In July 2015, the Ministry of Human Resources and Social Security of the People's Republic of China ("PRC") released Draft Provisions Related to the Implementation of PRC Labor Contract Law for public comments ("Draft"). The Draft provides detailed interpretations clarifying certain issues that have arisen during the implementation of the current Labor Contract Law. Although the provisions are still in draft form and have no legal effect as yet, they contain various provisions that, if adopted, would have a significant impact on the implementation of the PRC Labor Contract Law.

The key provisions worth noting are as follows:

  • If a non-PRC employee has entered into a labor contract with an employer in China but has not duly obtained the working permit from the local labor authority, no labor relationship will have been established.
  • Company policies that will directly affect the employees' interests must be notified to the employees, with the permitted methods for publication including requesting employees to sign acknowledgement letters, organizing training on new policies, etc.
  • Employers are entitled to impose monetary fines on their employees if employees violate the company policies and cause economic losses to the employers.
  • Labor contracts must be written in Chinese, and the Chinese version will prevail over other versions in any foreign languages.
  • An employer must enter into a non-fixed-term labor contract with an employee if such employee has served two fixed-term contracts consecutively, unless such employee agrees otherwise (regardless of whether the employer is willing to renew the labor contract).
  • If an employee is transferred to a new employer that is an affiliate of the old one or the newly registered entity after the dissolution of the old one, his/her service year must be carried over to the new employer.

At the present time, it remains to be seen when and whether all of these draft provisions will become legally effective.