On February 17 2011 the Guangzhou Intermediate People's Court issued a white paper regarding the significant increase in employment disputes handled by the Guangzhou courts since 2008, when the Employment Contract Law came into effect. Since 2007, the total number of employment cases brought before courts in Guangzhou has more than doubled to 11,630 in 2010 (this figure does not include cases that were heard by arbitration panels). In 2010 employment cases topped all other types of civil case in terms of claims heard, accounting for nearly 15% of cases heard by Guangzhou courts. Claims related to unpaid wages, overtime payment and compensation on employment termination were the most common.
A major focus of the white paper was on collective employment claims, which refer to a dispute where three or more employees bring a joint claim against their employer. These claims are of particular concern to the government due to their potential impact on social stability. Furthermore, a collective claim may mean much higher aggregate damages against an employer, as it may encourage more employees to bring claims than would otherwise have done, based on the shared costs of a joint claim versus individual claims. For example, reports of collective claims for unpaid overtime compensation have described awards reaching millions of renminbi.
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]).