On September 28, 2014, Standing Committee of Guangdong People's Congress released the amended Regulations of the Guangdong Province on Collective Contracts of Enterprises (“Regulations”). The Regulations will take effect from January 1, 2015. There are a number of highlights in the Regulations. For example, the employees can demand salary increase through salary collective negotiation; the collective negotiation can be initiated when more than half of the employees or of the employee representatives of the employee congress request negotiation; and the collective negotiation must be peaceful and reasonable and must maintain the normal business of the enterprise. This article will focus on the provisions regarding salary collective negotiation in the Regulations and will advice on how enterprises should deal with the salary collective negotiation.

1 Salary Collective Negotiation System

Article 9, 10 and 11 provide the salary collective negotiation system, which includes the principle, content, demand of the negotiation and factors to be considered during the negotiation.

According to the Regulations, the salary collective negotiation must abide by the principle of distribution according to performance and equal pay for equal work. The matters which can be negotiated include standard of salary, distribution method, payment method, annual average salary and the range and the method of the adjustment of annual average salary, salary during the probation period and sick leave or leave for personal reasons, etc. Factors to be considered during the negotiation include the labor capacity and economic efficiency, the total salary and the average salary of the employee in the previous year, the guideline of local enterprise’s salary, the guide price of the labor market, consumer price index, minimum salary standard, the average increase of the salary in relevant industry and area. Both the enterprises and the employees can initiate salary collective negotiation. The request could be to increase salary, to maintain the current salary or decrease the salary.

2 Predictions about Tendency

Generally speaking, salary is the matter that is most closely related to employee’s interest and is also the area where disputes frequently arise. According to our observation, the consciousness of rights safeguarding of employees in Guangdong Province persistently increased during the past several years. But there are limited measures available to these employees. Many employees do not resort to legal approach to protect their rights but choose to “make the affair bigger” or to make mass disturbance, which result in disadvantages to both parties and pressure of maintaining stability of the local government.

The Regulations is expected to provide a channel for the employees to protect their rights. What is especially worth attention is that the Regulations provide the employee with the rights to unilaterally initiate the collective negotiation. It can be predicted that employees will have initiatives in the salary collective negotiation and may actively initiate relevant procedures, which may lead the enterprise to enter the negotiation procedure without choice.

3 Advice on How to Deal With Salary Collective Negotiation

To meet the challenges brought by the Regulations, enterprises in Guangdong Province should establish and perfect collective negotiation on salary and organize skilled and experienced persons to respond to employee’s request of collective negotiation on salary. Apart from negatively respond to employee’s request of collective negotiation on salary, the enterprise can request to negotiation on the decrease of the salary when the enterprise is in deficit. It provides a solution to the enterprise which is managed poorly and is helpful for the development of enterprise.

Collective negotiation on salary does not mean that employees can demands an outrageous price. Employee’s demand of increase of salary must be based on the profits of enterprise, local guide line of salary and the salary level of the same industry at the same area. Also, collective negotiation on salary is not equal to giving up of profit. A peaceful, reasonable and successful negotiation on salary is a win-win: enterprise wins the cohesion of the employee and higher product efficiency; and the employee wins the increase of salary and the sense of belonging to the enterprise.