and Stabilize the Employment Situation. The Circular allows enterprises that are unable to pay social insurance premiums to suspend the relevant payment for a limited time period, up to six months. The effective period is tentatively limited to 2009 with no plans to extend the period to 2010.

Unaware of her pregnancy, Xiao Mei joined the staff of a fitness center as a fitness coach and signed a commitment of non-pregnancy. However, after the company learned of her pregnancy, it dissolved the labor contract with her and insisted that her behavior constituted fraud.

In China, for a labor contract to be valid, it may be accompanied by a ‘commitment letter’. A commitment letter is made by the employee to the employer and normally promises or verifies various criteria that are central to the job duties. For example, commitment letters could state that the employee is no longer employed by another employer; the employee has a valid commercial drivers license; the employee has obtained the required degrees; or the employee meets certain health criteria. These terms vary from employer to employer, vary based on the job duties, and vary based on negotiations between the employer and employee. However, the law stipulates that the agreed upon conditions must not violate the law or public order. If an employee knowingly makes untrue statements or commitments in the commitment letter, an employer can at a later time terminate the employee’s employment with no severance.

In this case, the commitment letter between Xiao Mei and her employer contained a commitment term in which she promised that she was not pregnant at the time of employment. Such a condition seemed reasonable to the employer as a pregnant fitness coach could not perform her job duties and the job duties would be potentially harmful to the embryo. However, her termination proved to be illegal.

The Constitution of the People’s Republic of China, the Labor Law and the Law to Protect the Interests and Rights of Women all indicate that males and females have equal employment rights. A female employee may not be terminated merely because she becomes pregnant after she has been employed. However, a female job candidate may be excluded from employment based on the job duties and the requirements of the job. In this case, a pregnant employee could not perform the job duties for which she was to be hired. It would be within an employer’s right to not hire a pregnant employee for a job she could not perform. However, in this case, the employee’s termination was not allowed by law because the female employee in fact did not know she was pregnant when she signed the commitment letter.

Employers have a right to know the current status of each potential employee. A right to know means that the employer is entitled to full knowledge of a staff member’s employment and physical situation at the time of recruitment. However, this right only exists during the recruitment stage, and the employer may not abuse this right. Furthermore, this is a right to be pro-active; both parties of the labor relationship must take the initiative to inquire into the other party’s true situation. The employer cannot require the employee to make a unilateral pledge regarding the truth of some fact and then terminate the employee if that fact turns out to be false. Employees may only be terminated if they knowingly misstate the facts, promises, and commitments in the commitment letter.

In this case, the fitness center must have taken the initiative and required Xiao Mei to undergo a physical examination to prove that she was not pregnant at the time of employment, otherwise it should bear the responsibility for any negative consequence.

In this case, the employer made the additional claim that the female employee had committed a fraud on the company. According to Article 18 of the Interpretation on Several Articles of Labor Law, fraud requires intentional misrepresentation of the truth by one party to the other, on which the other party relies to their detriment. In this case, the arbitrator found that the female employee did not know she was pregnant, did not knowingly misrepresent the fact of her pregnancy, and therefore did not commit fraud on her employer.

In 2007, Qiang Jiao was hired as Chief Editor of the Asia Finance Network Technology, a Beijing company. Both employer and employee agreed in the written labor contract that Mr Jiao’s total annual salary was to be RMB 150,000. This amount was to be composed of two parts: 1) RMB 144,000 cash payment and 2) RMB 6,000 to be used to purchase 0.1% of the company’s shares. Pursuant to the employment contract, the company was obliged to update the company ownership registration with the Administration of Industry and Commerce (AIC) after each granting of additional company ownership to the employee or be required to pay RMB 1,000 per day to the employee as a penalty.

Mr Jiao began working for Asia Finance Network on February 1, 2007. Every month, the company paid Mr Jiao his salary and withheld the requisite amount to be used to purchase company shares, as required by the contract. In November 2007, Mr Jiao checked with the local AIC and found that the company had never changed or updated the company ownership records. Mr Jiao complained to the labor arbitration committee but his claim was rejected on the basis that the dispute was not regulated by Chinese labor law. Mr Jiao then submitted the case to the Xicheng District Court in Beijing.

