With regard to the role of the trade union more generally, the trade union law provides for significant union involvement in the business of the employer. In particular, Article 38 of the Law provides that when discussing major issues on operation, management and development, the employer must listen to the views of the union. In addition, the union has the right to have a representative in attendance in any meeting to discuss wages, welfare, occupational safety and health, social insurance and other questions related to the immediate interests of the workers and staff members.

Pattie Walsh
Partner
DLA Piper

The domestic perspective

Employees have a right to establish a trade union, but approval must be obtained beforehand from the higher-level supervisory trade union in order for it to exist legally under the law. In its interactions with the union, an employer must ensure that it strictly adheres to the relevant provisions of PRC law. It is critical for employers to understand that trade unions in the PRC are a type of co-operative organisation which is in nature completely different from trade unions in Western countries. By law, trade unions are responsible for consulting with employers on behalf of the employees who have joined the union.

The provision in the PRC Constitution (amended in 2004) permitting strikes has been repealed. The Party and government generally prefer that employees not resort to strikes for the purpose of resolving disputes. Further, we understand that the All-China Federation of Trade Unions will not support strikes by employees. Instead, the generally held view is that trade unions exist to enhance harmony and a win-win situation between employers and employees.

As one of their primary duties, trade unions are legally authorised to consult with employers regarding their members' working hours and remuneration, provided that any request from a union raised on behalf of employees is in compliance with the law, reasonable and deserved.

Part Five of the PRC Employment Contract Law deals with salary under collective contracts. Either the employer or the trade union (which represents the employees) is entitled to request the conclusion of a collective contract. If the employer earns profit and offers a salary increase, the trade union and employees will surely agree. If a union proposes a salary increase on behalf of its employees, the employer must negotiate with it to determine whether such increase would be appropriate based on the company's development and specific situation.

The preferred method of handling matters with a trade union depends on the specific facts involved. Our understanding is that the ACFTU encourages employers to communicate with trade unions so as to effectively achieve their goals as co-operative organisations. We always recommend that employers deal with trade unions in accordance with the law, negotiate with them on amicable terms, and co-operate with and support each other to achieve a win-win situation.

Dr Isabelle Wan
Employment law practice leader
Transasia Lawyers

The HR perspective

Are they allowed to organise strikes? No. According to the Constitution of the Chinese Trade Unions and the Trade Unions Law, the basic duty of Chinese trade unions is to protect the legitimate rights and interests of workers. Their main responsibilities will cover: giving backing to the administrative departments to exercise their administrative power according to law; organising workers to participate in democratic management and democratic supervision; establishing a consultation system with the administrative departments, safeguarding workers' lawful rights and interests; and arousing workers' enthusiasm and promoting the development of enterprises and institutions.

Based on Articles 27 and 28 of the Trade Unions Law, the trade union will assist the enterprise to mediate and deal with these kinds of issues.

According to Article 38, companies need to negotiate with the union on planned pay adjustments, and also when discussing major issues of operation, management and development.

As to how you should deal with a labour union, the keywords are respect and support. Based on Article 28 of the China Trade Union Constitution, companies may make full advantage of the union to enhance employee relations by respecting this organisation and supporting their fulfilment of daily duties.

The management should get the union involved before finalising and making final official announcements on issues regarding establishing and reviewing company policy, changing the working environment, or making amendments to the major terms and conditions of the employment contract. They should treat the trade union as a helpful intermediary, before talking to an employee about the disciplinary action and decisions on termination of contract.

These trade union functions also help companies to reach legal compliance with the China labour contract law, safety law and other relevant China labour-related laws and regulations.

Just think about it: these trade union functions can support part of the company training system, especially for building up company culture and working safety, encouraging people development and enhancing rewards and the employee recognition programme. So you should work together with the trade union to have consolidated appraisal criteria and standards.

Lucy Tao
HR Director-Asia
Vertellus Specialist Inc.