PRC Law on the Mediation and Arbitration of Employment Disputes

Article 2: This Law shall govern the following types of employment disputes arising between employers and workers in the People's Republic of China:

(1) disputes arising in connection with the confirmation of employment relationships;

(2) disputes arising in connection with the conclusion, performance, amendment, termination and ending of employment contracts;

(3) disputes arising in connection with dismissals/ layoffs, resignations and quitting without notice;

(4) disputes arising in connection with working hours, rest, leave, social insurance, benefits, training or labour protection;

(5) disputes arising in connection with work remuneration, medical expenses for work-related injuries, severance pay or compensation, etc.; and

(6) other employment disputes as specified in laws and regulations.

Article 3: Employment disputes shall be resolved based on the facts, the principles of lawfulness, impartiality, timeliness and emphasis on mediation shall be complied with and the lawful rights and interests of the concerned parties shall be protected in accordance with the law.

Article 4: When an employment dispute arises, the worker may either hold consultations with the employer or request the labour union or a third party to jointly hold consultations with the employer in an effort to reach a settlement agreement.

Article 5: If an employment dispute arises and either party is unwilling to hold consultations or the consultations are unsuccessful or a settlement agreement is reached but is not performed, an application may be made to a mediation organization for mediation. If either party is unwilling to undergo mediation or the mediation is unsuccessful or a mediation agreement is reached but is not performed, an application may be made to an employment arbitration commission for arbitration. If a party is dissatisfied with the arbitral award, a legal action may be instituted in a people's court unless otherwise specified herein.

Article 6: When an employment dispute arises, the parties shall bear the burden of proof in support of their claims. If evidence relating to the disputed matter is in the control of the employer, the employer shall provide such evidence. If the employer fails to provide the evidence, it shall bear the adverse consequences.

Article 7: If there are least 10 workers involved in an employment dispute and they have identical claims, they may select a representative to participate in the mediation, arbitration or litigation activities.

Article 8: The labour administrative authority of a people's government at the county level or above shall, in concert with the representatives of labour unions and enterprises, establish a tripartite employment relationship harmonization mechanism to jointly consider and resolve major issues in employment disputes.

Article 9: If an employer violates state laws by being in arrears in the payment of or not paying in full work remuneration or being in arrears in the payment of medical expenses for a work-related injury, severance pay or compensation, the worker may lodge a complaint with the labour administrative authority and the labour administrative authority shall deal with the matter in accordance with the law.

PART TWO: MEDIATION

Article 10: When an employment dispute arises, a party may apply to any of the following mediation organizations for mediation:

(1) the enterprise's employment dispute mediation committee;

(2) a grassroots people's mediation organization established in accordance with the law; or

(3) an organization with an employment dispute mediation function established in the township, town or neighborhood.

An enterprise's employment dispute mediation committee shall be composed of representatives of the employees and of the enterprise. Members of the labour union shall serve as employee representatives or such representatives shall be selected by all of the employees. The representatives of the enterprise shall be designated by the person in charge of the enterprise. A member of the labour union or someone selected by both parties shall serve as the chairman of the enterprise's employment dispute mediation committee.

Article 11: The mediators of an employment dispute mediation organization shall be adult citizens who are impartial, just, in contact with the masses, are enthusiastic in mediation work, have a substantial knowledge of the law, are familiar with policies and have an adequate educational level.

Article 12: When applying for the mediation of an employment dispute, a party may do so either in writing or orally. If the application is made orally, the mediation organization shall record on the spot the applicant's particulars, the disputed matter for which mediation is being applied, the grounds and the date.

Article 13: When mediating an employment dispute, the parties' statements on the facts and grounds shall be closely listened to, the parties shall be patiently guided toward a solution and they shall be assisted in reaching an agreement.

Article 14: If an agreement is reached through mediation, a written mediation agreement shall be drawn up.

The mediation agreement shall be signed or stamped by the parties, and, after the mediators affix their signatures and the seal of the mediation organization thereto, it shall enter into effect, be binding on both parties and the parties shall perform the same.

If a mediation agreement cannot be reached within 15 days from the date on which the mediation organization received the application for mediation, either party may apply for arbitration in accordance with the law.

Article 15: If, after a mediation agreement is reached, a party fails to perform the same by the deadline specified therein, the other party may apply for arbitration in accordance with the law.

Article 16: If a mediation agreement is reached in respect of the payment of outstanding work remuneration, medical expenses for a work-related injury, severance pay or compensation and the employer fails to perform such agreement by the deadline specified therein, the worker may, on the strength of the mediation agreement, apply to a people's court for a payment order in accordance with the law. The people's court shall issue such order in accordance with the law.

