In today’s globalized business landscape, companies come to manage labor disputes. The intricate interplay of local laws, cultural nuances, and procedural requirements significantly shapes the resolution process. This article embarks on a comparative journey through four distinct jurisdictions—China, India, Italy, and Vietnam—to illuminate the strategies and challenges involved in addressing labor disputes.
Central to this exploration is the examination of whether mediation or extra-judicial settlement attempts are mandatory precursors to formal litigation. While some jurisdictions mandate these alternative dispute resolution mechanisms as initial steps towards resolution, others provide flexibility or even prioritize direct court intervention. Understanding these divergent approaches is pivotal for companies operating in multiple jurisdictions, offering insights into efficient conflict resolution strategies while navigating legal complexities.
In China, labor disputes arising from the confirmation, execution, modification, or termination of labor contracts, as well as those concerning various employee rights such as working hours, rest days, leave days, social insurance, fringe benefits, labor remuneration, and work injury medical expenses, are not directly handled by People’s Courts.
Instead, the regulatory framework, notably the Law of the People’s Republic of China on Mediation and Arbitration of Labor Disputes, grants either party (employee or employer) the option to request arbitration from the local Labor Arbitration Commission. This process is subject to a one-year time limit, starting from the date of rights infringement awareness. Interruptions may occur if either party asserts rights, a relevant department requests relief, or the other party agrees to fulfill obligations, with the time limit restarting accordingly. Disputes over overdue labor remunerations during ongoing labor relations are exempt from the one-year limit, except upon termination, where arbitration must be sought within a year from termination.
Upon receipt of a labor arbitration request, the commission conducts an investigation and seeks resolution through mediation. If mediation proves unsuccessful, the commission issues an arbitration decision, which holds legal validity.
The labor dispute arbitration commission operates as an administrative entity responsible for resolving labor disputes through arbitration. While its decisions are legally binding, it operates independently of the formal court system. Dissatisfied parties may pursue further adjudication through the Court system if they disagree with the Labor Arbitration Commission’s decision.
In India, labor disputes between workmen and employers are defined as “industrial disputes” and primarily governed by the Industrial Disputes Act, 1947 (IDA) read along with the Industrial Employment (Standing Orders) Act, 1946 along with the rules framed therein. The IDA has set up the mechanism for settlement of dispute between employer and the workmen which is connected to employment or non-employment or terms and condition of employment or condition of labour of any person. The IDA defines A “workman” as any person, including an apprentice, employed in any industry to perform manual, unskilled, skilled, technical, operational, clerical, or supervisory work for hire or reward.
The Act makes provision for establishments employing 20 or more workmen to establish a Grievance Redressal Committee for resolution of dispute arising out of individual grievances. The Committee is expected to complete the proceedings and resolve the dispute within 45 days. Apart from approaching the Grievance Redressal Committee the employer and the workman can also resort to a rather familiar method of dispute resolution called as “Mediation and Conciliation”. The parties can mutually appoint a Conciliation officer or approach the Conciliation Board that has the administrative powers to carry out investigations and assist the parties to arrive at a settlement. In case, if the parties have not been able to arrive at a settlement, the Conciliation officer can pass a failure report to which the parties have the right to approach the labour tribunals. The Labour Tribunals in India are set up by a three-tier system which includes the following (a) the labour court that consist of a single judge that can adjudicate all disputes other than those disputes falling under the powers of Industrial Tribunal (b) Industrial Tribunal having wider jurisdiction as compared to Labour Courts and can adjudicate disputes such as wages, bonus, provident funds, working hours, leaves etc. lastly (c) the National Tribunal that supersedes the jurisdiction of the Labour Court and Industrial Tribunal.
Alternatively, the IDA makes provision for voluntary arbitration between employer and/or the workman provided there is a prior written agreement before resorting to the Labor Court or Industrial Tribunal (Section 10A, IDA). It is observed that employment contracts make provision for arbitration as an alternate method as it can prevent undergoing the complexities and lengthy timelines of the Indian litigation system.
The limitation period for disputes under the IDA initiated before the Labour Court or Industrial Tribunal is generally three years (Section 2A(3), IDA). Claims related to termination of employment must be filed within three years from the date of discharge, dismissal, or retrenchment. For claims arising during employment, the time limit starts from the date the act or omission leading to the claim occurred.
Legislation in Italy has always shown a marked favor for the conciliatory settlement of labor disputes, only changing over time the configuration of the corresponding conciliation attempt as a mandatory or voluntary step.
Over the years, the conciliatory attempt, originally mandatory, was first transformed into a discretionary fulfillment, and then re-proposed as a mandatory step for all labor disputes (Legislative Decree 80/1998), and finally returned to being optional after the entry into force of Law 183/2010 (known as the “Collegato lavoro”).
Under the current regulatory framework, in the case of labor disputes, before going to the labor court, the employer or employee has the option (but not the obligation) to undertake a conciliation attempt at the “conciliation commissions” established at the provincial labor directorate. However, the parties also have the right to initiate court proceedings directly by filing a complaint with the labor judge. This procedure follows a special rite regulated by Articles 409 et seq. of the Code of Civil Procedure, which is characterized by greater speed, broader investigative authority of the labor judge, and principles of orality and concentration.
It is important to note that in the event of non-payment of claims arising from the employment relationship, the employee also has the option of filing for an injunction of payment. Payment injunction is an instrument that allows the creditor to quickly obtain an enforceable title. Its peculiarities include the speed of the procedure, timeliness of issuance, and reduced costs compared to ordinary proceedings.
As for the statute of limitations, it is noteworthy that for labor remunerations the term is 5 years. Based on the principles clarified by the relevant case-law (e.g., the Supreme Court judgment No. 26246/2022), such term is normally intended to start from the termination date of the employment relationship, with the exception of public employees.
In Vietnam, the resolution of labor disputes follows a structured legal framework outlined in the Labor Code (Law No. 45/2019/QH14). Central to this framework is the requirement for pre-mediation and arbitration before resorting to the People’s Court.
According to Article 180 of the Labor Code, the resolution of labor disputes emphasizes negotiation, mediation, and arbitration before legal proceedings. This means that parties involved in a dispute must first attempt to resolve their differences through mediation by labor mediators.
However, there are exceptions outlined in Article 188 where pre-mediation is not mandatory. These exceptions include disputes over certain aspects like dismissal for disciplinary reasons, damages upon contract termination, and social insurance matters, among others.
If pre-mediation fails to resolve the dispute, Article 189 allows parties to request arbitration by the Labor Arbitration Council. An arbitral tribunal is then established to examine the case and issue a decision. Only after these steps can the dispute be escalated to the People’s Court.
Strict time limits are set for each stage of dispute resolution, as outlined in Article 190. Parties must request mediation within six months of discovering an infringement, arbitration within nine months if mediation fails, and court intervention within one year if arbitration is unsuccessful. Exceptions are made for force majeure events. Compliance with these time limits is crucial for effective dispute resolution.
It’s crucial for both employers and employees to comply with the mandatory pre-mediation and arbitration requirements. Failure to adhere to these procedures may result in the dismissal of the case by the People’s Court or other legal consequences.
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