Shanghai Employee Representative Council Regulations
Guangdong Regulations on Democratic Management of Enterprises
Collective bargaining

Shanghai Employee Representative Council Regulations

On December 23 2010 the Standing Committee of the Shanghai Municipal People's Congress promulgated the Shanghai Employee Representative Council Regulations, which will take effect on May 1 2011. The regulations provide that all employers in Shanghai with more than 100 employees should (rather than 'must') establish employee representative councils. In general, employers with fewer employees should hold all-employee assembly meetings instead of employee representative council meetings to deal with matters that a council would normally consider.

Under the regulations, an employer should solicit an employee representative council's opinion or suggestions on:

  • business development plans;
  • annual management and operational results;
  • important business decisions;
  • the adoption of, or amendments to, important company rules or policies; and
  • decisions on significant matters that have a direct bearing on employees' immediate rights and interests.

Draft collective contracts must be discussed by the employee representative council and passed by a vote. If an employer fails to comply with the consultation rules when making one of the decisions described in the regulations, it may face legal challenges, although the regulations do not directly address this point.

Guangdong Regulations on Democratic Management of Enterprises

In Guangdong, the provincial government recently issued the fourth draft of its proposed Regulations on Democratic Management of Enterprises. It has made various changes to the third draft, which was published for public comment in August 2010 (for further details please see "ACFTU pushes forward on collective bargaining and democratic management"). Among other things, the draft states that:

  • private companies may (as opposed to 'must' in the third draft) establish employee representative council or employee assembly meeting systems; and
  • employee representation on the board of directors is required only in certain state-owned enterprises, not in private companies and foreign-invested enterprises.

The fourth draft also provides that striking workers are protected against termination if the strike occurs after the employer delays (or refuses to enter into) collective bargaining.

Collective bargaining

In January 2011 the All-China Federation of Trade Unions (ACFTU) announced a working plan to increase collective bargaining coverage to 60% of all types of enterprise by the end of 2011 and to more than 80% by the end of 2013, with a focus on Fortune 500 companies. This approach seems to differ from the original Rainbow Plan, which proposed that all companies with unions should implement collective bargaining agreements by the end of 2012. In Beijing, the local ACFTU branch has announced that it will target for collective bargaining enterprises that:

  • pay the minimum wage;
  • have achieved increased profits, but have not raised wage levels in line with wage increase guidelines published by the local government;
  • pay wages that are at a rate below the previous year's average market wage;
  • pay wages that are at a rate obviously below the average in the company's district or industry; or
  • are involved in a high number of labour disputes.

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]).