Deciphering the Labor Contract Law(3)

"To satisfy some employers' desire to extend probation periods, some experts suggest that they can extend the probation period to two months by offering a contract of one-year-and-one-day; and to qualify for six months probation by having a three-year-and-one-day contract," Liang says, adding that this is an overt counter measure intended to lower costs by compromising the employee's legal rights. 

On severance payment, Guo says that only two situations call for such compensation: one being the expiry of the contract, and the other being the dissolvent of a company due to bankruptcy, or a merger.

Guo says under the first scenario, when a contract expires, the employer can simply renew the contract to avoid severance payment. By continuously extending the contract up to a staff's retirement age or legal age to claim for social security insurance, the employer is free from shouldering the severance payment. To Guo's understanding, the rule actually lowers the operation costs of companies.

On staffing regulations, Liang believes they are meant to standardize recruitment channels and system. For example, in the hope of shunning responsibilities, many employers today have appointed employment agencies to arrange for labor placement.

Under the new Law, both staffing agencies and hiring firms should bear joint responsibilities and liabilities. The agencies are obligated to establish employment contracts and pay for social security insurances; meanwhile, the hiring firms are responsible for over-time payment, welfare package, working conditions, and salary adjustment.