Crisis Averted

Carol (Yeping) Zhu and Kent Woo of Zhong Lun Law Firm explain how companies can avoid the major causes of labor disputes, efficiently handle worker strikes and maintain positive employment relationships.

1. What is the biggest challenge faced by foreign-invested enterprises in human resources and employee relations?

Due to factors such as labor cost increases and an economic slowdown and transformation, a number of foreign-invested enterprises have pulled out of China or made adjustments to their local business in the past two years, triggering a wave of personnel cutbacks. Terminations can be quite complex, often involving a large number of people which, if not handled carefully, can result in the failure of the cutback itself or its process in complying with legal requirements, and thereby result in a collective dispute. Furthermore, the level of workers' awareness of their legal rights is also at an unprecedented high. This undoubtedly poses a huge challenge to companies, management of human resources and employee relations.