Conflicts with employees over matters like termination or dismissal, pay and benefits, adherence to working hours, leave, and other worker protections are considered employment conflicts under Chinese law.
Labor disagreements are increasingly being used by Chinese companies as an excuse to end employment relationships, but this will only exacerbate issues with the country’s legal system, which favors employees over businesses.
It is now more critical than ever for international businesses doing business in China to minimize the dangers of having a labor dispute.
What is a labor dispute in China?
A labor dispute is when two parties within an organization, typically the employer and the employee, disagree.
The Chinese labor dispute may encompass a variety of issues, but it typically relates to pay, benefits, taxes, leave, working conditions, and hours.
Labor disputes typically result from companies’ ignorance or underestimation of China’s labor regulations.
By keeping up with China’s labor laws and following the essential steps to prevent labor conflicts, employers can save a significant amount of time and money.
When firms first come to China, they are eager to hire personnel and launch their operations.
Unfortunately, businesses may not take the proper safeguards when drafting employment contracts due to their eagerness for hiring employees.
It will be much easier to avoid misunderstandings and potentially expensive labor conflicts if all pertinent information is included in the contract.
It is important to understand that in China, the employer will always have the burden of evidence when there is a dispute.
Labour disputes in China have the following main characteristics.
- The number of labor dispute cases has increased significantly and has remained high since the Labor Contract Law’s enactment in 2008. The overall number of national labor conflict cases was 894,053 in 2018, 1,069,638 in 2019, and 1,094,788 in 2020, according to data from China’s National Bureau of Statistics.
- In cases involving labor disputes, the success percentage for employees is comparatively high. Employees prevailed in 28% of labor dispute cases that were resolved in 2020, while employers prevailed in 10% of instances, according to data released by China’s National Bureau of Statistics. The remaining 62% of cases had some degree of partial success for both parties (not including settlements).
- Although there are more cases involving non-compete agreements and secrecy, wages, termination of employment contracts, and benefits are remain the key topics in labor dispute cases.
- Cases involving labor disputes must first go through labor dispute arbitration, which is required.
Types and causes of labor dispute in China
- Interest disputes: These are conflicts that result from differences in interests, like as pay, bonuses, and vacation time.
- Workplace disputes: These are conflicts that develop as a result of workplace expectations such as fair compensation, working conditions, and opportunity.
It’s essential to identify the root of a labor conflict in China in order to resolve it. Some of the most frequent causes of labor conflicts include the following:
- Economic causes: these primarily have to do with pay, incentives, and general working conditions.
- Management causes: Communication issues with management, worries over job security, and disparities in leadership styles.
- Psychological causes: These factors may also result in challenging circumstances for the employer to manage. These causes include things like disparities in motivation, a lack of appreciation, and the perception that one is not being treated fairly.
How to avoid labor disputes
The last thing any business owner wants is a labor conflict, especially when business is booming and sales are up.
You must understand that poor communication is the primary source of most workplace disputes, and that having a constructive two-way conversation will almost likely help you get to a mutually agreeable solution.
Here are some tips that will help you to avoid a labor dispute in China:
- Ensure that your staff has the tools they need to fulfill their tasks: If your staff is unable to execute the assignment because they lack the required equipment (or training), who is to blame? Verify that the relevant tools are on hand once more before assigning the following assignment.
- Evaluate salaries: Make sure that they track inflation trends and are in line with current market trends.
- Establish a clear employment contract: Since 2008, employment contracts have been required in China, and a lack of such may cause legal and employee issues. Employment contracts need to be properly filed and kept in storage, too.
- Employee handbook: Before they start working, the company gives new hires a copy of the employee handbook. It includes details about the company’s culture, policies, procedures, and employee rights and obligations.
- Handle overtime and leaves responsibly: Labor disputes frequently stem from leaves of absence and extra work. Be explicit about these rules in the contract and employee handbook and establish procedures for requesting approval for leaves and overtime.
It is crucial for a company to plan ahead and develop a thorough personnel management system, which includes signing official labor contracts with employees, obtaining certificates for foreign workers working in China, creating a clear employee handbook, paying social security and housing funds for employees, in order to reduce labor disputes when conducting business in China.
Hope this article has given you a better understanding of the dangers of a labor dispute in China and how to prevent them.
Contact us if you need help to hire and manage HR for your employees in China.