PART THREE: ARBITRATION

Section One: General Provisions

Article 17: Employment arbitration commissions shall be established based on the principles of master planning, rational distribution and meeting actual demands. The people's government of a province or autonomous region may decide to establish such commissions in cities and counties and the people's government of a municipality directly under the central government may decide to establish such commissions in districts and counties. Municipalities directly under the central government and cities divided into districts may also establish one or more employment arbitration commissions. Employment arbitration commissions shall not be established hierarchically at each level in line with administrative divisions.

Article 18: The State Council's labour administrative authority shall formulate arbitration rules in accordance with the relevant provisions hereof. The labour administrative authorities of people's governments of provinces, autonomous regions and municipalities directly under the central government shall guide the arbitration of employment disputes in their jurisdictions.

Article 19: Employment arbitration commissions shall be composed of representatives of the labour administrative authority, labour unions and enterprises. An employment arbitration commission shall be composed of an odd number of members.

An employment arbitration commission shall perform the following duties in accordance with the law:

(1) engaging and dismissing full-time and part-time arbitrators;

(2) accepting employment dispute cases;

(3) discussing major or difficult employment dispute cases; and

(4) monitoring arbitration activities.

An employment arbitration commission shall have a general office that shall be responsible for handling the day-to-day work of the commission.

Article 20: An employment arbitration commission shall have a list of arbitrators.

An arbitrator shall be impartial, just and satisfy any of the following conditions:

(1) having formerly served as a judge;

(2) being engaged in legal research or teaching and having a mid-level or higher title;

(3) having legal knowledge and having engaged in professional work, such as human resources management or labour union work for at least five years; or

(4) being a lawyer who has been in practice for at least three years.

Article 21: An employment arbitration commission shall be responsible for the employment disputes arising in its jurisdiction.

The employment arbitration commission of the place where an employment contract is being performed or of the place where the employer is located shall have jurisdiction over an employment dispute. If either of the parties applies for arbitration to the employment arbitration commission of the place where the employment contract is being performed and the other party applies to that of the place where the employer is located, the employment arbitration commission of the place where the employment contract is being performed shall have jurisdiction.

Article 22: The worker and the employer between whom an employment dispute has arisen shall be the parties to the employment arbitration case.

If an employment dispute arises between a worker and either the temp agency that placed him/her or his/her employer, the temp agency and the employer shall be a joint party.

Article 23: A third party with a material interest in the outcome of an employment dispute case may apply to participate in the arbitration activities or the employment arbitration commission may notify it to participate in the arbitration activities.

Article 24: A party may appoint an agent to participate in the arbitration activities on his/her/its behalf. If an agent is appointed to participate in the arbitration activities, such agent shall submit to the employment arbitration commission the power of attorney signed or stamped by the principal. The power of attorney shall specify the entrusted matters and the agent's authority.

Article 25: A worker who has lost all or part of his/her civil capacity shall be represented in the arbitration activities by his/her statutory agent. If he/she does not have a statutory agent, the employment arbitration commission shall designate an agent for him/her. If a worker is dead, a close family member or his/her agent shall participate in the arbitration activities.

Article 26: Employment arbitration proceedings shall be conducted in public, unless the parties have agreed that they not be conducted in public or if state secrets, trade secrets or private matters are involved.

Section Two: Application and Acceptance

Article 27: The time limit for applying for arbitration in an employment dispute shall be one year. Such time limit shall commence to count from the date on which the party learnt or ought to have learnt that his/her/its rights were infringed.

The time limit for arbitration specified in the preceding paragraph shall be interrupted if a party asserts his/her/its rights against the other party, or applies for relief to the relevant authority, or the other party agrees to perform his/her/its obligation, and shall commence to count again from the time of the interruption.

If a party is unable to apply for arbitration before the expiration of the time limit for arbitration specified in the first paragraph of this Article due to force majeure or other legitimate reason, the time limit shall be suspended. Counting of the time limit shall resume from the date on which the reason for the suspension is eliminated.

If a dispute over unpaid work remuneration arises during the term of an employment relationship, an application for arbitration by the worker shall not be subject to the time limit specified in the first paragraph of this Article. However, if the employment relationship has ended, the application shall be submitted within one year from the date on which the employment relationship ended.

Article 28: When applying for arbitration, the applicant shall submit a written arbitration application and copies thereof in a number equivalent to the number of respondents.

An application for arbitration shall specify the following particulars:

(1) the worker's name, sex, age, profession, work unit and address, the employer's name, domicile and the name and position of its legal representative or main person in charge;

(2) the arbitration claims and the facts and ground on which they are based; and

(3) the evidence, the source of the evidence and the names and addresses of witnesses.

If submitting a written arbitration application would be genuinely difficult, an application may be made orally, in which case the employment arbitration commission shall make a written record thereof and inform the other party.

