New labour measures adopted by the Standing Committee of the Beijing Municipal People’s Congress are likely to impose additional costs and further administrative burdens on companies in Beijing.
Some of the key components in the Measures for Implementing the Labour Union Law, which took effect at the beginning of this year, include the following:
Penalties for violation
If a company breaches the measures – for example, by obstructing employees from establishing a union, refusing to engage in the collective bargaining process, etc. – the authorities may demand that the company rectify the breach. If the company still fails to comply, the labour bureaus may include this information in their records, and the administrations for industry and commerce may include this in the public credit information index. This may potentially limit the company’s ability to participate in government procurement activities, bid for government projects and receive government subsidies.
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Notification in mass lay-offs
Mass lay-offs in Beijing would become more onerous under the measures than elsewhere in China. The Labour Union Law does not require a company to convene an employee representation council or an all-employee meeting for the purpose of discussing the mass lay-off plan, particularly if the company already has a union.
However, the measures issued by Beijing provide that the company should inform all employees of the mass lay-off plan “through an employee representative council or through an all-employee meeting”, as well as listen to the opinions of the company union or all employees.
Collective bargaining
It appears that the measures mean a company is obliged to conduct collective bargaining regardless of any difficulties, if the employees present such a request.
Under the new national law, and local regulations in Shanghai and several other cities, the company may refuse to engage in collective bargaining for a “justifiable reason”. The term “justifiable reason” is not defined in the law but is generally interpreted very narrowly – for example, the company is about to be shut down.
The measures, in contrast, provide that if the company union or other employee representatives request collective bargaining, the company cannot refuse or delay the bargaining for any reason.
Union fee
In the past, the local Beijing tax authorities and Beijing chapter of the All-China Federation of Trade Unions has tried to push all companies without a union to pay a union preparation fee, but the new measures have made it clear that only companies that have begun the union establishment process need to pay such a fee.
According to the new regulations, if the employees have shown a willingness to establish a company union, then the company should pay a union preparation fee, which should be equivalent to 2% of the company’s total salary, from the date when the upper-level union starts to provide assistance in establishing the union.
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Business Law Digest is compiled with the assistance of Baker & McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker & McKenzie by e-mailing Danian Zhang (Shanghai) at:danian.zhang@bakermckenzie.com
