Brief Description of Employees’ and Employers’ Associations
In China, all trade unions are under the leadership of the All-China Federation of Trade Unions (“ACFTU”). ACFTU is a national-level organisation that reports directly to the Chinese Communist Party and has branches at the provincial, city, and district levels. Technically speaking, an enterprise does not have to take positive action to establish a trade union. However, if its employees request for the establishment of a trade union, the enterprise cannot obstruct the process. In practice, local ACFTU branches have been observed increasingly pressuring enterprises to set up trade unions from the top town.
The China Enterprise Confederation (originally known as the “China Enterprise Management Association”) and China Enterprise Directors Association (the “CEC/ECDA”) are non-profit national organisations that are registered with and approved by the Ministry of Civil Affairs of the PRC. The government department responsible for overseeing the CEC/ECDA is the State-owned Assets Supervision and Administration Commission of the State Council. The CEC/ECDA have legal person status and are created to promote reforms within enterprises, improve management within enterprises, act as a liaison between enterprises and governments and protect the legitimate rights and interests of enterprises and entrepreneurs. CEC is the sole representative from China within the International Organisation of Employers.
Rights and Importance of Trade Unions
The fundamental rights and responsibility of trade unions is to safeguard the legal rights and interests of employees. Specifically, trade unions should i) harmonise employment relationships and safeguard the rights and interests of employees by conducting equal negotiations for employees and forming collective contracts; ii) organise and coordinate employee participation in democratic decision making, democratic management and democratic supervision according to relevant law and via the employee representative congress or other channels; and iii) maintain close contact with employees, listen to their views and demands and forward the same to the management of employers, exhibit concern for their daily lives, help them resolve difficulties, and serve them wholeheartedly.
An enterprise may form collective contracts with its trade union (or its elected employee representatives if the enterprise has no trade union). If a union or an elected employee representative submits a written request to engage in collective bargaining, the employer generally cannot refuse without just cause. Collective contracts are binding on the employer and all of its employees. Accordingly, individual employment contracts cannot include standards that are lower than those set forth in the collective contracts.
China recognises the following types of representation:
- Employee Congress / Employee Representatives’ Congress
- General Assembly of Union Membership / Union Member Representative Congress
- Trade Union Committee (“TUC”)
- Finance Scrutiny Committee (“FSC”)
- Trade Union President, Deputy President and Committee Member
Limited liability companies invested and incorporated by two or more state-owned enterprises or by two or more state-invested entities, shall have employee representatives in their board of directors. For entities solely owned by the state, there shall be an employees’ representative appointed as board director. Other limited liability companies or companies limited by shares may opt to have employee representatives in their board of directors. Employees’ representatives who sit on the board of directors shall be appointed by company employees via an ERC or EC or other forms of democratic election. In addition, according to PRC Company Law, the board of supervisors shall include shareholders’ representatives and an appropriate number of employees’ representatives.
Other Types of Employee Representative Bodies
Grassroots Chinese Communist Party (“CCP”) federations could also help employees to organise, receive information concerning the employees’ appeals and provide assistance to resolve disputes between employers and employees, in order to establish and maintain harmonious employment relationships. Any employer with more than three CCP members shall establish a grassroots CCP organisation. In addition, employers shall provide the necessary conditions to facilitate the CCP activities.