On 13 November 2014, the 3rd district court of Dongguan Guangdong (a city located in southern China) issued a research report on malicious actions arising from labour disputes. The report indicates that between 2012 and 2014, the court accepted 23 presumed malicious lawsuits from employees of labour-intensive enterprises. Although the number of lawsuits during this period has remained stable when compared to previous periods, the sums claimed are drastically increasing, with the total amount claimed by employees between 2012 and 2014 reaching RMB 45,000,000. Additionally, the types of claim issued are becoming more diverse. In the past, cases mainly related to claims for unpaid wages, whilst more recently, cases have included claims for compensation for annual leave, unpaid social insurance, double-month salaries, severance pay, unpaid allowances and subsidies.
The increased variety and value of malicious claims being issued may be attributable to the fact that there is no cost for an employee to submit a claim or make an application for arbitration to a court or tribunal against his or her employer, even if he or she is not successful. This means that some unscrupulous employees are able to pursue claims with little or no merit, without significant financial or legal risk. The 23 cases detailed in the report mainly concerned workers who repeatedly issued employment-related claims against multiple enterprises in order to obtain unwarranted financial compensation.
The report may prompt legislators to take steps to improve the courts' powers to impose penalties on individuals who bring these types of malicious legal action. In the meantime, employers are advised to review and improve their internal rules and policies to protect themselves as far as possible from employees seeking to take advantage of poor management for their own personal gain.