INTERNATIONAL & COMPARATIVE EMPLOYMENT LAW

Final Exam
2011.12.13

Xuemin Li
MSC in International Human Resource Management ESC Rennes School of Business Instructor: Asha MOORE-MARGIN

Introduction ZOOPRA GLOBAL have decided to establish its business facility overseas. Germany and China are the final two candidates. My job is to help ZOOPRA to identify these two countries and choose the better place to invest. So I need to have a general idea and understanding of how the employment law works in each country. In my evaluation, these following factors are mainly taking into consideration:

Rigidity of employment legislation Difficulty of hiring Use of fixed-term contracts Employee rights to terminate a contract Dismissing unproductive staff Making workers redundant Immigration laws Skill availability Diversity management Industrial relations

Rigidity of employment legislation In Germany, the Basic Law guarantees free choice of occupation and prohibition of forced labor (Art. 12). It also establishes the principle of equal treatment and in particular obliges the state to support the effective realization of gender equality (Art. 3). The major sources of labor law are Federal legislation, collective agreements, works agreements and case law. There is not one consolidated Labor Code; minimum labor standards are laid down in separate Acts on various labor related issues, which are supplemented by the government's ordinances. Because of the German membership in the European Union, labor law is strongly influenced by EU legislation and case law. EU Directives must be implemented and EU jurisprudence has legal binding power. (International Labor Organization)

Prior to 1994 Chinese employers and workers had been regulated by various administrative regulations, State Council directives, and laws passed by the National Peoples Congress. However, these regulations, laws, directives were not unified or comprehensive. In many cases, rules would cover one type of enterprise, but not another. (Labor Law Reform in Contemporary China ). 1994 marked the passage of the first comprehensive labor law in the history of the Peoples Republic of China. The nature and direction of Chinese labor law was naturally tied up in other issues of economic reform, including state enterprise reform and the formation of new firms in the private and foreign sectors. Labor law was affected by the vagaries of central leadership struggles over the path and speed of economic reform.( Murray Scot Tanner,1999)

Difficulty of hiring China Population 1,338,299,512 Unemployment rate 3.4% Minimum wage No statutory stipulation Income level Middle Minimum age of employment 16 Skill shortage Top executed talent Aging of Population (>60) 13.26% Germany 81,702,329 7.7% No statutory stipulation High 15 IT Sector 20% Recourse: The World Bank

Statutory minimum wage is not stipulated both in Germany and China. Each company has its own salary standard, actual wages is determined in the individual employment contract, based on employees capacity, profession and experiences. Although no statutory stipulation, but wages can not be lower than the minimum standard set in the related collective agreement. As my research, I found that the labor cost is very high in Germany, for example, the minimum wage of an apprentice in Kufmannisch is 1304 euro, its said that the average wage in Germany is about 2000euro per month. (HERVER,2010)

Use of fixed-term contracts

The time limits of Chinese labor contracts have fixed and flexible term and time limits of the accomplishment of certain amount of work. (Art 20 para1). The fixed-term contracts can conclude with the mutual agreement of employers and employees. Stipulation of fixed-term contracts are half a year to three years. (Wolfgang Dubler and Qian Wang , 2008)

Compare with China, the use of fixed-term contracts in Germany have much more restrictions. They can only be allowed when giving the objective reasons for the limitation, such as substitutions in case of illness or project work. However, as an exception to the rule, employer and employee can reach a decision if the time doesnt exceed two years. (MLawGroup 2008)

Compare the two countries, we found that the provision of China increases dependence on the respective employer and long-term life planning is made quite difficult for the workers. But as consider the lower turnover, it has bigger influence. Because we dont want to change the face quite often and foster our talents from the beginning.

Employee rights to terminate a contract In China, employees should terminate a contract 30 days in advance to the employer. But if they are during probation period, or suffer threat, violence, deprival of freedom or employer break the contract, employees can notify to terminate the contract at any time.

In Germany, if employees suffer non-payment of wages and unlawful working, they have the right to terminate the contract without notice. (Trade & Invest-Germany)

Dismissing unproductive staff The employer has the right to terminate the labor contracts if employees are incompetent at their jobs and remain so after training of relocating the work. But

employer should notice employee 30 days in advance in written form. (Labor Law of China Art26 legislation 2 )

In Germany, the notice period is between four weeks and seven months base on the length of employment. But theres an immediate termination which notice period does not apply. Continued non-performance of agreed work belongs to this situation. That means employment can terminate without notice. (German Employment Protection Act)

Making workers redundant In China, if the employer wants to fire more than 20 employees or over 10% of the total when the company runs into difficulties in business, the employer should explain such situation to the labor union or all the employees 30 days in advance and solicit their opinions and report it to labor administrative department. (Art para1) In Germany, if certain number (base on the size of enterprise) of employees should be made redundant, the employer needs to negotiate with the workplace representative an agreement which regulates the social impacts for the dismissed employees. And significant number of dismissal must filing with the Federal Employment Agency otherwise will be invalid. ( MLawGroup 2008)

I couldnt find the legislation which stipulates the rights of employees when face such redundancy in Chinese Employment Law, but in Germany, fired employees are entitled to ask economic compensation or take complain ( MLawGroup 2008)

Immigration laws The number of foreigners in China is growing rapidly, they want to work or live in China. In 2007, over 10% of the 26 million foreigners came to China for employment. (Bureau of Exit and Entry Administration)

In order to manage the increasing numbers of foreigners, Chinas first immigration law has been starting drafting. It is expected to identify potential immigrants into different package such as skilled or unskilled labors, job or investor immigration. (State media, 2010)

Germany is a hot immigration country for people across the world. It has a great economy and has third largest immigrants population in the world. From Jan.1, 2005, first German Immigration Law took effect. The law represents a political compromise by not unboundedly open the door of labor market to immigrants. Thus, foreigners from non European Union will still be refused to access to simple jobs. However, highly-skill immigrants can get a better deal, no matter where are them from. (WORLD.ED)

We know that China was once a main source of migrants to other countries, but now lots of foreigners choose to migrate into China. Although its first immigration law has not born yet, I think it is already a strong signal of Chinas growing global economic status.

