China Matters: Shanghai Clarifies Several Issues Under The Employment Contracts Law

In March 2009, the Shanghai High Court and Shanghai Labor Arbitration Commission issued the Opinions on Several Issues Concerning Application of the Employment Contracts Law (Hu Gao Fa [2009] No. 73) (the Opinions). The Employment Contracts Law (ECL), which came into effect on January 1, 2008, contains many ambiguous provisions left open for interpretation by municipalities and provinces. The Implementing Regulations of the Employment Contracts Law of the Peoples Republic of China (the Regulations), effective upon promulgation on September 18, 2008, provided some additional clarity with respect to unwritten practices and interpretations of the ECL and other employment rules and regulations, but they did not address some of the more controversial provisions of the ECL. The Opinions provide further clarity with respect to some practices and interpretations of the ECL for application in Shanghai. Notably, on the whole, the Opinions appear more favorable to employers. We explore some of the more significant provisions below.