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[Excerpt] In response to the current economic situation, the Ministry of Human Resources and Social Security (MOHRSS) in a notice issued on November 17, 2008 has called on employers to refrain from laying off employees.

Presumably in response to the MOHRSS notice and out of the concern to prevent social unrest, some local governments have announced or reiterated policies that employers must obtain approval from local labor bureaus before conducting mass layoffs. These approval requirements are more stringent than the mass layoff procedures set out under the Employment Contract Law (ECL) (劳动合同法),which only require companies to notify the local labor bureaus (after consultations with all employees or the company unions, if any). Further, some localities are also now requiring employers in financial difficulties to consult with their employees regarding the possibilities of reducing wages and working hours as means to avoid mass layoffs.

In a related development, an official of the cabinet-level State-Owned Assets Supervision and Administration Commission said on December 16, 2008 that state-owned enterprises should strive to reduce wages of employees and not lay off employees. Further, the MOHRSS announced on December 22, 2008 that companies which are in financial difficulties and are unable to make social insurance contributions may defer payment of social insurance contributions of up to six months in 2009, upon obtaining approvals from the provincial people’s governments. MOHRSS had announced earlier that planned increases in minimum wages will be put on hold.


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