China: Employment Law Newsletter

31 October 2014

New Provisions on Guangdong Enterprises' Collective Contract

The Provisions on Guangdong Enterprises' Collective Contract (the "Provisions") were issued on 25 September, 2014 with an aim for concerned parties to operate the entire process concerning collective bargaining and collective contract under a pragmatic and enforceable mechanism. They are notably compared to the applicable legislation on the same subject in Shanghai, Beijing and Shenzhen for the clearer and more effective procedural design for employees to start the collective bargaining process and for the stipulation on legal consequences following certain forbidden behaviour by both employers and employees. The Provisions are also featured with a multi-layered resolution mechanism for any dispute arising in the course of collective bargaining.

The Provisions may be viewed as a synergised move with the central government's recent resolution that 80% of all employers in China shall have established collective bargaining mechanisms by 2015. This may indicate that the Chinese government is making an effort to leverage collective bargaining and collective contract to improve employees' wages and welfare benefits and, on the other hand, alleviate the tension between employers and employees in order to lessen potential strikes and other forms of collective employee actions. The Provisions will be effective from 1 January, 2015. To learn more please click here.

2014 Enterprise Wage Guideline for Guangdong Province

The 2014 Enterprise Wage Guideline for Guangdong Province was announced on 30 September, 2014. Based on the national policy concerning enterprises' salary distribution and the prediction of Guangdong social economy development, and also taking into consideration Guangdong economic development, materials price level, employment and other factors, the 2014 guideline is not a mandatory requirement and is simply for the reference by enterprises in Guangdong. The key points of the Guideline are as follows:
• The baseline for salary increase for enterprises in Guangdong is 9%;
• The ceiling for wage increase for enterprises in Guangdong is 14%; and
• The minimum increase for enterprise wages in Guangdong shall be 3%.

Regulations for Further Clarification of Arbitration Jurisdiction for Labour Disputes in Shanghai

Compared to the previous rule on the same subject, these regulations omit the part concerning the arbitration jurisdiction over labour disputes on social insurance. According to a notice issued by the Shanghai Human Resource and Social Security Bureau, Shanghai arbitration committees at each level have ceased trying any labour disputes in connection with social insurance since 1 July, 2014. Additionally, the regulations further clarify the arbitration jurisdiction for foreign invested enterprises including enterprises of Hong Kong, Macao and Taiwan. As required by these regulations, the Municipal Labour Dispute Arbitration Committee has jurisdiction over the following labour disputes:

  • Labour disputes between a foreign enterprise registered in Shanghai with a registered capital of  US$ 10,000,000 or above, or of an equivalent amount or above, in accordance with the Law of the PRC on Foreign-funded Enterprises and its employee;
  • Labour disputes between enterprises or other economic organisations from Hong Kong, Macao and Taiwan registered in Shanghai with a registered capital of US$ 10,000,000 or above, or of an equivalent amount or above, with reference to Rules for the Implementation of the Law of the People's Republic of China on Foreign-funded Enterprises and their employees; and
  • Disputes between foreign nationals, residents from Hong Kong, Macao and Taiwan, Chinese nationals residing permanently abroad and their employers.

The regulations commence validation as of 1 October, 2014 and expire on 31 December, 2018.

Shanghai Notice on Transfer by Banks upon Employers' Unpunctual and Insufficient Submission of Social Insurance Premium
Published and effective on 17 September, 2014, this notice aims to ensure the submission of social insurance premiums by enterprises punctually and in full in Shanghai. Pursuant to the notice, if an employer fails to submit social insurance premium punctually and in full, and still fails to do so by the expiration of the specified period of time, the responsible administrative authorities will issue a reminder letter and finally render a decision to transfer social insurance premiums if the employer continues ignoring it. The related banks or the financial institutions must comply with the decision to offer assistance in transferring the specific overdue amount from the employer's account. In the meantime, the concerned employer has a right to make a statement of defence within the stipulated time limit. Further, the late-payment fees will be calculated at a rate of 0.05% per day as of the date when the payment becomes overdue. The validation period for the notice is five years.

Implementing Guidelines for Shenzhen Special Economic Zone Regulations on the Security of Wages Owned by Enterprises
Since 1998 when Shenzhen promulgated the legislation on the security of overdue wages, other localities in China such as Shanghai, Jiangsu, Zhejiang and Hubei have also followed this trend to issue their respective regulations on this subject. These local legislations are formulated to establish a local fund scheme to make advancement to the employees to whom their employers own wages to the required extent. The regulations at different localities vary in standards for employers' submission. Employers in Shenzhen are required to submit RMB 400 to the fund during the 1st quarter of each year, while the annual submission amount in Shanghai is the local minimum monthly salary standard.

Recently Shenzhen publicly announced the Implementing Guidelines for Shenzhen Special Economic Zone Regulations on the Security of Wages Owned by Enterprises, to be effective from October 1, 2014. The guidelines further clarify that the regulations and the guidelines apply to all legally incorporated enterprises and other economic organisations, excluding sole or family proprietors, public organisations, institutions, and branches of employers located outside the Zone. Under the guidelines, the employee incurring overdue wages may apply for advancement for overdue wages to the local human resource authorities where the employment occurs, or where the employer is registered.

Authors

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Ying Wang

Partner
China and Hong Kong

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