The Court rejected the employee’s claim. Under Chinese law, salary can only be paid in cash, and this provision may not be superseded by mutual agreement between the employer and employee; stock option or share purchase provisions in a labor contract are void as a matter of law. Therefore, Mr Jiao’s request to register his name in the official records and his claim for indemnity was rejected by the Court.

Miss Qi was employed as the PR manager of a company located in Shanghai. Her employment with the company was terminated at the beginning of 2009. Upon her termination, the company demanded that Miss Qi refund a total amount of RMB 38,700 which she had borrowed from the company the previous year. Miss Qi refused to repay the loan, insisting that the money had been used for official company business. The two parties were unable to reach an agreement and the PR company brought a lawsuit for settlement.

The company showed that three advance payments were made to Miss Qi and asserted that these payments should be deemed as loans to her because she had never submitted invoices or receipts in order to complete the reimbursement process.

Miss Qi argued that the funds were used for projects in which she directly liaised with newspaper and magazine editors to launch advertisements on behalf of clients. The reason for this was that the PR company could skip the sales department of the newspaper and advertising agents and complete the project at a much lower cost. As this practice was internally prohibited by the media companies Miss Qi worked with and did not strictly comply with PRC tax regulations, Miss Qi had to apply for the funds in her own name and then wire them to the editor’s personal account. However, in this type of transaction, she would be unable to be given a formal invoice or receipt. In court, Miss Qi presented the editor’s statement, sample prints, and other materials as evidence.

The court found that each of the payment requests showed that the money had been wired to the newspaper and magazine editors per Miss Qi’s instructions and each payment request had been signed by her employer’s Legal Representative. The evidence also showed that Miss Qi was only an applicant for the company funds but had never been in real possession of the money. The court ruled that there was insufficient evidence to show that the funds were a personal loan to Miss Qi, that the funds were used for payment of company expenses, and therefore rejected the company’s claim.

Labor costs for Shanghai’s private businesses rose 182% this year to an average RMB 65,845 (US$9,683), according to a recent report by the Shanghai Labor and Social Security Bureau.

The report, comparing this year’s figures to last year, also found labor costs for all city enterprises increased 21% to RMB 71,525.

Labor costs include salaries, basic insurance fees, housing funds and other welfare allotments.

The employees of state-owned companies registered the highest average labor costs, which climbed 19% to RMB 81,651. Labor costs at collectively owned enterprises, mainly township enterprises where assets are owned jointly, were the lowest at RMB 43,698 and only showed an 8% over the previous year.

The labor bureau did not explain the massive jump in labor costs among private businesses.

State-owned enterprises provided more insurance, housing subsidies and welfare fees than other businesses. Salaries accounted for 64.4% of labor costs for state-owned enterprises, and 84.6% for private businesses.

Foreign enterprises used employees the most efficiently, as their personnel expense rate - the ratio between labor costs and sales - was only 4.4%, the lowest of all, according to the report.

In 2010, Beijing will adjust both the reimbursable percentage and upper limit of outpatient expenses covered by basic medical insurance. The ceiling claim amount shall be approximately six times the total wages of an employee. It is estimated that the ceiling claim amount will be raised from RMB 170,000 to around RMB 270,000.

From 2010, Beijing will implement a new management process for employees who suffer work-related injuries. Employees who suffer work-related injuries shall first apply for permission for rehabilitation and then must select one of four designated hospitals for treatment and recovery during the paid leave period. After being release from the hospital, the employee shall then obtain certification of their work-related injury and then receive economic compensation.

According to statistics recently released by the Shenzhen Municipal Human Resources and Social Security Bureau regarding the labor market, the ratio of job openings to job applicants was 1.25. The August labor market had 590,000 job vacancies and only 470,000 job applicants with a resulting labor shortage of 120,000. This number is six times that of April and was the biggest supply-demand gap in Shenzhen’s labor market in 2009.