The Standing Committee of the Shanghai Municipal People's Congress has issued a draft Amendment to the Shanghai Collective Contract Provision (the "Draft"). The draft was open for public comments from 8 to 23 January 2015. Compared to the previous legislation, which was effective from 1 January 2008, the amendment is more detailed and exhaustive. It contrasts with its recently promulgated counterpart in Guangdong, effective from September 2014, which is less conservative.

The Draft's notable elements are as follows:

  1. It specifies the subjects generally covered by collective bargaining for salary, including salary distribution systems, salary standard and salary payment methods, the annual salary adjustment range, bonuses and allowances and subsidies, etc;
  2. Certain elements are entailed thereunder to be referenced for collective bargaining for salary, including enterprises' production proficiency and business performance, the total salaries and average salary of enterprises over the previous year, the workforce cost of enterprises and the industry, the average salary of the city and the industry, the guiding line for enterprises' salary increase, the minimum salary standard of the city and the urban consumption price index, etc;
  3. The Draft deals with trade secrets concerns by granting employers the right to sign a confidentiality agreement with a relevant bargaining representative;
  4. Similar to its Guangdong counterpart, under the Draft, employers and employees are subject to certain restrictive obligations. For example, enterprises are not allowed to restrict freedom of employee bargaining representatives or humiliate, threaten or physically hurt them. On the other hand, employees are forbidden to cease working, in breach of their employment contract, or to compel other employees to be absent from work or disrupt the normal working order of the employer;
  5. Under this Draft, trade collective bargaining is extended to other industries than just architecture and food & beverage. The trade union of the industry may select representatives to bargain with trade association for the execution of a trade collective contract. For the neighbourhood and industrial parks where small and micro-sized enterprises which are not capable of collective bargaining are located, the related trade unions are entitled to select representatives for collective bargaining and execute a regional collective contract; and
  6. In light of disputes that occur in the course of collective bargaining, the Draft prescribes that employees and enterprises may seek instruction from the upper-level trade union and enterprise association to achieve resolution. This differs from previous legislation where the local labour authority would be the sole organisation responsible for the resolution of a dispute.

There is a sense that the Draft in some ways mirrors the latest Guangdong Provisions on Collective Contract but it falls short of provisions on mechanisms to start collective bargaining and deadlines for the completion of collective bargaining. That being said, both Shanghai and Guangdong Provisions discussed set out that in the course of collective bargaining, employees are not allowed to cease work or compel co-workers to be absent from work in breach of their employment contracts or employers' internal rules. In this sense, the government is making an effort to encourage collective bargaining and collective contract executions to the extent that strikes are actively discouraged.