Shanghai Higher People's Court Promulgated the Opinions on Several Issues Concerning the Application of Labour Contract Law

On March 3, 2009, Higher People's Court of Shanghai Municipal, in the form of instructional opinions, promulgated the Opinions on Several Issues Concerning the Application of Labour Contract Law (hereinafter referred to as "the Opinions") to all levels of the Courts of Shanghai consisting of 22 articles in all, which actually plays the role of Judicial Interpretations and solves part of the sharp difficulties in provision application and equals the interests between employees and employers. Hereby, we translated the Opinion (see http://www.giprs.org/node/499) for your reference.

After the implementation of the Labor Contract Law as from June 1, 2009, we really feel the sharp increase of the requests from the clients to handle labor disputes, provided, however, owing to the deffectio of the legislative skills, many provisions are quite ambiguous, which leads to many complaints from no matter foreign-invested or domestic enterprises and legal professionals. Especially, the same case may have contrary adjudications, which lays great pressure and risks on lawyers. For reliability, apart from providing the perennial counsel services to the clients, we almost declined all the labor arbitrations and suits of the new clients. However, just as Contract law and Company Law, the research on Labor Law will not be abandoned even for a professional lawyer engaged in IP. For example, during providing the legal services of protecting trade secret to the clients, lawyers have to ascertain the effectiveness of a labor contract (especially the Confidentiality and Non-competition clauses).

In our view, the Opinions promulgated by Higher People's Court of Shanghai Municipal does not blindly protect the interests of the employees but emphasis the application of the principle of good faith and fairness when handling the labor disputes, which can be counted as a great breakthrough of judicial practice. However, we also noticed that

1. The Opinions are only implemented in the Court system, provided, however, the arbitration institutions, as the organ in the advanced procedure, have not promulgated instructional file alike sharing the similar opinions, which still makes us impossible to foresee the results of adjudication made by the Labor Dispute Arbitration Committee.

2. It is primarily informed that Guangdong and Jiangsu Province, etc. respectively promulgated similar instructional opinions. For inter-region and large-scale enterprises, without doubt, the legal research costs will be increased; moreover, the Opinions are not the formal legislative instruments whose effectiveness and term of enforcement are of uncertain elements;

In a word, the number of labor dispute cases will keep increasing for a long time (affiliated to the economic trend) in future. We suggest enterprises and lawyers never to be too prudent.