Employers' perceptions of the Labour Contract Law: regulatory responses in the small and medium-sized enterprise sector in China

Abstract

PurposeThe purpose of this paper is to explore employers' perceptions of China's Labour Contract Law (LCL) and its influence on employment relations and human resource management practices in small and medium-sized enterprises (SMEs).Design/methodology/approachThis paper adopts a qualitative approach based on 24 interviews with owners and human resource managers of 23 privately owned SMEs in eastern and western China.FindingsMixed levels of reported compliance with the provisions of the LCL legislation indicate that the regulatory adoptive behaviours of SME employers are partially explained by the coercive mechanism. Various strategies adopted by employers suggest that when under the pressure of law, SMEs are formalising their employment practices while simultaneously seeking to maintain a degree of informality in respect these practices.Research limitations/implicationsThe adopted qualitative approach may limit the findings to be explorative within broader national contexts.Practical implicationsThe move towards more formalised practices helps to address issues such as high turnover and widespread labour shortage in SMEs. The paper is likely to be of interest to policymakers seeking to gain insights into employers' perceptions as a means to develop more effective labour regulations.Originality/valueUnlike most of existing literature examining the general compliance to the LCL and workers' perspectives, this paper reports the views of SME employers; as such, it offers an original contribution to understanding of the role and behaviours of SME employers in regulatory responses in the studied context.