What
to Do with the New Labour Law?
Back to Basics
 With
the introduction of the new Labour Contract Law (LCL) on the
mainland earlier this year, as well as ongoing amendments
to the employment ordinances in Hong Kong and Macau, the human
resources (HR) landscape in Greater China is getting more
complex than ever.
Hong Kong: Ordinance Amendments in Force
These days, much has been discussed over a possible minimum
wage and general wage protection issues in Hong Kong, with
numerous industry lobbyists, government bodies and labour
organisations chiming in with a variety of opinions, surveys
and figures on global trends. Amendments were also made to
the Employees' Compensation Ordinance. The amendments, which
came into effect on September 1, 2008, referred to employees'
entitlements to benefits as related to medical treatment,
examination and certification given by registered Chinese
medicine practitioners.
Macau: New Labour Law Passed
Whilst these issues are also critical to employees in Macau,
a new labour law, which encompasses 50 modifications to the
current law was passed in August of this year but not in force
until January 1, 2009, despite the differences of opinion
over long service payments. Some of the new adjustments include
longer maternity leave (increased from 35 days to 56 days),
an increase in mandatory paid leave (from 6 days to 10 days),
and more clearly defined overtime payment policies.
China: the Great Impact of the New LCL
But it is the LCL in China that has had the most impact, especially
in the Pearl River Delta (PRD) region. The biggest element
of this ordinance is the change of contractual employment
in correlation with continuous employment. In the past, an
employer was able to simply dismiss an employee at the end
of his term by not renewing the contract, but now, employers
are subject to issuing fair severance payments in such cases.
A regulation added to the LCL became effective on September
18, 2008. It deals with recognition of service in cases where
there is a transfer of business, such as when a company is
bought out by another organisation. Basically, the new company
must treat the employees of the existing company as if they
had been working in the new company for the same number of
years.
This new law has led to some major changes in labour-management
relations and equal employment opportunity, though it may
be fair to say that employers perhaps hold a slight edge now
as the global economic turmoil takes toll. Company worker
unions and employee representative bodies are now more commonplace
throughout the mainland and they have direct input to a company's
compensation, work hours, leave, occupational safety and health,
insurance and benefits, training, discipline and performance
practices.
Even major multinationals have to adjust their practices.
For example, Wal-Mart reported that it signed two-year collective
bargaining agreements to increase payroll costs and salaries
by 8 to 9 percent annually over the preceding years.
Labour Dispute Cases Increase
Moreover, after the introduction of the new law, Guangzhou
alone heard 35,512 labour dispute arbitration cases between
January and August of 2008, a year-on-year increase over 2007
of almost 132 percent, whilst Guangzhou's labour and social
security bureau disclosed that there were plans to raise minimum
monthly wage to RMB1,000 in Guangdong province next year,
though that may be delayed given the economic crisis. Nonetheless,
it does highlight the constant escalating costs of doing business
in the PRD region.
Nothing is more essential than properly managing your workforce
and talent pool at the moment, especially when the shortage
of skilled labour still exists in the region. Take Shenzhen
as an example.
Whilst labour shortage was reported to have relieved in the
2nd quarter of 2008, the city was still short of approximately
430,000 workers.
So the primary question is: How does a company now effectively
and efficiently manage its talent pool?
Professor Cheng Yan-yuan, an authority on China labour law
who has spent decades on the study of industrial relations
and human resources management has given her suggestions.
Strategic Thinking
Professor Cheng says, "Companies should team up with
their workforce as strategic partners. People are the ultimate
factor in business development and the Labour Contract Law
has compelled corporate management to think more deeply about
how to utilise human resource strategies to enhance the value
of its employees, motivate their spirit and enhance their
core talents. High quality manpower can significantly raise
a company's competitiveness and innovation."
She also pointed out that focusing on bolstering staff morale
during low seasons and properly managing surplus staff during
high seasons requires both short-term and long-term strategic
thinking. Corporate branding, remuneration schemes, development
opportunities and management style are all critical elements
of key talent attraction.
Progressive HR Management
In essence, it still comes down to the basics, but with a
progressive twist. Some companies are already enacting a number
of comprehensive, modern HR programmes to optimise their people
management.
KPMG, with 7,000 people working in Hong Kong, Macau and the
mainland, puts much emphasis on nurturing and fostering relationships
with key talent. As an example of its progressive HR policies,
actual employees are involved in part of their marketing and
advertising campaigns, whilst there is an HR initiative called
"MyLife" which promotes a healthy work-life balance
for their employees through activities such as cooking classes,
social etiquette training and sports.
Another example of progressive HR management is Shangri-La
Hotels and Resorts. In 2007, it started a "CSR Champions
Training" programme, which empowers and equips employees
to perform meaningful community work in specific regions.
This not only gives the employees a greater sense of being
an integral part of the company, but also that of being active
contributors to the community, making them proud of being
a Shangri-La employee.
When it comes to production workers, it's about adhering to
the government regulations and actively exhibiting an extra
effort. Employee retention is always less expensive than hiring
and training new staff, even on the production line. Factories
throughout China, and especially in the PRD region are often
seen to lose time, efficiency and productivity after each
Lunar New Year as they have to replace workers who do not
come back to work after the holiday. This figure of non-returning
workers can range from 10 percent up to 30 percent every year.
As for administration staff, including supervisors and managers,
it starts with the recruitment process. It is imperative that
a company's hiring strategy revolves around not only the current
needs of the company, but the company's long-term vision and
mission. This means ensuring that when key talents are identified,
a substantial portion of the selection methodology comes from
sheer compatibility. It is almost a certainty that if the
talents are treated properly, they will become key contributors
to the company on a long-term basis.
Talent Development for Long-term Success
To implement progressive HR management strategies, companies
should go beyond expectation and provide workers with continuous
training and personal development, as well as additional financial
incentives based on quality and productivity. Mentoring is
a critical part of any progressive HR programmes. It not only
speeds up the transfer of knowledge, but also accelerates
the lag between training to enable new employees to effectively
contribute to the company's overall directives and goals.
Ongoing professional development is also an integral part
of talent management. Good performers stay exceptional by
continuous training and development, not only to optimise
their known strengths and abilities, but also to improve their
deficiencies. Seeing clearly his company's effort and dedication
to the talents, whether for their development or personal
wellbeing, key employees will surely repay the company with
remarkable performance and loyalty.
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