An essential burden

The movement demonstrates a fundamental problem in the economic system and its ideological structure in this rapidly developing country. While living expenses are increasing greatly, many Chinese workers are still working on a barely subsistent wage. On the other hand, while the older generation is satisfied with disposable income and tough working conditions, the new generation has a higher expectation, both economically and spiritually. They seek a greater quality of life in working conditions and income.

When the people are increasingly aware of the rights of themselves, they need certain ways to help them to guarantee those rights. Without a systematic rule being in place, the settlement procedure could be time-consuming and inefficient, which would directly lead to tremendous economic loss and trouble for the government.

China is developing at breakneck speed. Considering the imbalance between life expectations and actual conditions, the kind of movement seen at Honda will only increase with the coming decades. To ensure a prosperous economy down the road, the government generally realises that labour disputes are not best settled in Arbitration Committees, but within companies at the first instance. This could prevent great economic loss, and meanwhile lighten the burden of the government in dealing with the enormous number of labour dispute cases.

The regulation

The new regulation basically has two parts: negotiation and mediation.

Negotiation refers to the situation when two parties of the disputes initiate a settlement procedure themselves. In that procedure, if the parties demand the company to be involved, the Mediation Commission of the company should take part in it.

The mediation procedure can be initiated both by the parties of the dispute and the Mediation Commission itself.

The new regulation mostly focuses on the legal procedure of the mediation. Firstly, it sets some time limits in the procedure. For example, as for the negotiation procedure, a party will be deemed as refusing to negotiate if it does not reply in five days after one party has requested negotiation. The mediation commission should take part in the mediation within three days after one party demands it. The whole mediation procedure takes no longer than 15 days. The time limit ensures the efficiency of the negotiation and mediation procedure.

The regulation also gives the final agreement a definition. The agreement reached after mediation would be deemed as strong evidence in later arbitration, if there should be any. The parties to the dispute have two ways to have the agreement recognised: by demanding the Arbitration Committee to recognise it within 15 days after the agreement has been made; or by resorting to law after one party has refused to implement the agreement, and showing the agreement as evidence. After being recognised in the arbitration, the agreement can be enforced by law.

Influence

The greatest change the regulation brings to enterprises is the establishment of a Mediation Commission.

According to the regulation, a large or medium-sized enterprise should establish an internal Mediation Commission, and a small-sized enterprise has the option of establishing one.

To establish a Mediation Commission, the company must first select officer to represent the company and hold a meeting to vote for the employees' representatives. The number of the representatives of the employer and employee should be equal. The time spent by the representatives working for mediation should be calculated as their working time for the company.

Enterprises should also provide things needed for the Mediation Commission, which includes a working place, equipment and necessary funds.

According to the regulation, enterprises should also set up a series of rules for the management of the Mediation Commission. This would include the rules of registration, recording, training, reporting, and examination system of the Commission.

The government has claimed it will put a great emphasis on promoting the establishment of Mediation Commissions within enterprises to settle labour disputes internally, and will make it a mandatory condition for all enterprises in China. An enterprise without a Mediation Committee would be punished by administrative departments of social security if any group event or labour dispute which influence social stability takes place there.

Solution

The promulgation of the new regulation means enterprises have to share more social responsibilities with the government. It will also be a two-edged sword for enterprises.

On one hand, a company will have to pay for the cost of the Mediation Commission. This does not only mean an office and staff; it means the company should maintain the operation of a new internal organisation year by year. The company will have to pay for the cost of this organisation as well as the costs for settling disputes.

On the other hand, the company gains an opportunity for a second consideration when it makes an inappropriate decision in dealing with employment problems. The existence of a Mediation Commission means an additional option for employees and the company after a second dispute, and the two parties may have another chance to solve problems internally without the high cost of money and time for arbitration and litigation.

Will the regulation effectively solve the problem for the government? Maybe. It at least requires a pre-arbitration procedure for most labour disputes, which may lead to the settlement of some cases. However, the agreement finally reached cannot be enforced by law directly. This will always be a problem, as cases will need recognition from arbitration if they are not implemented well. This will hardly reduce the working burden of the Arbitration Committee. However, the regulation can at least alleviate social contradictions as a whole, to some degree.

An acceptable-cost Mediation Committee is an essential burden for companies to bear in order to meet the demands of the government, and also to relieve internal employment tensions.

Tara Tang, Shanghai HR-L Law Firm