Article 29: An employment arbitration commission shall accept an arbitration application and notify the applicant thereof within five days from the date of receipt of the application, if it deems it to satisfy the conditions for acceptance. If it deems the application as not satisfying the conditions for acceptance, it shall notify the applicant thereof in writing and state the reasons. If the employment arbitration commission refuses to accept the application or fails to render a decision by the expiration of the time limit, the applicant may institute a legal action in a people's court in respect of the disputed employment matter.

Article 30: The employment arbitration commission shall serve a copy of the arbitration application on the respondent within five days after the acceptance thereof.

The respondent shall submit his/her/its statement of defence to the employment arbitration commission within 10 days after receipt of the copy of the application for arbitration. The employment arbitration commission shall serve a copy of the statement of defence on the applicant within five days after the receipt thereof. The failure by the respondent to submit a statement of defence shall not affect the conduct of the arbitration proceedings.

Section Three: Hearing and Award

Article 31: The arbitration tribunal system shall be implemented when an employment arbitration commission decides an employment dispute case. The arbitration tribunal shall be composed of three arbitrators and have a chief arbitrator. Simple employment dispute cases may be arbitrated by a sole arbitrator.

Article 32: The employment arbitration commission shall notify the parties of the composition of the arbitration tribunal within five days from the date of acceptance of the application for arbitration.

Article 33: An arbitrator shall recuse himself/herself, or, alternatively, a party shall have the right to challenge an arbitrator orally or in writing if:

(1) the arbitrator is a party in the case or a close family member of a party or his/her/its agent;

(2) the arbitrator has a material interest in the case;

(3) the arbitrator has another relationship with a party in the case or his/her/its agent that could affect his/her impartial rendering of an award; or

(4) the arbitrator has privately met with a party or his/her/its agent or has been entertained or given a gift by a party or his/her/its agent.

The employment arbitration commission shall promptly render a decision on a challenge and notify the parties thereof orally or in writing.

Article 34: If one of the circumstances specified in Item (4) of Article 33 hereof obtains in respect of an arbitrator, or if he/she has solicited a bribe, accepted a bribe, practised favouritism by committing fraud or perverted the law in rendering the award, he/she shall bear legal liability in accordance with the law. The employment arbitration commission shall dismiss him/her.

Article 35: The arbitration tribunal shall notify the parties in writing of the date and place of the hearing five days before such hearing. If a party has a legitimate reason, he/she/it may request a postponement of the hearing three days before such hearing. The decision on whether or not to postpone the hearing shall be made by the employment arbitration commission.

Article 36: If the applicant, after receipt of the written notice, refuses to appear for the hearing without a legitimate reason or withdraws from the hearing early without the consent of the arbitration tribunal, he/she/it shall be deemed to have withdrawn his/her/its application for arbitration.

If the respondent, after receipt of the written notice, refuses to appear for the hearing without a legitimate reason or withdraws from the hearing early without the consent of the arbitration tribunal, a default award may be rendered.

Article 37: If the arbitration tribunal deems an expert assessment of a specialized issue necessary, it may turn such issue over to an assessment institution agreed upon by the parties for an expert assessment. If the parties have not agreed upon or are unable to reach agreement on an expert assessment institution, the arbitration tribunal shall designate the expert assessment institution to carry out the expert assessment.

At the request of a party or as required by the arbitration tribunal, the expert assessment institution shall assign an expert assessor to participate in the hearing. Subject to permission given by the arbitration tribunal, the parties may question the expert assessor.

Article 38: In the course of the arbitration proceedings, the parties shall have the right to carry out cross-examinations and argue their cases. After the conclusion of the cross-examinations and arguments, the chief arbitrator or sole arbitrator shall ask the parties for their closing comments.

Article 39: Once evidence submitted by a party has been ascertained to be genuine, the arbitration tribunal shall treat the same as a basis for determining the facts.

If the worker is unable to provide evidence in the control of his/her employer that relates to his/her arbitration claims, the arbitration tribunal may require the employer to provide such evidence within a specified period of time. If the employer fails to provide the same by the designated deadline, it shall bear the adverse consequences.

Article 40: The arbitration tribunal shall keep a written record of the hearing. If a party or another arbitration participant is of the opinion that there are omissions or errors in the record of his/her statements, he/she shall have the right to apply to have the same corrected or supplemented. If correction or supplementation of the record is withheld, the application shall be placed on the record.

The record shall be signed or stamped by the arbitrators, the clerk, the parties and the other arbitration participants.

Article 41: The parties may reach a settlement themselves after they have applied for the arbitration of an employment dispute. If they reach a settlement agreement, the application for arbitration may be withdrawn.

Article 42: Before rendering the award, the arbitration tribunal shall first attempt to mediate the dispute.