Skill availability

Diversity management In Germany, managing diversity has been a topic since the 1990s its a modified version of equal opportunities of gender. Recent years, both governmental and economic level have interested in the concept of managing diversity. The EU promotes diversity managing to combat discrimination, the German government started it as well (Cormack and Bell 2005).

In Germany, at first only a few companies such as Lufthansa, Die Deutsche Bahn and

the Deutsche Telekom made diversity management practices into implementation (Schwarz-Wlzl and Maad 2005). But situation has changed after the introduction of Charter for Diversity which now has been signed by more than 600 organizations, that means diversity management is highly welcome now.(Joana Vassilopoulou,2011)

Research studies indicate that there has been more engagement with gender equality in China and empirical work has been documented on gender, especially in the last three decades (Croll 1985; Cooke 2003, 2005; Bowen et al. 2007). There has been much less focus on ethnicity, disability, religion, and cultural diversity in the Chinese employment market and there is therefore a dire need for more research in these strands of diversity. (Yu Fu, Nicolina Kamenou)

As my consideration, China has become a force to be reckoned with in international stage. Management of cultural diversity has become more and more important part in the organization. How to manage in the cultural diversity environment, how to control conflicts under such circumstance is an important question to the HR managers. China has recognized that diversity management is a must, but it still need to learn more method and strategy from developed countries.

We see that China has become a force to be reckoned with in international stage. Management of cultural diversity has become more and more important part in the organization. How to manage in the cultural diversity environment, how to control conflicts under such circumstance is an important question to the HR managers. China has recognized that diversity management is a must, but it still need to learn more from developed countries such as Germany.

Industrial relations As my research, Chinas industrial relations are some kind of special. Chinas communist government provides workers in public enterprises with a lifetime welfare

and employment. Trade unions are the instruments of the government. We hardly see Chinese workers go for strikes because government controls all the economic activity. The trade unions act as political organizations to imbue workers and supervisors and keep them productivity high and maintain industrial peace. In general, the workers are unaware of economic issues and they feel secure of socialist public ownership. (Comparative Labor Relations-China)

Unlike Chinese workers are not very combative, all matters affecting German workers, such as daily working time and breaks, the holiday schedules and pay system. And these issues are mandated by German law. And totally different from China, trade Unions in Germany are highly aimed at protecting the rights of employees. Germany has a widespread system of industry-level and centralized collective bargaining. But now unions have already kept silent in some company-level agreements. About one third of the company of private-sector has negotiated such kind of treaty which called Alliances for employment, and with the workers councils can lead to lower costs, higher productivity and more flexible working hours. (Comparative Labor Relations- Germany)

Conclusion

Reference Liliane Jung(2001), National Labor Law Profile: Federal Republic of Germany, [Online] available from: http://www.ilo.org/public/english/dialogue/ifpdial/info/national/ger.htm#equ [Accessed: 12/12/2011]
Mary E. Gallagher, Baohua DongLEGISLATING HARMONY: LABOUR LAW REFORM IN CONTEMPORARY CHINA, [Online] available from:

http://www.erb.umich.edu/Research/Initiatives/colloquiaPapers/GallagherRevisedPap erJan08.pdf [Accessed: 12/12/2011] Herver(2010),The labor market in Germany, [Online] available from:

http://www.expat-blog.com/en/guide/europe/germany/915-the-labour-market-ingermany.html [Accessed: 12/12/2011] Wolfgang Dubler,Qian Wang,(2009), THE NEW CHINESE EMPLOYMENT LAW, [Online] available from: http://www.law.illinois.edu/publications/cllpj/archive/vol_30/issue_2/daubler&wanga rticle30-2.pdf [Accessed: 12/12/2011]
MLawGroupLegal Briefing: German Labor and Employment Law,2008

Labor Law of the People's Republic of China, Standing Committee of the National People's Congress,[Online] available from: http://www.lawinfochina.com/display.aspx? lib=law&id=705http://www.gtai.com/homepage/investment-guide-togermany/employees-and-social-security/termination-of-employment/#c2397
[Accessed: 12/12/2011]

Termination of Employment, Germany Trade & Invest,[Online] available from: http://www.gtai.com/homepage/investment-guide-to-germany/employees-and-socialsecurity/termination-of-employment/#c2397 [Accessed: 12/12/2011] By Elaine Wu,(2010), First ever immigration law coming soon to China,[Online] available from: http://shanghaiist.com/2010/05/26/china_works_on_first-time_immigrati.php
[Accessed: 12/12/2011]

Bernd Grler,(2005), First German Immigration Law Takes Effect,[Online] Available from: http://www.dw-world.de/dw/article/0,,1442681,00.html [Accessed: 12/12/2011] Joana Vassilopoulou(2011), Understanding the habitus of managing ethnic diversity in Germany,[Online] available from: https://ueaeprints.uea.ac.uk/33505/1/ThesisVassilopoulouPrintVersion.pdf [Accessed:
12/12/2011]

Yu Fu, Nicolina Kamenou, Perceptions of cultural diversity in Chinese subsidiaries of Western multinational companies, [Online] available from: http://www.organizzazione.unina.it/cms7/proceedings/proceedings_stream_02/Fu_and_Kamenou. pdf [Accessed: 12/12/2011]

Comparative Labor Relations, [Online] available from:

http://frank.mtsu.edu/~cbaum/451topic17.doc [Accessed: 12/12/2011]