Issued by Department of Labour Relations,
Shanghai Municipal Labour & Social Security Bureau
On October 17th, 2005

To all District and County Labour & Social Security Bureaus, all Enterprises’ Administration Departments and Holding Companies (Groups):

In order to better implement the Labour Contract Regulations of Shanghai Municipality (hereinafter referred to as “the Regulations”), certain issues in implementation of The Regulations are notified as the followings:

1.The Issue on Definition of the Medical Treatment Period

The medical treatment period of a worker with local residency whose labour contract is renewed after the implementation of the Regulations shall be defined pursuant to The Circular on Promulgating the Provisions on the Standard of Medical Treatment Period for Diseases or Non-Work-Related Injuries to Workers of Local Origin in Performing Their Labour Contracts issued by Shanghai Municipal People’s Government, [Doc.No.16 (2002)]; and the worker’s years of service on which the medical treatment period is conditioned shall be defined accumulatively based on his/her consecutive years of service with the concerned employing unit, while the starting date of the worker’s entitlement to the medical treatment period shall be the date eligible as per The Circular mentioned above.

2.The Issue on Service Term and Breach Penalty

The clauses with reference to service terms or breach penalties set forth in the labour contracts that comply with relevant state laws and municipal regulations prior to the promulgation of the Regulations shall remain valid, and shall be performed accordingly by both parties.

3.The Issue on Structural-Ownership Transformation of Public Institutions

The Regulations apply to the enterprises which have undergone structural-ownership transformation from public institutions after implementation of the Regulations. The terms or clauses concerning remuneration and working conditions in the original labour contract that are more favorable than those as per the Regulations shall remain valid for both parties, provided such terms or clauses are defined through democratic procedures during the structural-ownership transformation of the concerned employing unit; whereas terms or clauses concerning remuneration and working conditions that are less favorable as against the standards set forth in the Regulations shall be aligned therewith and be performed accordingly.

4.The Issue on Labour Contract Concerning Demobilized Servicemen or Military Officers Transferred to Civil Work

On initial job placement for demobilized servicemen or former military officers by competent government authorities to enterprises or public institutions, labour contracts shall be duly signed by both parties concerned in accordance with Labour Law of the People’s Republic of China, the Regulations and other relevant laws or regulations; and the years of military service of such personnel shall be regarded as the consecutive years of service with the same employing unit, except that the demobilized servicemen or officers opt for placement support in money and decide to seek jobs on their own.

5.The Issue on Definition of Economic Compensation for Dispatched Workers by Labour Service Corporations on Termination of the Labour Contracts

On termination of labour contracts of dispatched workers recruited by labour service corporations, the basis of economic compensation shall be defined in line with the income confirmed or promised by the concerned labour service corporations. In case that the monthly income of the dispatched workers could not be confirmed, the compensation basis for termination of the contract shall be defined in line with the municipal average workers’ monthly income upon the termination of the labour contract promulgated by the Municipal Government.

6.The Issue on Labour Relations Concerning Suspension of the Employing Unit’s Business License

In case that an employing unit is put out of business owing to suspension of its business license by the Industrial and Commercial Administration Authorities, and either the employing unit or the employee moves to dissolve the labour contract, the labour relation issues shall be referred to Item (3) in the first paragraph of Article 37, and Item (6) in the first paragraph of Article 42 under the Regulations. 

7.The Issue Concerning the Employing Unit’s Non-compliance with Social Insurance Contribution Obligations

In case that an employing unit fails to pay social insurance contributions as per relevant laws and regulations, the outstanding social insurance contributions shall be reclaimed accordingly, and Article 31 of the Regulations shall not apply to this case.

8.The Issue on Lump-sum Job-withdrawal Subsidy for Emigrating Workers

According to the general principles under The Reply on the Lump-sum Job-withdrawal Subsidy for Chinese Returnees and their Relatives Permitted to Emigrate Abroad issued by General Office of Ministry of Labour and Social Security, Doc.No.126, (2005), the issue on lump-sum job-withdrawal subsidy (hereinafter referred to as “job-withdrawal subsidy”) for workers within the Municipality, who are Chinese Returnees or relatives thereof (hereinafter referred to as “ the returnees”) and are permitted to emigrate abroad, and who meanwhile do not meet the statutory conditions for retirement, shall be handled as per the following rules:

(1)The sum in the returnee’s individual pension account shall be paid by the competent social insurance agency in lump-sum, and the employing unit shall not pay job-withdrawal subsidy for the years of service after January 1st, 1993.

(2)The employing unit shall pay the returnee the job-withdrawal subsidy for his or her service term with the concerned employing unit prior to January 1st, 1993, as per the Provisions on Issues Concerning Leaves and Wages of Chinese Returnees Traveling Abroad for Private Purposes, co-issued by the Overseas Chinese Affairs Office of the State Council, the Ministry of Personnel, and the Ministry of Finance; while the standard of the job-withdrawal subsidy shall be defined according to the monthly pay of the returnee concerned in 1992;

(3)In case of promulgation of new rules by the Municipal Government on the summing of individual pension accounts, the new rules shall prevail.
    
9.The Issue on Structural-ownership Transformation Concerning Implementating the State Policy of “Separating Secondary and Core Businesses” in those Large and Medium-Sized State-Owned Enterprises (hereinafter referred to as “Business Separation and Structural Transformation”)

For those enterprises subordinate to the central Government that are jointly approved and confirmed by the Ministry of Labour and Social Security, the Ministry of Finance, and the State Council’s State-Owned Assets Supervisory and Regulatory Commission to launch business separation and structural transformation; or those large and medium-sized enterprises within the Municipality approved and confirmed by the Shanghai Municipal State-Owned Assets Supervisory and Regulatory Commission to launch business separation and structural transformation, the labour relation issues concerning placement of redundant staff either shall be handled pursuant to The Rules on Implementing Placement of Redundant Staff in Large and Medium-sized State-Owned Enterprises Approved to Separate Secondary and Core Businesses and Launch Structural-Ownership Transformation in Secondary Businesses Doc.No.859, (2002), co-issued by the former Ministry of Foreign Trade and Economic Cooperation, the Ministry of Finance, the Ministry of Labour and Social Security and other 5 State Authorities, as well as other relevant laws or regulations.

The Regulations shall apply to the enterprises in which during the business separation and structural transformation, the congress of the workers’ representatives has agreed to handle labour relation issues as per the Regulations.
 
10.The Issue on Compensation in the Absence of Labour Contracts

In case that a written labour contract that should have been signed is not yet reached, and the employing unit terminates the labour relations according to Article 40 of the Regulations, the employing unit shall make economic compensations to the workers based upon their de facto terms of service; while for workers who meet the conditions set forth in Article 30 or Article 33 under the Regulations, such compensations may not be paid by the employing unit.
 
11.The Issue on Economic Compensation on Changes of State-owned Employing Units during Structural-Ownership Transformation

In case that changes of the employing unit occur during the structural-ownership transformation for state-owned enterprises and re-placement of related working staff, with the terms of service of the concerned workers remaining intact in the new employing unit, and that such changes have caused no actual unemployment, the economic compensation may not be paid by the concerned employing unit, even with the dismissal and recruitment formalities being completed.