The Guangzhou Intermediate People’s Court recently issued the White Paper on the Litigation of Labor Dispute (2011-2013). The White Paper summarized the labor dispute cases in Guangzhou from 2011 to 2013. The main points are as follows:

  1. Among the cases accepted by the Guangzhou Intermediate People’s Court, 64% deal with social insurance. New types of disputes, such as those involving labor dispatch or equal payment for equal work, have also been emerging;
  2. A large number of labor dispute cases arose due to nonstandard employment practices, such as:
  1. Failure to go through the democratic process when formulating internal policies;
  2. Failure to publicize or inform employees of the contents of internal policies;
  3. Failure to clearly agree on the calculation of overtime hours and overtime pay;
  4. Failure to establish a salary record;
  5. Failure to establish a standard work attendance system;
  1. Malicious actions due to lack of integrity have been on the rise, such as:
  1. Employers misrepresenting, concealing or forging evidence, and employees refusing to sign a employment contract but claiming doubled salary afterwards on the ground of the lack of written employment contract;
  2. Employees agreeing to obtain cash in lieu of social insurance, but terminating the employment contract afterwards and claiming economic compensation on the ground that the employer did not contribute social insurance;
  3. Employees asking employers to issue salary certificates which untruthfully indicate a higher salary to purchase a house or for other reasons, but claiming for the salary differences based on such certificates after leaving the company;
  1. Collective labor disputes which are brought to the arbitration committee have increased in number, and accounted for 40.8% of the total labor dispute arbitration cases. However, the number of collective labor disputes which are brought to the court has decreased. The main reasons are the multiple measures adopted by the local government, the People’s Court and the arbitration committee, including mediation before lawsuit, which have resolved many collective labor disputes in a timely manner.

Concerning the aforementioned problems, the Guangzhou Intermediate People’s Court put forward some suggestions and solutions, including strengthening the function of labor unions, establishing a labor dispute resolution mechanism in cooperation with multiple parties, increasing the punishment on parties who bring a lawsuit in bad faith, building an employment history profile to record bad behaviors, etc.

KWM Comment: The amount of lawsuits launched in bad faith, as mentioned in the White Paper, is worth noting for employers. When managing employees, employers should be cautious to prevent actions taken in good faith from being taken advantage of by employees.