BEIJING, Dec. 29 (Xinhua) -- China's top legislature adopted a law on labor dispute mediation and arbitration on Saturday aimed at "fair and timely" settlement of disputes and lower costs for workers seeking to safeguard their rights. The new law takes effect on May 1, 2008.

    After three readings, the law was approved by lawmakers attending the weeklong 31st session of the Standing Committee of the National People's Congress (NPC).

    "To solve labor disputes fairly and in a timely way, the law has strengthened the role of grassroots mediation institutions, improved the arbitration system, and clearly stated that labor dispute arbitration is free of charge," said Wu Bangguo, the NPC Standing Committee chairman, who presided over the closing session.

    "It will shorten the cycle of labor dispute settlement, lower the cost for laborers to safeguard their lawful rights, and is conducive to the development of a harmonious relations between employees and employers."

    The new law has four chapters and 54 clauses, and it follows the labor contract law and the law on employment promotion in being approved this year to improve China's labor systems.

    It stipulates that when workers file a complaint, authorities in charge of labor affairs should deal with employers that underpay or fail to pay wages, other compensation or medical fees for job-related injuries.

    Figures from the NPC Law Committee show that about 30 percent of labor disputes concern pay, with delayed payment a prominent issue at year end.

    Some NPC Standing Committee members said many labor disputes could have been avoided if the authorities in charge of labor affairs had intensified supervision of companies and dealt with major violations in a timely way.

    Under the arbitration law, an organization is entitled to establish its own labor mediation committee to solve internal disputes at its own level. Such a committee should include employees and management representatives.

    When disputes occur, litigants can either turn to such a committee or grassroots people's labor dispute mediation organizations, the law says.

    Further, disputes concerning pay, medical fees or work-related injury compensation can be settled by arbitration if the amount is less than 12 months of the local minimum monthly wage. The arbitration award will have the effect of law. Similar provisions apply to disputes over working time, holidays and social insurance.

    "The law is intended to help solve labor disputes fairly without going to court," Li Yuan, an official with the NPC Law Committee, told a press conference held after the conclusion of the session.

    China's modern labor arbitration system began in 1987, leading to the establishment of procedures to cope with labor disputes through the steps of "mediation, arbitration and trial." Regulations on labor-management disputes and the Labor Law were promulgated in 1993 and 1994.

    The procedures and practices for dealing with labor disputes have won wide public acceptance.

    According to NPC statistics, labor disputes have risen continuously in recent years. Those statistics also show that labor dispute arbitration organizations at various levels dealt with 1.72 million cases involving 5.32 million employees from 1987through 2005, with a growth rate of 27.3 percent annually.

    However, there are problems with the arbitration system. For instance, arbitrators are rarely professionally trained and thus lack credibility. Further, although arbitration is supposed to be cheaper than going to court, the actual process is often long and therefore expensive.