Supreme People's Court Issues Draft Interpretation Regarding Employment Disputes - International Law Office

The Supreme People's Court has reportedly issued a draft interpretation on how lower courts should apply recent legislation to resolve employment disputes. The draft interpretation addresses key aspects of the Employment Contract Law and the Law on the Mediation and Arbitration of Employment Disputes.

According to the draft interpretation, company rules issued before January 1 2008 (when the Employment Contract Law came into force) that were not adopted in accordance with employee consultation procedures remain valid, provided that they do not violate applicable law and were publicized to employees. Courts may also consider the validity of company rules issued on or after January 1 2008 without consultation if the rules meet these criteria and are not clearly unreasonable.

The court seems to have changed its position, as a similar interpretation issued in 2001 required that company rules be adopted according to democratic procedures.

The draft interpretation also provides that employers and employees may agree that the calculation base for overtime compensation can exclude bonuses, allowances and subsidies, provided that the resulting amount is not lower than
the local minimum wage. Employers bear the burden of disproving overtime claims that are less than two years old.

The Ministry of Human Resources and Social Security and the Beijing Municipal Labour Bureau have also issued draft regulations aimed at filling gaps in the law and its implementing regulations, while courts in Guangdong and Jiangsu have already issued guidelines providing their interpretation of the law. The widespread issuance of related regulations by central and local authorities may have been prompted by a lack of clarity in the existing rules and arguably represents an attempt to create more employer-friendly rules in light of the economic crisis.

For further information on this topic please contact Andreas Lauffs at Baker & McKenzie by telephone (+86 21 6105 8558) or by fax (+86 21 5047 0020) or by email (andreas.lauffs@bakernet.com).