Employees will be first in line for pay-outs -- ahead of tax offices and debtors -- if their company goes bust under a draft Corporate Bankruptcy Law in front of China's legislature.

Workers' salaries, medical insurance and job-related injury benefits should be paid first a business files for bankruptcy, before paying off overdue taxes and business debts, under the proposed law.

Jiang Qiangui, deputy head of the legal affairs committee of the National People's Congress, said outstanding salaries were fixed costs and the risks of paying them first were predictable and controllable.

Wang Xinxin, a law professor with the Beijing-based People's University, however, warned that the main role of a bankruptcy law was to protect the legal rights and interests of creditors and debtors.

The protection of workers' rights and interests should be covered by an improved social security system.

Bankruptcy laws have been slow to take effect in China, but laws on state-run companies took effect in 1986, followed by a civil procedure process for non-state companies in 1991.

Source: Xinhua