China Law Library

Collective Wage Bargaining Temporary Rules

CBL’s Introduction

China’s Collective Wage Bargaining Temporary Rules, translated here into American English, establish mandatory bargaining processes that significantly impact how employers set wages and bonuses. Notably, wage agreements become legally binding and directly influence minimum employee compensation, limiting employers’ discretion. Of particular interest is the active role of local labor regulators in reviewing and approving wage agreements, potentially constraining companies’ flexibility in wage-setting and increasing regulatory oversight.

Contents

Chapter 1 General Provisions

Section 1 The purpose of these Rules is to govern collective wage bargaining and (hereinafter “Wage Agreements”), protect the rights of the parties in employment relationships, and promote stable employment relationships under the Employment Act of the People’s Republic of China and other applicable law.

Section 2 These Rules apply to collective wage bargaining and wage agreements for businesses in the People’s Republic of China.

Section 3 Under these Rules, collective wage bargaining refers to the process where employee and employer representatives lawfully engage in equal negotiation regarding the business’s internal compensation structure, methods, and amounts and enter into negotiated wage agreements.

For the purpose of these Rules, wage agreements refer to collective bargaining agreements executed specifically for wages. Wage agreements executed shall be an exhibit to the existing collective bargaining agreement and they shall have equal legal effect thereto.

Section 4 Legally executed wage agreements shall be legally binding upon both employers and employees. The parties shall perform their obligations under these agreements and may not amend or cancel the agreements without the agreement of the other.

Section 5 Wage rates in the employment contracts between businesses and employees shall not be lower than the minimum rates specified in wage agreements.

Section 6 County labor regulatory agencies and their parent agencies are empowered to review wage agreements and oversee compliance with the agreements.

Chapter 2: Collective Wage Bargaining Process

Section 7 Collective wage bargaining shall cover:

(a) The term of the wage agreement;

(b) Compensation structure, standards, and methods;

(c) Average annual wages and extent of adjustments;

(d) Policies for bonuses, allowances, and subsidies;

(e) Methods of wage payment;

(f) Amendment and cancellation of wage agreements;

(g) Termination of wage agreements;

(h) Liability for breaching wage agreements;

(i) Any other matters deemed necessary by the parties.

Section 8 The negotiation of average annual wage standards shall be subject to the national macroeconomic policies and take into account the following factors:

(a) Cost of labor in specific regions, industries, or businesses;

(b) Average wages of workers in specific regions and industries;

(c) Local government salary guidelines and salary trends in the labor market;

(d) Local urban consumer price index;

(e) Productivity and financial performance of the business;

(f) Preservation and appreciation of state-owned assets;

(g) Total and average business employee wages from the prior year;

(h) Other factors necessary in collective wage bargaining.

Chapter 3 Collective Wage Bargaining Representatives

Section 9 shall be selected through statutory procedures. Employees are represented by the labor union. For employers without a labor union, the employee representatives shall be elected, with agreement by over half of the employees. Employer representatives shall be the employer’s statutory representative or their appointees.

Section 10 Each party in the negotiation shall appoint a lead negotiator. The labor union president shall be the lead negotiator for employees. The president may also appoint, in writing, another individual to act as the lead negotiator on their behalf. Employees shall collectively deliberate on selecting one if there is no labor union. An employer’s statutory representative shall be its lead negotiator. The statutory representative may appoint, in writing, other management employees to act as their representative.

Section 11 Lead negotiators of both parties shall take turns as to who chairs the collective wage bargaining. The chair is responsible for coordinating the collective wage bargaining and proposing solutions for issues that arise during the negotiation.

Section 12 Each party in the negotiation may engage outside professionals as their bargaining representatives in writing, but such representatives shall constitute no more than 1/3 of their representatives.

Section 13 The parties to the negotiation possess equal rights to make proposals, raise opposition, and present opinions.

Section 14 Bargaining representatives selected from within the business to participate in collective wage bargaining shall be considered to have performed regular work and are entitled to their regular wages, bonuses, allowances, subsidies, insurance, and other benefits. The law protects the employee representatives’ rights. Employers shall not discriminate against employee representatives or illegally terminate or revise their employment contract.

Section 15 Bargaining representatives shall follow the agreed-upon negotiation rules, perform their duties, and keep the confidentiality of the employer’s trade secrets. The parties in the negotiation must not engage in any kickbacks or extreme, threatening, deceptive, or otherwise improper conduct.

Section 16 Bargaining representatives must thoroughly understand wage structures, solicit opinions, and address queries concerning wage bargaining from the party they represent.

Chapter 4 Collective Wage Bargaining Procedures

Section 17 Both employers and employees may make a request to commence collective wage bargaining. The party requesting collective wage bargaining shall provide the other party with a letter of intent to bargain that specifies the proposed time, place, and issues to be negotiated. The receiving party shall respond in writing within 20 days of receiving the letter and engage in collective bargaining with the other party.

Section 18 Both parties, upon request of the other party, are obligated to provide authentic information and materials as needed, 5 days prior to the negotiation, but in doing so must not violate applicable law.

Section 19 The wage agreement draft shall be submitted to the meeting of all the employees or employee representatives for review.

Section 20 When the two parties in negotiation reach an agreement, the business management shall prepare the written wage agreement. The wage agreement shall come into effect once signed and sealed by both parties’ lead negotiators.

Chapter 5 Review of Wage Agreements

Section 21 Within 7 days of the execution of a wage agreement, the employer shall file three counterparts of the wage agreement and an explanatory memorandum with the labor regulator.

Section 22 The labor regulator shall review the qualifications of representatives in the collective wage bargaining, the terms of the agreement, and the execution procedure within 15 days of receiving the wage agreement.

If, after review, the labor regulator finds no issues with the wage agreement, it shall promptly issue its wage agreement opinion letter to both parties, and the wage agreement shall take effect immediately.

If the labor regulator requires changes, it shall notify both parties of its requirements in the opinion letter. The parties shall promptly negotiate to revise the wage agreement pursuant to labor regulator requirements and file the revised agreement at the labor regulator.

The wage agreement shall be deemed as approved by the labor regulator and take effect immediately if neither party receives the wage agreement opinion letter from the labor regulator after 15 days of filing the agreement.

Section 23 The parties shall disclose the effective wage agreement to their members in an appropriate manner within 5 days.

Section 24 Collective wage bargaining is generally conducted once a year. The employer and employees may, 60 days before the expiration of the existing wage agreement, provide the other party with a letter of intent to negotiate; then commence the next round of collective wage bargaining and enter into a new agreement.

Chapter 6 Miscellaneous

Section 25 Any matters regarding collective wage bargaining and wage agreements not addressed in these Rules shall be governed by the Collective Bargaining Agreement Rules.

Section 26 These Rules shall take effect upon issuance.

 

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See CBL’s China Employment & Labor Law FAQ to learn more about how to succeed in China’s labor markets.

This article was translated into American English from the following government publication:

“工资集体协商试行办法”

https://www.gov.cn/zhengce/2022-08/31/content_5711295.htm

 

 

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