What does the LCL cover?
The LCL covers how labor contracts are written, enforced, and terminated. It discusses • Severance payments; • Noncompete clauses; • Probationary periods; • Part-time employees; • Mass layoffs; • Collective bargaining; • Labor dispatch agencies; • The formulation of company policies; and • The role of labor unions. How does this law differ from existing law? The new LCL changes how the above subjects are addressed. A few examples of the changes include • Collective bargaining Though existing laws already allow for collective bargaining, the new law introduces the concept that collective bargaining can occur across an industrial sector in a defined geographic area. Recent regulations in Shanghai outline specific processes for collective bargaining and appear to call for mandatory collective contracts for all enterprises in the municipality (see Box). • Severance payments Previous rules on severance compensation allow for one month’s pay for each year of employment, with a cap set at 12
