Thousands of employees who have eight years or more on their employment record are being urged by the Huawei Technologies to resign at the end of this year. They will be offered a new contract for one to three years afterwards.

It's said that Huawei is taking this unusual action due to pressure from the new Employment Contract Law that goes into effect next year. According to the law, employees with a 10-year length of service can sign a "labor contract having no fixed term" with their employers while ostensibly serving as permanent staff.

"Huawei has asked veteran employees to resign in order to avoid such types of labor contracts," said Lan Guoqing, HR director of Asia International Hotel (Guangzhou).

But the company has argued that their move represents an adjustment of the HR plan. Those who voluntarily resign are guaranteed compensation; for example, 10 years service would equal nearly 200,000 yuan (US$26,825).

An insider revealed that the adjustment involved about 7,000 employees and the company had to pay compensation exceeding one billion yuan (US$1.34 billion).

"The reform aims at eliminating deep-rooted discrepancies between veterans and rookies," admitted someone inside the PR department.

However, Huawei's self induced tide of resignation has attracted widespread criticism. They have been attacked for "shirking social responsibility". A HR expert from Guangzhou called Huawei's action "inappropriate", saying: "In terms of morality and social responsibility for a business enterprise it's irresponsible for Huawei to do this. Their action will not only impair the company's image, but also it will lower employee morale."

His opinion has been echoed on the Internet. "Huawei has set a rather bad example for other enterprises to cope with the incoming Employment Contract Law," said a netizen. "The company has urged its employees to resign by using both the carrot and the stick. It's a disguised form of lay offs."

"As the 'vulnerable group', employees have no alternative but to resign 'voluntarily'," said another netizen.

In addition, many fear this may just be the beginning. Since the new Employment Contract Law places special emphasis on labor interests, enterprises worry that this preference will probably add to labor costs and put them in a passive position.

But Yang Hongxi, general manager of the Guangzhou Ruiqi Human Resources Service, felt that misinterpretation of the new law was the culprit creating unnecessary anxiety in many enterprises.

According to Yang, the new law includes 13 clauses covering the employer's responsibilities; this accounts for about 80 percent of the total "legal responsibility" clauses. Moreover, the law is clear about responsible parties in cases that infringe upon labor interests.

"This reaction from enterprises is natural and reasonable," said Yang. "And short-term anguish is unavoidable. Huawei is just trying to stay competitive by re-signing new contracts. But as a leading enterprise in China, Huawei may create a negative impact on other companies. The misinterpretation might be magnified."

Although HR managers from 10 state-owned and foreign enterprises have denied similar actions inside their companies during the interview, some of them revealed that rumors of lay offs were circulating.

Experts think that the implementation of the new Employment Contract Law is good timing for most enterprises to abandon their over-reliance on low-cost labor.

"Higher labor cost forces enterprises to pay more attention to on-the-job training and technical investment," noted Ye Jiaguo, deputy secretary-general of the Guangdong Enterprises Culture Association. "Currently, enterprises seem to be under great pressure. In the long run, they will reap the fruits of innovation and efficiency."

Yang Hongxi shared Ye's opinion. He suggested that enterprises embrace the new law positively.

"The new law is in accordance with societal development. It regulates the human resource management system and aims at building a harmonious relationship between an employer and his employees. Employers should bear in mind that the long-term development of all enterprises depends upon on the devotion of their employees," explained Yang.

(China.org.cn by Huang Shan November 2, 2007)