Is my PRC affiliate obliged to establish a union in the PRC for its Chinese employees?

The PRC Trade Union Law stipulates that a trade union can be established by employees on a voluntary basis. While the law prohibits an employer from obstructing or restricting its employees from setting up a trade union, the law does not require the employer to set up the union.

However, subject to local rules and local practice, it would not be uncommon to see your PRC affiliate required by the local federation of trade union or the local government to set up a company trade union.

How much do I need to pay to the union fund?

Under the PRC Trade Union Law, once the union of the company is established, the employer is obliged to make a monthly allocation of 2% of the total wages of all employees to a union fund. However, subject to the local rules and local practice, in some cities (e.g. Tianjin), all employers are required to pay to the union fund regardless of whether or not the employer has established a trade union of its own.

Are union members entitled to any specific employment protection?

Yes, the chairman and vice chairman of the union are entitled to the following protections under the PRC Trade Union Law:

  • the work position of the chairman and vice chairman cannot be changed without the approval of the union and the superior union; and
  • the term of labour contract of the chairman and vice chairman is extended until the expiry of their term of office at the trade union (which is generally three or five years).