China Law Blog

The other day I posted on China's proposed new labor laws, in a post entitled, "China's Proposed Labor Law:Going After Capitalists Like China, 1967."  Got a great comment from Seoul super-lawyer, Brendan Carr, that is so good and so helpful, it deserves its own post.  So here goes, in Brendan's own words:

Korea already has a Labor Standards Act (LSA) which confers job security like you're describing the Chinese act wants to provide. Boy, does the LSA suck. Its primary and signal defect is the arbitrariness of having such a law in an environment where only the foreign companies, and big Korean companies, give a dang about compliance. Smaller Korean companies are beastly employers, but there are so many of them -- and they have so many other legal problems -- that it's not worthwhile for authorities to police them. So instead they focus on the errant multinational, who "ought to know better" because of the famous foreign brand.

Free legal advice to foreign employers: Fixed term contracts should start off at 12 months. Never hire anyone on an open-ended contract, which is employment for life ab initio, or a contract longer than 12 months (you can't enforce the longer period against the Korean employee anyway). And before that fixed term contract has renewed a second time, make a decision whether you feel comfortable having the employee around forever. Because that's the legal position after that contract has renewed twice.

From a competitive standpoint, as we hear the giant sucking sound over here in Seoul, we can say Hell, yes, China -- do it! as an equally bad labor law will level the employment-law playing field. But on an objective level, it sure seems stupid.

Four things (at least) worthy of highlight from Brendan's comment, now post:

1.  Tougher laws, without equal enforcement, are a way to camouflage discrimination against foreign companies.   Korea and Japan are notorious for this.

2.  Laws do influence where companies locate.  Yes, it would be great if China's labor laws where as protective as those in Sweden, but if they were, countless companies now in China will indeed move to places like Vietnam.  What is best for the Chinese worker?  I am not calling for 70 hour weeks or no minimum wage, but at the same time, there has to be a balancing.

3.  Good lawyers figure out how to use laws to their clients' advantage and this means that laws relating to business rarely immediately succeed in fulfilling all of their goals.

4.  Brendan Carr should start a Korean Law Blog.  I know he is already one of the authors of Korea's leading blog, The Marmot's Hole, but I am serious.  Brendan?