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CIRCULAR OF THE GENERAL OFFICE OF THE STATE COUNCIL ON THE APPROVAL AND TRANSMISSION OF THE PROPOSALS SUBMITTED BY THE MINISTRY OF LABOUR AND THE MINISTRY OF PERSONNEL CONCERNING FURTHER IMPLEMENTATION OF THE POLICY OF GRANTING DECISION-MAKING POWER TO ENTERPRISES WITH FOREIGN INVESTMENT FOR THE EMPLOYMENT OF WORKING PERSONNEL

    The report entitled "Proposals Concerning Further Implementation of the
Policy of Granting Decision-Making Power to Enterprises with Foreign
Investment for the Employment of Working Personnel" submitted by the Ministry
of Labour and the Ministry of Personnel has been approved by the State
Council. The Report is hereby transmitted to you for earnest implementation.
PROPOSALS OF THE MINISTRY OF LABOUR AND THE MINISTRY OF PERSONNEL
CONCERNING FURTHER IMPLEMENTATION OF THE POLICY OF GRANTING DECISION-MAKING
POWER TO ENTERPRISES WITH FOREIGN INVESTMENT FOR THE EMPLOYMENT OF WORKING
PERSONNEL(Excerpts)

    In order to improve the investment environment to facilitate the
implementation of the strategy for the economic development in the coastal
areas, the following proposals are hereby made on further implementaion of the
policy of granting decision-making power to enterprises with foreign
investment for the employment of working personnel:

    (1) Workers, technical personnel and administrative personnel (including
senior administrative personnel) needed by enterprises with foreign investment
may be employed by the enterprises openly from society; the enterprises may
also select and employ their working personnel from among the personnel
recommended by the Chinese joint venturers, their business partners. If the
personnel employed from the local area cannot satisfy the needs of the
enterprises, working personnel may be employed trans-regionally.

    (2) In case that enterprises with foreign investment wish to employ
working personnel from among workers and staff members on job, the departments
and units concerned should give their active support and permit their working
personnel to leave. The aforesaid departments and units should not impose any
restrictions by charging payments or by taking back rooms or houses. In case
that the original unit attempts to obstruct without any justification, workers
or staff members who are employed by the aforesaid enterprises may resign.
After resignation, their years of service shall still be counted without
interruption. If any disputes arise, the person concerned may apply to the
labour dispute arbitration committee in the local area, or to the service
center for the exchange of personnel authorized by the local government for
arbitration. All parties concerned must execute the arbitral award. If
necessary, the transfer formalities may be performed on behalf of the engaged
workers and staff members directly by the local labour or personnel
departments.

    (3) In case that enterprises with foreign investment go beyond the
province, autonomous region, or municipality directly under the Central
Government to employ workers and staff members, it is no longer necessary for
them to submit their applications to the provincial department of labour or
personnel for approval; the labour or personnel departments of the areas
concerned should strive to do their organizational, coordinative and service
work well.

    (4) When a Chinese enterprise establishes a joint venture with foreign
businessmen, the joint venture may select and employ the workers and staff
members of the original Chinese enterprise according to needs. The Chinese
side of the joint venture and the competent authorities over the joint venture
shall make proper arrangements for the placement of those workers and staff
members who are not employed; and the local government shall take an active
part in assisting the department concerned to do the personnel regulation work.

    (5) In the case that an enterprise with foreign investment dismisses
workers and staff members in accordance with the contract and relevant
provisions, no departments, units or individuals shall interfere. Of the
dismissed workers and staff members, those who were on loan or temporarily
employed shall be reaccepted by their original unit of work and those who were
directly hired by the joint venture shall register for a new job with the
local labour service company or the service center for the exchange of
personnel at their original place or be offered a new post through the
introduction of a department concerned, or organize themselves for
self-employment, or look for a job themselves.

    (6) The Chinese personnel, who hold the position of chairman of the board
of directors or directors in a Chinese-foreign equity joint venture or in a
Chinese-foreign contractual joint venture, shall not be transferred during
their terms of office without authorization. If the transfer is necessary, the
appointing unit shall solicit the opinions of the examining and approving
organ of the said enterprise and of the foreign side of the joint venture.
No departments and units have the right to transfer senior Chinese
administrative personnel employed by an enterprise with foreign investment,
during their terms of office as stipulated in the contract, to other positions
without the consent of the said enterprise's board of directors and of the
general manager.                                          

    (7) If there is any conflict between these Proposals and the pertinent
regulations and provisions promulgated by the State Council and The former
Ministry of Labour and Personnel, these Proposals shall prevail.

    (8) Various areas and departments concerned should strengthen publicity
and education among the leading cadres at various levels and the broad masses
of workers and staff members for their better understanding of the matter and
ensure that enterprises with foreign investment can exercise their
decision-making power in selecting and employing working personnel in
accordance with the practice prevalent in the world. Those who violate the
pertinent laws and regulations and these Proposals, and use dishonest methods
or devious means in handling cases concerning the employment or dismissal of
workers and staff members, shall be criticized and admonished. If the cases
are serious, investigations shall be conducted into the legal responsibilities
of the persons concerned or disciplinary sanctions shall be given to them, in
accordance with the actual circumstances.