China Enacts Labour Dispute Mediation and Arbitration Law

China Enacts Labour Dispute Mediation and Arbitration Law

The Labour Dispute Mediation and Arbitration Law (“the Law”) was promulgated by the Standing Committee of the Chinese National People’s Congress and came into effect on 1 May 2008. The Law aims to achieve an impartial and timely settlement of labour disputes, protect the legal rights and interests of the relevant parties.

I highlight some detail of the Law as below:

Mediation

Pursuant to the Law, upon the occurrence of any labour dispute within a corporation, either the employer or employee may apply for mediation. Mediation may be provided by any of the following mediation organizations: (1) labour mediation committee of a corporation; (2) a legally established mediation organization at the grassroots level; or (3) organizations or groups established at the township level.

The Law further provides that the labour mediation committee of a corporation shall be comprised of member(s) representing both the employer and employee. The employee’s representative shall be members of the trade union or persons recommended by the employees while the employer’s representatives shall be appointed by the person in charge of the corporation. In addition, the chairperson of such a labour mediation committee shall be a member of the trade union or a person recommended by both parties.

Any agreement reached as a result of mediation must be documented in writing and signed or sealed by the employer, the employee and the mediator, whereupon it shall be legally binding upon both the employer and employee.

It is worth to highlight that the Law also provides for circumstance where an employee may apply to the Court directly for a Payment Order should the employer fail to perform its obligation under the mediation agreement. These circumstances relate to labour disputes for delayed payment of labour remuneration, medical expenses for work-related injuries, economic loss suffered by the employee or work compensation.

Arbitration

Under the Law, parties may also choose to proceed to arbitration directly without going through the mediation process. In any mediation case, a labour dispute may proceed to arbitration under the following circumstances:

(1) where parties fail to reach an agreement within 15 days after the receipt of a mediation application by the relevant committee; or
(2) where any party fails to fulfill its obligations under the mediation agreement.

Time Limitation Period for Arbitration

The time limitation period for application for arbitration of a labour dispute shall be one year counted as of the date when a party knows or should know that its right has been violates. The time limitation period is subject to being discontinued or suspended under certain circumstances.

Prior Execution

In the event of recovery of the labour remunerations, medical expenses for a work-related injury, economic indemnity, or compensation, upon an application of a party, an arbitral tribunal may render an award of prior execution, and transfer the case to the people’s court for execution if certain requirements have been satisfied.

Final Arbitral Award

Except as otherwise provided for by the Law, arbitral award on any of the following labour disputes shall be final:

(1) A disputes over the recovery of labour remuneration, medical expenses for a work-related injury, economic indemnity, or compensation, in an amount not exceeding the 12 month local monthly minimum wage level; and

(2) A dispute over the working hours, breaks and vocation, social insurance, etc., arising from the execution of state labour standards.

Litigation

Where a labour dispute arbitration commission decides not to accept an application for arbitration or fails to make a decision before the prescribed time limit, an applicant may bring an action in the people’s court for matters on the labour dispute.

(This article is prepared for reference only and may not be construed as legal advice. Should you have any questions and comments, you are welcome to contact the author.)

Author: Helen Yan - Attorney at Law, Member of PRC Bar Association
Tel: 0756-3229508
Mobile: 13928008926
Email: yanhailing@yahoo.com