If an agreement is reached through the mediation, the arbitration tribunal shall draw up a mediation document.

The mediation document shall specify the arbitration claims and the results of the agreement between the parties. The arbitrators shall sign and affix the seal of the employment arbitration commission to the mediation document and serve the same on the parties. The mediation document shall become legally effective once the parties sign in receipt thereof.

If the mediation is unsuccessful or one of the parties reneges before the service of the mediation document, the arbitration tribunal shall render an award in a timely manner.

Article 43: When an arbitration tribunal arbitrates an employment dispute case, such case shall conclude within 45 days from the date on which the employment arbitration commission accepted the application for arbitration. If a case is complicated and an extension is required, subject to the approval of the chairman of the employment arbitration commission, the time limit may be extended for a period not to exceed 15 days, and the parties shall be notified in writing thereof. If, at the expiration of the time limit, an arbitral award has not been rendered, a party may institute a legal action in a people's court in respect of the disputed employment matter.

If in the course of arbitrating an employment dispute case certain facts have become clear, the arbitration tribunal may first render an award in respect of such facts.

Article 44: In a case where recovery of work remuneration, medical expenses for a work-related injury, severance pay or compensation is sought, the arbitration tribunal may, pursuant to an application by a party, render an award for advance execution and transfer the case to a people's court for enforcement.

To render an award for advance execution, the case shall satisfy the following conditions:

(1) the relationship of rights and obligations between the parties is clear; and

(2) failure to grant advance execution would grievously affect the livelihood of the applicant.

When a worker applies for advance execution, he/she shall not be required to provide security.

Article 45: The award shall be rendered based on the opinion of the majority of the arbitrators, and the minority opinion shall be recorded in the written record. In the event the arbitration tribunal is unable to reach a majority opinion, the award shall be rendered based on the opinion of the chief arbitrator.

Article 46: The award shall specify the arbitration claims, the facts of the dispute, the grounds for the award, the findings of the award and the date of the award. The arbitrators shall sign and affix the seal of the employment arbitration commission to the award. An arbitrator who disagrees with the award may choose to sign or not sign the award.

Article 47: An arbitral award rendered in the following types of employment disputes shall be final and become legally effective on the date it is rendered, unless otherwise specified herein:

(1) a dispute over the recovery of work remuneration, medical expenses for a work-related injury, severance pay or compensation where the amount does not exceed the equivalent of 12 months of the local minimum monthly wage rate; or

(2) a dispute over the implementation of state labour standards with respect to working hours, rest, leave, social insurance, etc.

Article 48: If a worker is dissatisfied with an arbitral award as specified in Article 47 hereof, he/she may institute a legal action in a people's court within 15 days from the date of receipt of the arbitral award.

Article 49: An employer may, within 30 days from the date of receipt of the arbitral award specified in Article 47 hereof, petition the intermediate people's court of the place where the employment arbitration commission is located for vacation of such award if it has evidence demonstrating that:

(1) there genuinely was an error in the application of a law or regulation;

(2) the employment arbitration commission did not have jurisdiction;

(3) the statutory procedure was violated;

(4) the evidence on which the award is based was fabricated;

(5) the other party concealed evidence that was sufficient to affect the rendering of an impartial award; or

(6) an arbitrator, in the arbitration of the case, solicited a bribe, accepted a bribe, practised favouritism by committing fraud or perverted the law in rendering the award.

The people's court shall vacate the award if, after forming a collegiate bench and examination, it is determined that one of the circumstances specified in the preceding paragraph obtained in respect of the award.

If the people's court rules to vacate the arbitral award, a party may institute a legal action in a people's court in respect of the disputed employment matter within 15 days from the date of receipt of the ruling.

Article 50: If a party is dissatisfied with the arbitral award rendered in an employment dispute case other than that specified in Article 47 hereof, he/she/it may institute a legal action in a people's court within 15 days from the date of receipt of the award. If no legal action is instituted by the expiration of the time limit, the award shall become legally effective.

Article 51: The parties shall perform by the specified deadline a mediation document or award that has become legally effective. If a party fails to perform such mediation document or award by the specified deadline, the other party may apply for enforcement thereof to a people's court in accordance with the relevant provisions of the Civil Procedure Law. The people's court that accepted the application shall enforce such mediation document or award in accordance with the law.

PART FOUR: SUPPLEMENTARY PROVISIONS

Article 52: If an employment dispute arises between a public institution that implements the employment system and a member of its working personnel, matters shall be handled in accordance herewith, unless otherwise provided in laws or administrative regulations or by the State Council, in which case such provisions shall apply.

Article 53: No fee shall be charged for the arbitration of employment disputes. The funding of employment arbitration commissions shall be secured from fiscal funds.

Article 54: This Law shall be effective as of May 1 2008.