Few Chinese laws have taken as long to draft as the Labor Contract Law, which after 11 years in the draft process was adopted by the Standing Committee of the National People's Congress (NPC), the top legislature on June 29. But few Chinese laws have been as controversial either.

In one month during which lawmakers solicited opinions of the draft law the NPC received around 200,000 suggestions, a new record for this process in China.

About 70 percent of these suggestions came from ordinary working people, while others were from the Chinese offices of multinational companies and foreign chambers of commerce. The two camps of labor and management held exactly opposite opinions on the law. While the former was concerned about how to protect workers' rights, the latter raised worries that excessive protection of labor interests might raise production costs.

"The law that will go into force on January 1 next year keenly protects workers' interests and rights, but it is not biased toward employees. The legislature has taken into consideration the lawful rights and interests of management, including those of foreign investors," said Liu Jichen, Director of the Legal Affairs Department of the All-China Federation of Trade Unions at a press conference on July 2.

Dismissing the concerns of employers, Zhang Mingqi, a senior official with the All-China Federation of Trade Unions explained at the press conference that due to the relative shortage of capital and excessive supply of labor, in China workers will remain at a disadvantaged position for a long period. Therefore, he said, the Labor Contract Law should be positioned top give labor a slight advantage in order to achieve a balance between workers and their employers.

According to statistics, more than 80 percent of all labor disputes in China have been caused by a violation of workers' rights; for some regions the proportion is over 98 percent; meanwhile, employees are winning 90 percent of labor cases at arbitration and in the courts.

"It is an international norm to protect the interests of the disadvantaged in lawmaking," said Liu.

For example, he said, employers can sign non-competition contracts with workers, with a non-competition period of not more than two years to encourage innovation and ensure fair competition.

So an employer can rest assured that an employee does not walk out at the end of the contract period and join a direct competitor.

It also softens the terms under which employers can cut staff--if an enterprise switches to other production, adopts a major technological innovation or changes its mode of business.

Liu stressed that the law will help create a harmonious labor relationship.

One major problem existing in China's labor market is that employers refuse to sign a labor contract or purposefully shorten the term of labor contracts. According to a survey conducted by the NPC Standing Committee at the end of 2005, only a tiny proportion of employees in China worked under a contract that year and most contracts were short-term, lasting one year or less.

To reverse this situation, the Labor Contract Law stipulates that if no contract has been put in place by an employer between one month and one year, workers are entitled to a double wage; if a person has been employed for one year or more without a contract they are viewed as being on an indefinite-term contract.

The law also stipulates strict terms on dismissing a fixed-term employee. If a fixed-term employment contract is not renewed, the employer has to pay one month's salary for each year of prior tenure as severance, to a maximum of 12 months.