6.1 Legislation in brief
The key pieces of legislation governing industrial relations in China are the Trade Union Law, the Labour Law, and the Labour Disputes Mediation and Arbitration Law.
6.2 Role of trade unions and collective agreements
The Trade Union Law provides for the formation of trade unions in all enterprises, regardless of the number of employees working in the enterprise. The All-China Federation of Trade Unions is a quasi-governmental body responsible for assisting the establishment of enterprise-level trade unions. Trade unions can be an important tool for labour authorities to resolve labour problems. In addition, employers are required to consult with trade unions in many circumstances (eg formulation and amendment of certain policies, large-scale retrenchments, unilateral termination of employment contract, extension of working hours etc).
Following the introduction of the Employment Contract Law, there are particularly onerous consultation obligations with regard to workplace rules and regulations and other matters affecting employees. Employers are required to consult with the employee representative congress or all the employees in the first instance, followed by consultation with the labour union (if in place).
Collective agreements are written agreements which address overall terms of employment for employees at a particular enterprise. The trade union of a particular enterprise is empowered to sign the agreement on behalf of employees. Collective agreements may be comprehensive or they may relate only to one or several specific issue or issues. They operate alongside the individual employment contract. It is not mandatory for an employer to sign a collective agreement with employees.
6.3 Industrial action and disputes
In practice, employees are not permitted to strike in the PRC, although it is not expressly prohibited by law.
Industrial disputes may be resolved through mediation, arbitration or litigation. The Labour Disputes Mediation and Arbitration Lawprescribes the relevant processes that apply. This law, which came into effect on 1 May 2008, sought to streamline the previous labour dispute regime, to lower costs and provide for the resolution of labour disputes in a fair and timely manner. Under the legislation, mediation is a mandatory requirement before arbitration. In case the mediation fails, labor dispute arbitration may be further initiated, and an arbitral award will be given. If not satisfied with the arbitral award, either the employer or the employee may then file a lawsuit with the court.