As labour disputes rise 30 % in first half of 2009,
courts emphasize stability

China Labour Bulletin, Hong Kong, 20/07/09

The Supreme People’s Court (SPC) announced on 13 July 2009 that labour disputes in China as a whole climbed by 30 percent in the first half of 2009. Certain areas saw sharper increases, with labour disputes in the first quarter of 2009 shooting up by 41.6 percent in Guangdong, 50.3 percent in Jiangsu, and a staggering 159.6 percent in Zhejiang.

A SPC spokesperson told Caijing magazine that the international financial crisis was the main reason for the increase in disputes, but Caijing also noted that the passing of two important laws in 2008 – the Labour Contract Law and the Labour Dispute Mediation and Arbitration Law – had helped give workers additional means with which to defend themselves.

Caijing reported that certain new trends were evident in the cases of the first half of 2009. In the past, most cases involved the relatively simple issues of wages in arrears and other economic compensation issues; now cases often involved non-payment of insurance, retirement procedures, open-ended contracts, and equal pay and benefits for similar work status, and other more complicated issues.

The relatively low threshold for bringing a case to the labour dispute arbitration committee, often only 10 yuan, was cited as another reason for the increase.

To help manage with the sudden surge of labour disputes, the Supreme People’s Court issued a Guiding Opinion (关于当前形势下做好劳动争议纠纷案件审判工作的指导意见) for handling labour arbitration and the courts to follow. Although the Opinion reiterates many long-standing themes, its overall point of emphasis is to balance the legal rights and interests of workers while at the same time allowing enterprises to survive the current difficult economic climate. Of particular interest are points 8, 9, and 11.

Point 8 says that cases arising from basic wages in arrears and overtime payments should be appropriately handled. But stresses that courts should operate under the principle of “quickly register the case, quickly mediate, quickly try the case, and quickly implement the verdict” (快立, 快调, 快审, 快执). This emphasis on speed could be aimed at preventing desperate workers from taking to the streets in protest.

In Point 9, courts are encouraged to mediate between parties involved in lay offs, and encourage enterprises not to lay off employees. If enterprises are unable to pay off laid-off employees in a lump sum, then the court should urge the employer to mediate a settlement that would include economic compensation in installments or other such methods. This measure could be interpreted as a way to help struggling businesses and shore up social stability.

Point 11, regarding the rational adoption of property preservation measures, states that courts should fully consider the survival and development of enterprises while at the same time guaranteeing workers’ livelihoods and social stability. For enterprises with cash flow problems, and for responsible firms that have operational development potential, courts should allow troubled enterprise to use their “detained” or “sealed” assets for business purposes, while under the watch of the government. Enterprises would not be allowed to sell off or transfer their assets. Courts should only freeze or transfer assets with caution (慎用冻结, 划拨流动资金), and the court should not auction off factory equipment.

Overall, the Guiding Opinion’s main goal is to actively serve the Party and government leaders in the promotion of the “harmonious stability.” A court representative told Xinhua: “the people’s court in the work of trying civil cases, must be carried out from beginning to end by focusing on serving the overall work of the Party and the country” (人民法院的民事审判工作 - 必须始终围绕服务党和国家工作大局来进行). This emphasis is entirely consistent with the findings by Thomas Kellogg in his article “The Death of Constitutional Litigation in China?” in which he states that the court, under the leadership of SPC President Wang Shengjun, has often emphasized the "three supremes" – “Party interests, public opinion, and legal rules”. Furthermore, under Wang’s conception of the court’s role, judicial work should serve to “promote social harmony”, and indeed, the court's recent actions seem to follow in that vein.

Since China's macro-economic climate has seen a remarkable comeback with the announcement of GDP growth of 7.9 percent in the second quarter of 2009, it will be interesting to observe how the courts will take into consideration the relative strengths of each parties interests once the long shadow of the economic crisis recedes.