China amending labor law to protect 'contractors'

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Lawmakers on Tuesday started to read a draft revision of the labor contract law that aims to prevent employers from exploiting workers by improperly classifying them as contractors.

The bill was submitted for its first reading at a bi-monthly session of the National People's Congress (NPC) Standing Committee, which runs from Tuesday to Saturday.

China adopted the current labor contract law in 2007 and it has provided protection for employees and helped maintain social harmony, said Uzhitu, vice chairman of the NPC Finance and Economic Committee.

However, the number of independent contractors has also increased rapidly since the promulgation of the law, he said.

Serious problems have emerged, as many employers have tended to hire contractors long term to replace permanent employees, with some companies using contractors to complete the majority of their work, he said.

The legal rights of contractors have not been well protected, he said adding that contractors often receive less pay and benefits than regular employees.

In addition, the market has seen an increasing number of contractor agencies, many of which are not run in line with laws and regulations, he said.

Under the current law, employers are "generally" allowed to hire contractors to do temporary, supplementary or backup jobs.

The proposed revision provides clearer definitions.

"Temporary" means that an employer is not allowed to hire a contractor for a job lasting more than six months, the draft says.

The bill also includes an article requiring agencies and employers to follow the principle of "equal pay for equal work" when negotiating payment for their contractors.

Moreover, the draft asks contractor agencies to obtain administrative approval before operation and lifts the minimum registered capital requirement from the current 500,000 yuan (78,600 U.S. dollars) to 1 million, in a bid to ensure the effective supervision and the solvency of such agencies to better protect the contractors' rights, Uzhitu said.