Wave of strikes drives collective bargaining plan - International Law Office

An increasing wave of labour unrest has left China's employers facing uncertain times. More than 10,000 workers in Shenzhen and Dongguan alone are reported to have gone on strike over the past few weeks. The high-profile actions have hit a number of multinational companies, including Hitachi, Pepsi and Citizen. Such strikes have become prevalent in companies planning shutdowns, significant reductions in business operations or relocations in response to the changing business climate. As a result, companies must be increasingly careful about how they handle these sorts of restructurings.

The workplace unrest has also provided new impetus for the Rainbow Plan proposed by the All-China Federation of Trade Union (ACFTU). Its aim is to sign collective bargaining contracts in all companies that have established a union by the end of 2012.

As part of this effort, Shenyang municipality has issued the Measures on Collective Bargaining for Wages, which took effect on December 1 2011. The measures provide that employers and employees may propose collective bargaining, and that the other party must accept the invitation within 10 days. If the employer fails to conduct collective bargaining as duly proposed by its employees, the local labour authority will record the fact and may make the company's refusal public. If the company has not been unionised, the upper-level ACFTU may guide and supervise the bargaining process. According to media reports, around 40 of the 57 Fortune 500 entities in Shenyang have signed collective bargaining agreements.

Similarly, Hunan province issued its own Provincial Measures on Collective Bargaining of Wages, which will take effect on May 1 2012. The measures clarify that if a company has a union, the employees may propose collective bargaining through the union. If the company has not established a union, the upper-level ACFTU may instruct and organise the employees to propose and conduct the collective bargaining with their employer.

In addition to passing new legislation, many local authorities have been using other means to urge collective bargaining. In Guangzhou, the municipal-level ACFTU has reportedly approached several large multinational companies to engage in collective bargaining; while in Beijing and Shanghai, the local municipal-level ACFTU has announced the recruitment and training of a group of professional collective bargaining instructors, who will be assigned to private sector companies to instruct and supervise their collective bargaining. Nearly 70 instructors have so far been trained and licensed by the Shanghai ACFTU and have started their work in their assigned companies.

For further information on this topic please contact Andreas Lauffs or Jonathan Isaacs at Baker & McKenzie's Hong Kong office by telephone (+852 2846 1888), fax (+852 2845 0476) or email (andreas.lauffs@bakermckenzie.com or jonathan.isaacs@bakermckenzie.com).