Labor and Social Security authorities in southern China's Guangdong Province have warned companies against illegally laying off employees in hopes of evading obligations required under the country's new Labor Contract Law.

An official with the administration in charge of labor relations, Lin Jingqing, reiterated Saturday that unreasonable dismissals are not acceptable under the law, Guangzhou-based Information Times reports.

Lin's remarks came after local big businesses, including network hardware manufacturer, Huawei Technologies Co., Ltd, laid off long term employees to avoid signing them to contracts with unfixed terms.

He said related regulations will be issued to punish evasive employers.

China will enforce its new Labor Contract Law on January 1, 2008. The law will require employers to offer contracts with unfixed terms to those who have worked for the company for 10 consecutive years upon reaching a negotiated consensus.

The contracts will secure stable careers for senior employees, as they can not be terminated without legal reasons or the occurrence of the specific conditions listed.

On the other hand, enterprises worried that the protected contracts may cause side effects in human resource management, the report said.

According to earlier reports, Huawei Technology defended the layoffs, saying they could encourage employees to work harder and help the company maintain competitiveness.

The company, one of China's most successful worldwide brands, persuaded 7,000 of its employees approaching the ten year mark to resign "voluntarily" and sign new contracts with fixed terms ranging from one to three years.

The reports said the dismissals could cost the company one billion yuan (US$134 million) in compensation, which triggered heated debate nationwide.

The labor official ensured the new law will grant equal rights to workers as well as businesses, saying the open-ended contracts don't mean "iron food bowls" for employees.

Lin Jingqing said the contracts can be terminated by employers if a worker is any of the following: in breach of duty; breaking the law; or seriously affecting the enterprise's operation.

For an employee not able to work following illness or injuries, employers also have the right to terminate the contract.

(CRI November 4, 2007)