Is the Chinese employee voice becoming louder? And how should companies trading with Chinese suppliers respond to the changing nature of China's labour force?
1. What can employers in China do about collective employee unrest?
It depends on what has provoked the tension. If a genuine dispute between staff members, unrelated to a particular employment issue, employers may have no alternative but to call the police if workers are protesting or brawling. Once initial unrest has been calmed, employers will be left to resolve underlying issues. That will almost certainly involve engaging with relevant workplace unions.
2. What if the matter involves a work dispute?
If a dispute relates to a work issue, such as employment terms and conditions, employers will typically engage with local unions to resolve it. This is likely to involve what can often be quite protracted negotiations.
Although not uncommon in the PRC, strike action is rarely prolonged. However, it is crucial to resolve matters as quickly and amicably as possible to protect reputation, particularly for disputes attracting global attention.
3. What action can employers take to resume production?
Employee handbooks in China govern the circumstances in which disciplinary action, including dismissal action, can be taken against employees. Although there are legal restrictions in the People's Republic of China (PRC) preventing unilateral dismissal of employees, it is possible to take disciplinary action against employees for misconduct if that is what the employer believes is in question.
Before unilateral termination of employees in the PRC, employers will need to notify relevant unions and give trade unions an opportunity to provide their opinion. Employers must take into account any opinion deemed reasonable. Union cooperation may not be forthcoming if, of course, the alleged misconduct is linked to a wider employee dispute.
4. Can additional workers be drafted in to keep production going?
This is difficult. There is no specific prohibition on employers using agency workers during a strike to maintain cover or production as there is in the UK, but it is not possible to take on workers 'as and when needed' in the PRC. There will be some risk that they cannot simply be terminated when the dispute is over and the 'usual' employees return to work.
5. What labour law developments in China should be on the radar?
Companies operating in the PRC can expect increased pressure to conclude collective agreements with relevant employee unions. This will give employees an increased say in how labour matters are handled. Most collective agreements are still negotiated at company level between management and employees, with a focus on salary and protection of special groups (such as female employees). How far any collective negotiation can go largely depends on the company's economic status. However the government and state-controlled All China Federation of Trade Unions' 'Rainbow Plan' sets a goal of all unionised companies covered by a collective agreement by the end of 2013. This will drive continued pressure on employers to engage with employees on a collective basis.
Kathleen Healy (pictured), employment partner, and Holly Insley, employment senior associate, currently based in the firm's Hong Kong office.