On August 4 2011 the Shanghai Human Resources and Social Security Bureau issued its Rules for the Mediation of Collective Bargaining Disputes. The rules outline the actions that labour bureaux may take to facilitate collective bargaining between the employer and the employees (or labour union). Under these rules, the labour bureau in charge may:

  • convene a meeting to consider each party's arguments;
  • investigate the reasonableness of the parties' positions on the disputed issue or issues; and
  • engage a third party to assess the reasonableness of each party's position.

The labour bureau will then provide an opinion on any outstanding issues on which the parties cannot agree. Although the opinion will not be legally binding on the parties, it is likely to have a significant impact. For example, if the employer does not follow the opinion, it may face certain consequences. Employees may turn the opinion against the employer if - using an increasingly common tactic - they disclose the dispute to the media. In the worst-case scenario, if the employees initiate a collective action, such as a strike, the relevant local authority - which will generally be the labour bureau - may be more sympathetic to the employees. It may side with the employees or refuse to intervene in the dispute. Such a decision could have serious implications for the employer, as labour bureau intervention is often crucial to the resolution of long-term strikes.

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 ([email protected] or [email protected]).