New ongoing violations after the implementation of Labour Contract Law in China

12th June, 2009

New ongoing violations after the implementation of

Labour Contract Law in China

         Calling workers to learn the labour legislations actively

         Calling the society to pay close attention on workers’ rights

         Calling the government to monitor the law implementation and enforce severely


Wrote by Shenzhen Dagongzhe Migrant Worker Centre

Translated by Workers Empowerment and IHLO


Since 1 January 2008, the PRC’s “Labour Contract Law” has come into effect, which shows the government’s focus on re-adjusting labour relation and its dedication on safeguarding workers’ legal rights and interests.


After several months, it is time to ask, have workers’ legal rights and interests been effectively protected? In order to understand the effect of the law, Shenzhen Dagongzhe Migrant Worker Centre conducted a survey and interview workers in different areas of Shenzhen city, together with several invited civil organizations. In total 320 valid questionnaires, out of 380, were returned. Ten workers were invited for in-depth interviews, as the organization intended to know certain specific phenomena better, and nine valid interviews were done. From the results, we could tell that the unbalanced power relation, sometimes detrimental, between workers and employers still maintained. Even in the wake of the Contract Law, some employers continue to turn a blind eye to the new law, coming up with new “trick”. There is the summary of the major violations:


I.       All sorts of peculiar labour contracts

1.      English contract

Some employers translate the labour contracts into English, knowing that ordinary workers could not read English. Example, Mr. Yu, works at a foreign-invested toy factory, says “in the process of signing the labour contract, most workers didn’t know the English contents, so at first, we all refused to sign. Later, the management forced us to sign it, they said the contract was for one year (the real term is for two years) and we could quit the jobs whenever we want to. So most of the workers signed it, but I didn’t because I couldn’t read it.”


2.      Two contracts at a time

Mr. Pan, a skilled electrician in a Hong Kong-invested enterprise, reveals, “The basic monthly wages at the factory is set at 1,500 Yuan. However, the factory required me to sign two identical contracts, each of them saying our basic wages is at 750Yuan per month, so in total, it is the same 1,500 Yuan. Other technical workers also had to sign two contracts.” To divide the 1,500 Yuan wages into two separate contracts and using only one of them as an official contract, the factory calculates the overtime wages at a half-rate and saves a significant social security premium. After the launch of Labour Contract Law, enterprises tend to use this “trick” to reduce the overtime payment for workers.


3.      6 six-day a week, each day 6.7 hours

“According to your contract, how many hours do you work per day?”, workers usually answer this question with dissatisfaction, “the legal standard is set at 5 day and 8 hour a day. However, the enterprises divide 40 hours into 6 six days, each day our shift lasts 6.7 hours. In this case, we don’t get overtime payment for the 6.7 hours we work on Saturdays.” Such a practice shows that some enterprises try to interpret the law for their own interest, to avoid paying overtimes wages, which most workers work extremely hard to get it.


4.      Incomplete or even blank contracts

From the survey, 3.8% of the contracts do not provide the location of employment, 10.6% do not state a clear job description, some workers report that they were offered to sign a blank paper and 5.9% of the contracts are blank contracts. It is rather risky for workers to sign blank or incomplete contracts.

Some employers even covered the content of the contracts, only showing the signature areas to workers to sign. Mr. Sun from a plastic factory said, “the company covered the contents of the contracts and asked us to just sign. At first, we all refused to sign as we found it unreasonable. However a week later, the management said those who refused to sign would have an one-month wages deduction, so we were then forced to sign.”


5.      Two different stamps on the labour contracts

In our in-depth interview, Mr. Li, 28 years old, said, “since January 2008, our factory gave us contracts to sign, they even agree to give us un-limited timeframe contracts. But we saw the stamps of two different legal entities on the contracts, so we all refused to sign. The factory put out a notice, saying that workers who refused to sign contracts by 31 January would need to take unpaid leave. The factory later threatened the workers that they would be dismissed without compensation if they didn’t sign contracts. At the end, most of the workers other than 23 them signed the contracts”


It is rather common for a company to register several subsidiary-companies under it. When one subsidiary committed any violation and workers take it to court, the parent-company would unregistered the company in questioned and transfer the other workers to another subsidiary. The behaviour of Li’s factory, to have two different stamps on the contracts, may suggest something suspicious.


II.    Abuse and manipulate the factory regulations

1.   Price hikes on meals and dormitory

The survey shows that 22.2% of workers suffered from an increase in the price for food and accommodation. Ms Yang from a toy factory said angrily, “our food charges have gone up to 250 Yuan a month. We heard that minimum wages has been increased and therefore the employer would charge us more for food and accommodation. But we have less overtime work now but a higher bill on food and penalties. How come our government doesn’t regulate the price on food anymore?”


