China Employment Law Update - October 2009
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Baker & McKenzie
[Excerpt] The Beijing High Court and the Beijing Municipal Labor Dispute Arbitration Committee jointly announced through meeting minutes issued in August 2009 several clarifications on key employment issues. While not binding on local arbitration committees and courts, these lower level organizations are expected to follow the conclusions announced in the meeting minutes. The meeting minutes stated that employers must pay a minimum of 20% of the salary that the employee earned prior to termination in order to enforce a post- termination non-compete restriction. Beijing previously had no standard that applied across the city. The minutes also provide that an employer has the right to waive a non-compete restrictions by giving notice to employees. The meeting minutes also discussed the burden of proof in overtime disputes, stating that employers have the burden to show that overtime has been paid during the period of two years prior to the date that an employee files a claim. Employees, however, assume the burden for any claims relating to time periods before two years. This distinction is based on the requirement that employers keep payroll records for two years. The status of “independent contractor” was also indirectly recognized in the meeting minutes, with the clarification that an “employment relationship” may not exist for persons who provide services to a company based on their own skills, knowledge and equipment, take business risks by themselves, and are not subject to the management of the company.
Baker & McKenzie; China; employment law
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