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Issue 08, 2008 (01 August)
 Human Resources

Enterprises May Not Maliciously Bypass Open-Ended Employment Contracts

The Guidelines on Several Issues Concerning the Application of the Law on the Mediation and Arbitration of Employment Contracts and the Labour Contract Law jointly promulgated by the Guangdong Provincial Higher People's Court and the Guangdong Provincial Labour Dispute Arbitration Committee has formally gone into force in Guangdong. The guidelines deem invalid malicious deeds of employing units to avoid concluding open-ended labour contracts with workers.

On the question of open-ended labour contracts, a matter of great public concern, the guidelines declare invalid the following four types of actions by employing units to maliciously avoid signing open-ended labour contracts: Forcing workers to resign and then sign new contracts with them with "zero years of service"; setting up affiliated companies and changing the name of the employing unit each time new contracts are signed; assigning workers to other duties illegally; and other acts of bypassing the law which obviously contravene the principles of good faith and fairness.

In case where workers claim overtime pay and employing units deny having asked them to work overtime, the burden of proof rests with employing units.

The guidelines also make provisions for the determination of the final arbitration award, standards for calculating financial compensation, payment deadlines, and the determination of the validity of employing units' rules and regulations.

For the Chinese text of the guidelines, please visit the website of Guangdong's department of labour and social security at: