In May of last year, the All-China Federation of Trade Unions, the Ministry of Human Resources and Social Security and other relevant departments jointly issued the Notice on Further Collective Consultation on Responding to the Impact of the Epidemic, calling for “giving full play to the important role of the collective consultation system” and encouraging both sides in labor relations to share their concerns in matters directly related to the vital interests of workers and to properly solve the outstanding problems of labor relations affected by the epidemic and maintain harmonious and stable labor relations.


Recently, the Tripartite Committee for the Coordination of Labor Relations in some regions has also issued a notice to enterprises, requiring them to conduct collective bargaining and sign collective contracts with their employees.  Therefore, considering the aforementioned updates, how should enterprises effectively manage collective bargaining and collective contracts?

  1. What are collective bargaining and collective contracts?

1.1 Collective bargaining

The collective consultation mechanism is one of the important systems that the law provides, in that it allows workers to participate in the democratic management of enterprises, establishing representatives of the workers and the enterprise to negotiate on matters concerning the rights of the workers and the enterprise, in order to ultimately reach an agreement.


1.2 Collective contracts

A collective contract is a form of labor contract, which refers to the written agreement signed by the employer and the employees of the unit through collective consultation on such matters as remuneration for work, working hours, rest and vacation, labor safety and health, vocational training, insurance benefits, etc., in accordance with the provisions of laws and regulations.


The labor conditions and labor remuneration standards stipulated in the individual labor contract shall not be lower than those stipulated in the collective contract. Based on the nature of a collective contract, the focus of collective bargaining should be on the interests of the vast majority of grass-roots employees in enterprises to meet their interests.

  1. Does an enterprise have to conduct collective bargaining and enter into collective contracts?

In essence, some areas are mandatory for enterprises to collectively consult their employees on and to refuse would result in the competent human resources department adopting penalties against the enterprise in question (such as in Jiangsu, Shenzhen, Chongqing, Shanghai.)


Taking Jiangsu Province as an example, the Regulations on Collective Contracts in Jiangsu Province stipulate that employers shall establish an equal consultation and collective contract system in accordance with the law, with both employers and employees holding the right to demand equal consultation. If one party requests consultation, the other party shall give a written reply within 20 days of receipt of the request and shall not refuse or delay the request.


If the request for equal consultation by the other party is refused or delayed, the human resources and social security department shall order to correct it, and if the party fails to change it in time, the human resources and social security department shall impose a fine of between 3,000 yuan and 30,000 yuan. The legal representative or principal person in charge and other persons directly responsible may be fined between 500 yuan and 2,000 yuan.


Article 65 of the Regulations on the Promotion of Harmonious Labor Relations in the Shenzhen Special Economic Zone also stipulates that if the employer refuses to consult collectively, the competent department of human resources shall order it to make corrections within five days; if it fails to do so within the deadline, it shall be fined between 2,000 yuan and 10,000 yuan.

  1. Main Aspects of Negotiation

According to the Provisions of the Collective Contract formulated by the former Ministry of Labour and Social Security, enterprises and employees may conduct collective consultations on a number of aspects involved in the labor relationship and sign collective contracts or special collective contracts.  The scope of negotiation includes the following aspects:


  1. Labor remuneration;
  2. Working hours;
  3. Rest and vacations;
  4. Labor safety and health;
  5. Additional insurance and welfare;
  6. Special protection for female employees and minors;
  7. Training of professional skills;
  8. Management of labor contracts;
  9. Rewards and penalties;
  10. Staff reduction;
  11. Term of collective contract;
  12. Procedures for modifying or canceling the collective contract;
  13. Settlement of disputes, which arise in fulfilling the collective contract, through negotiation;
  14. Liabilities for breach of collective contracts;
  15. Other matters agreed on by both parties through negotiation.


In addition, can collective bargaining be conducted for bonuses that are of concern to both enterprises and employees? According to Article 53 of the Opinions on Several Issues concerning the Implementation of the Labor Law of the People’s Republic of China issued by the former Ministry of Labor, “salary” refers to the labor remuneration directly paid by the employer to its employees in monetary form in accordance with relevant national regulations or labor contracts, generally including time wage, piece wage, bonus, allowance and subsidy wages for extended working hours and wages paid under special circumstances. “Wage” is the main part of workers’ labor income. Therefore, the bonuses are included in the labor remuneration and belongs to the scope of collective bargaining.

  1. How does an enterprise conduct collective bargaining?

Simply put, collective bargaining consists of the following steps: the first of which is to make a negotiated offer, which the representative of the enterprise or the representative from the employee’s side puts forward according to their own needs, the second step is to identify the consultative representative, the third step is to start consultations, at which point a preliminary draft agreement is formed, the fourth step is to consider the adoption of the draft agreement, and the final step is to review and file the agreement.

  1. Our Proposal

Collective bargaining has gradually become an important measure for the government to solve social labor conflicts and balance labor relations. In the face of collective bargaining and collective contracts, to ensure compliance, we recommend to take note of the following aspects:


  1. Various Forms

During the COVID-19 outbreak, enterprises can utilize online consultation, through various forms, such as through online meetings, WeChat groups and other such means of consultation and communication, as well as anonymous online questionnaires/voting forms sent to collect employees’ suggestions and opinions.


In addition, according to the Ministry of Human Resources and Social Security’s Response to Recommendation No. 5606 of the Third Session of the 13th National People’s Congress (People’s Social Security Construction Word (2020) No. 136), employers can conclude an electronic labor contract with workers through consultation, therefore, electronic contracts can also be extended to come under the banner of collective bargaining.


2 Collective Bargaining Process

Even during the current COVID-19 outbreak, collective bargaining must follow its original format. In personnel, collective bargaining shall be conducted by the enterprise and the employees with the same number of representatives (each side shall have at least three) and a chief representative shall be identified on each side. The chief representative of the employee’s side is generally the president of the trade union, and for enterprises that do not have a trade union, the regional trade union may provide guidance in this respect. In addition, both parties may entrust external professionals, such as lawyers and legal counsel, to participate in the negotiations.


  1. Actively Communicate with the Government and Trade Unions

Enterprises need to establish a relationship of mutual trust with trade unions, in the case of the need for union intervention to resolve grievances with employees and potential resistance to proposals.  Active access to government departments and local trade unions, where necessary, can help to facilitate the progress of consultations.


  1. Have a Plan in Place to Prevent Problems

In all kinds of unexpected situations, enterprises are often caught off guard.  In response to unexpected events that may arise in the course of collective wage negotiations, enterprises should have plans, such as negotiation strategies with their employees, consulting with trade unions, and how to coordinate the company’s financial requirements, while ensuring that collective bargaining progresses smoothly.