Union Establishment and Labor Unrest:
What Every Employer Doing Business
in China Needs to Know
December 8 and 9, 2010
Wang Dongpeng
Jeffrey Wilson
Unions
Unions—Key Concepts
• All-China Federation of Trade Unions
(ACFTU)—unitary structure
• ACFTU independent, but must uphold the
leadership of the CCP
• “Enterprise unions”
• Leadership from the “upper-level” union
• Employers must pay 2% of total payroll to
fund a union
Roles of Unions
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•
•
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Represent interests of employees
Preserving harmony / social stability
Mediating disputes
Monitoring companies for employmentrelated compliance
Powers of Unions
• Right to notice before employee dismissal
• Consultation rights
– Company policies
– “material employee-related matters”
– restructuring or “important operational issues”
• Demand collective bargaining
Union Establishment
• Unionization campaigns and targets
• Must a company have or establish a union?
• Establishment procedures
Management Strategies
• Unions Establishment
– Ignoring
– Circumvention
– Compliance
• Types of Unions
– “Paper” Unions
– “Social Welfare” Unions
– “Integrated” Unions
Other Employee Groups
• Employee Representative Congress
• Employee Assembly
• Employee Welfare Clubs
Strikes and Workplace Unrest
Strikes and Workplace Unrest
• Are strikes legal?
• What are the employees demanding?
– Basic rights
– Interests
Strikes and Workplace Unrest
• What actions should be taken immediately?
– Notify the authorities
– Identify employee representatives
– Reach temporary agreement to get facilities
back on line
Strikes and Workplace Unrest
• Settling a strike
– Involvement of the authorities
• ACFTU
• Labor Bureau
– Negotiations with employee representatives
– Company issues announcement or
agreement is signed
Strikes and Workplace Unrest
• What actions can be taken by an employer?
– Salary deductions
– Termination of striking employees
– Hiring of replacement workers
– Lockouts
Strikes and Workplace Unrest
• Common Employer Mistakes
– Not having ready crisis team, plan, and
procedures
– Lack of local government relationships
– Underestimating ability of employees to
independently organize and negotiate
– Calling in outside security
– Appearing too strong or too weak
Steps to Avoid Unrest
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•
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Compliance with labor standards
Compliance with government policy
Competitive compensation and benefits
Responsive HR policies and grievance
procedures
• Communication channels with employees
Steps to Avoid Unrest
• Consider establishing employee
representative congress
• Consider establishing and encouraging
“integrated” union
• Consider entering into collective contract
Collective Wage Bargaining
Collective Wage Bargaining
• Why the push?
– Unbalanced income distribution
– Economic crisis and inflation
– Boost domestic demand
– Changing structure of Chinese economy
– Strikes and work slowdowns
Collective Wage Bargaining
• “Rainbow Plan”
– Collective contract targets
– Legislative proposals
Collective Wage Bargaining
• Does an employer have to:
– negotiate?
– enter into a collective contract?
– raise salaries?
Collective Wage Bargaining
• Procedures
– Either party may demand negotiations
– Employee negotiators selected by union or employee
assembly or employee representative congress
– Negotiate in good faith
– Draft contract submitted to employee assembly or
ERC for approval
– Sign collective contract
– Submit contract to labor bureau for review
Collective Wage Bargaining
• References to determine salary increases
– Salaries in different geographical areas
– Salaries in the same industry
– Company profits
– Inflation indexes
– Government salary increase guidelines
Collective Wage Bargaining
• Uncertainties
– Government attitude
– Stance of trade union
– Lack of clear laws
– Economic and social conditions
Questions?