2.   A growing list of penalty items

The survey shows that 22.3% of the workers told that the items of penalty have gone up. 57.2% of the workers said they did not agree with those regulations. Mr. Sun, a some 30-year old puncher at a metal factory said, “our factory regulation says, 50 Yuan fine for a minor mistake, which includes late for work for a minute or verbal argument with supervisors. For major mistakes, like arguing with the manager, the fine goes up to 200 Yuan. The factory often sends us warning letters and each warning letter costs us 50 Yuan. The second warning letter means dismissal…”


III.       The Enforcement of the Labour Contract Law is not so Sanguine

1.      Many factories still not offer a contract to workers

General lack of contracts amongst local invested, small factories, 73.4% of workers from the survey said they had signed a contract (though they have all sorts of problems as mentioned above), while 26.6% of workers still work without contracts. 41.9% of local-capital factories and among small-scale factories, i.e. less than 1000 workers, 35.8% of them do not offer contracts to their workers. For larger factories, i.e. with more than 1,000 workers, only 6.1% of them do not sign contract with workers.


2.      28% of the contracts with wages lower than legal minimum wages

The survey shows that 28% of the contracts offer monthly wages lower than 750 Yuan, and 51.60% of contracts offer wages between 750 and 1,200 Yuan. Starting from October 2007, the legal minimum wages for outskirt Shenzhen was set at 750 Yuan and it would be increased to 900 Yuan on 1 July 2008. The legal minimum wages is the bottle line for workers to live and factories fail to live up to that standard, how could they talk about workers’ personal development?


3.      Falsehoods between the contracts and reality

When we asked the workers “are there any falsehoods between the contracts and the reality at workplace?”, a majority of them, 63.83% said their work hours are different from the contracts, 4.26% said they work in a different location than stated on the contract, 3.19% revealed there are difference between factory names and other types of differences reach 11.70%.


IV.        Calling for better implementation, join hands by all sectors of the society

The survey shows that 79.2% of workers are dissatisfied with the situation in the factories. It shows that the labour contract law needs further and better implementation.


1.      Circumvent is never a solution

As a company, deducting workers’ wages and avoiding the overtime payment as a mean to operate, instead of improving their technical level, creativity and management skill, which tends to exploit workers to keep up in competition is not a sustainable move. They would soon either be punished by government or would lose workers, suffer from the so-called labour shortage. Currently it is established to have 740,000 workers short in Shenzhen, which is a warning to the enterprises, telling them that if they want to develop, they would need to be law-abiding and establish a correct direction of development.


2.      Calling the workers to get familiar labour legislations

As a worker, aware of their own rights, methods to safeguard themselves could help themselves to combat with their employers, at labour departments, at courts, by clearly telling their demands. It is the only effective way to get the Labour Contract Law fully implemented.


3.      Close attention to workers’ rights from all sectors in the society

Workers are the creator of social wealth, as well as the motivity of social development. As a member of this society, we all have responsibility and obligation to pay close attention to labour right and the workers’ condition. If most of the workers cannot enjoy a sustainable life, it definitely will impact on the stable and development if the society. Furthermore, if the worker cannot develop and build up their capacity, it will limited the overall development of the society as well.


4.      Calling the Government for strengthen on promotion, monitoring and enforcement

In this research, it clearly showed that large scale of illegal practices is still exist in the labour contracts signed. If we ignored the voice of the workers and only concentrate on the rate of contract signed, it will definitely lead to misapprehend. The workers know about the illegal situations in the factories most clearly. Therefore, the Government should pay more attention to the actual situation of workers and listen to their voice; at the same time, encourage the people’s organization such as the trade union, women federation, and civil groups to display their function on promotion, communication, facilitation and monitoring of Labour Contact Law. Meanwhile, the Government could set up clear incentive payment to encourage the social groups and individuals to report the illegal enterprise.


Since the Labour Contract Law came to effective, “tricks” happened frequently in those illegal enterprise, these acts not only undermined the legal right of the workers, but also defied and trampled down the Law. In front of such a rigorous situation, we are calling the workers to get familiar labour legislations; calling for a close attention to workers’ rights from all sectors in the society; and, calling the Government for strengthen on promotion, monitoring and enforcement


Please refer to for a full Chinese version of the report.

For any further enquiry or transshipment, please contact Suzanne Wu