[JURIST] A new labor law that requires all Chinese workers to have written employment contracts went into effect on January 1 in China [JURIST news archive], Bloomberg reported Wednesday. The Contract Labor Law [MinterEllison backgrounder] also gives Chinese workers the right to severance pay upon termination, sets a minimum wage, and puts limits on the amount of overtime that companies can legally ask employees to perform. Labor rights groups have hailed the law as a major step toward combating the sweatshop mentality, while economists predicted that the new law may cause companies that have traditionally favored doing business in China for its low labor costs to move their manufacturing to other countries. Bloomberg has more.

The Standing Committee of China's National People's Congress [official website] adopted the law [JURIST report] in June amid revelations that labor officials failed to report [JURIST report] the enslavement of hundreds of people at various brick kilns in China's Shanxi and Henan provinces. Criminal charges have were brought against government officials, and a State Council conference, chaired by Chinese Premier Wen Jiabao [BBC profile] said that those who have illegally employed children or subjected workers to slave conditions would be severely punished.