Labor Law is a relatively new phenomenon in China, with the first comprehensive law passed

in 1994. The new law, adopted by the National People’s Congress (NPC) on 29th June 2007,

looked to redress some of the poor working conditions found in China, particularly for the

average worker. Prior to the passage of this law, most Chinese employee’s in small-medium sized

firms lacked employment contracts. Morever, they were short-term, giving employers the flexibility to

frequently bring in a new, often cheaper hires whenever they saw fit.

Labor Law is a relatively new phenomenon in China, with the first comprehensive law passed in 1994. The new law, adopted by the National People’s Congress (NPC) on 29th June 2007, looked to redress some of the poor working conditions found in China, particularly for the average worker. Prior to the passage of this law, most Chinese employee’s in small-medium sized firms lacked employment contracts. Morever, they were short-term, giving employers the flexibility to frequently bring in a new, often cheaper hires whenever they saw fit.

The intention of the new labor law issued in January 2008 is to provide a more effective protection of employees by offering an “employee-friendly” environment which must be accepted by all Foreign Invested Enterprises and domestic companies in China.

For all incoming and existing companies based in China it is important to develop a sound HR strategy following PRC regulations in order to reduce negative impacts during the course of the business development.

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Employment Issues and Individual Income Tax in China

By Klaus Koehler, Managing Director, Klako Group

For international investors looking to enter or being already established on the Chinese market an understanding of the common employment and tax practice is significant. The Labor Contract Law (LCL) which came into effect on 1st of January 2008 has been designed to provide a more "employee-friendly" environment. It is important for all companies (inside and outside of China) to understand their rights in terms of contractual agreements, hiring, terminating as well as other employment issues, such as personal income tax and the dangers to the individual and company should tax evasion occur.

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All information in this report is verified to the best of our ability and is assumed to be correct at time of release; however, Klako Group does not accept responsibility for any losses arising from reliance on the information provided within.

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Interview with Mr. Jonathan West, Chief Finance Office of eWise Software Development (Shenzhen) Company Limited

About eWise:
eWise is a payments and online financial management solutions provider with a reputation for developing innovative technology solutions that make transacting online easier and more secure. eWise offices in the UK, USA, China and Australia support some of the world’s top 50 financial institutions with solutions delivering outstanding, proven ROI for our customers and a better online experience for millions of end-users worldwide.

To read full interview, please click here to view magazine (PDF file)