Incentive Research In Termination System Of Labor Contract

China’s socialist market economic system is transferred from the planned economy institution, and it demonstrate that labor protection has deep historical roots in China. Labor Contract Law was promulgated in2008, the provisions of the termination of the Labor Contract Law caused many jurists and economists to argue for the equality of labor relations and tilt protection. Long-term and dismissal protection of labor contract are the two legislative themes of the Labor Contract Law. The cost of employment and dismissal has increased. after Labor Contract Law promulgated,which can be reflected from the increase of the economic compensation and damages, the relaxation of non-fixed term labor contracts and the rise of the cost of legal responsibility in violation of the provisions of the labor contract. The legislative purpose of labor contract law is to maintain the stability of the employment of laborers, But firms also will make use of a variety of measures to circumvent the regulation of the law because of the increased costs of the termination, so it may have not a fully positive impact on employment stability for workers. The implementation of a labor control measure must take into account other aspects of the impact. It is contrary with the operating rule of market.It also create much negative impact which it is not easy to describe, and the operating rules of market will be a hinder of its implementation.To contrast with China labor contract, the United States insist on the the principle of dismissal at will in dealing with labor disputes.The employer is free to discharge individuals "for good cause, or bad cause, or no cause at all". The principle of dismissal at will is evolution from the U.S. law cases and it is the core legal principle to deal with labor disputes in the, however, with the development of the U.S. labor disputes, the court have accepted three exception of the principle of dismissal at will, which include the public policy exception, the implied contract exception and the good faith and fair dealing exception. But in the essence, the principle of dismissal at will has not been abandoned, it just made some exceptions to amend it. We can understand the differences of the institution of China’s labor contract termination and the principle of dismissal at will deeply by comparative analysis of these two institution.With the promulgation of the Labor Contract Law, the institution of China’s labor contract termination have significant changes in two aspect. First, for the employer,the restrictions of the termination of labor contracts get further exacerbated. Second, the transition from the fixed term labor contract to the non-fixed term labor contract is greatly relaxed, and the Labor Contract Law set a mandatory renewal institution in the transition from the fixed term to the non-fixed term labor contract.lt also prohibit the employer and the workers agreeing upon the termination conditions, The termination cost of the labor contract have increased significantly, the provisions of this clause also have led to a series of employer’s behavior to avoid the control of Labor Contract Law. The economic analysis also shows that the employer have a strong incentive to make the acts of evasion and breach of labor contract law. The design of the mandatory renewal institution in labor contract law didn’t take into account the behavior of employers’opportunism, and it will certainly affect the operation of the system. The rule of non-fixed term labor contract in China’s labor contract law focus on the job stability of workers, but ignore the costs of the enterprise, it can be said that it clearly ignored the problem of efficiency of the system.Enterprises seek alternative employment arrangements is particularly important under the high restriction cost. So these two forms of contract, the contract to complete a certain task in the duration of labor contract and part-time employment contract may be very attractive to the employers, because with a special task of the labor contract expiring, it do not have to pay the termination cost of the contract, and a non-full-time employment contract does not require a written contract, the employer may terminate the labor contract with workers at will. The employers and the temporary employees’contract implies a class of option combinations, which contain the option to choose to continue to enter into long-term labor contracts, and the option to terminate the contract at any time. With the consideration of temporary conditions of employment, the employer can choose whether to continue to retain temporary employees based on business conditions and cost conditions. Finally, the economic analysis of options contracts can also demonstrate that if employers do not choose to do opportunistic behavior, employers will reduce the magnitude of the wage under the huge termination cost of the non-fixed term labor contract. To get further theoretical analysis, this topic build a new economic models to provide a theoretical support with the conclusions of this paper. Most of the labor market models are focus on the establishment of labor relations and the determinants of the size in the labor market, but no model discuss the wages under the labor protection of termination. This model is to study the behavior of payment of wages’decision-making in the case of increase the termination restrictions of the labor contract. The analysis of the model show that the amount of the workers’ wage depends on the termination cost of the employers. With the restriction cost lifting and and the strengthen of law enforcement and administration of the regulatory environment, the limit of human capital investment will be decreased and employment impact will be expanded. It also show that even if the enterprise refuses to perform the provisions of the termination in labor contract law, based on the protection of workers,it still will result in overall reduction of the wage income.In order to reduce the labor cost of the termination, the employers would use all kinds of loopholes of the system of legal or use illegal measures to circumvent the institution of the termination. It will increase the burden on the workers, therefore, it do not necessarily bring real benefits to workers by lifting the protection.