Consideration On The Prevention And Response To Strike In China -– Triggered By The GM.US Strike – Employment and HR

On September 16th, nearly 50,000 members of the
United Automobile Workers (“UAW”) of General Motors
(GM.US) carried out the biggest strike ever in the past 12 years in
the U.S. UAW representatives demanded for creation of more job
positions, raise in remuneration for new hires, and restriction on
the number of temporary workers. Recently, GM.US has reached a
“truce” agreement with UAW and the strike suspended. As
specialized lawyers practicing labor law, in recent years, our team
have been frequently requested for legal consultation on strike
issues in an increasing trend, and assisted clients to properly
settle a few strikes. This article will compare and analyze the
right of strike in China and in the U.S. by elaborating the two
strikes settled by AnJie labor law team in April 2019 and the
strike of GM.US.

1. Case Study of Strike

In April of this year, the employees on the main production line
of a Japanese-invested electronics company in Guangdong Province
(hereinafter referred to as the “electronics company”)
slackened and ceased production, due to the equity transfer of its
parent company in Japan. Most employees commuted to work on time
but didn’t work, just sitting in the canteen for protest. The
main appeal of the employees is to request the electronics company
to buy out/compensate for their service years and resume the
production. The employees believed that the equity transfer of
parent company would inevitably affect the electronics company,
thus it remained unknown whether the employees’ benefits will
be reduced and whether organizational structure, management
guidelines and policies will be maintained, etc. Therefore, they
thought that the buy-out of service years is the most appropriate
action to take and for which they required compensation as a
precondition for return to work. In the other hand, the electronics
company believed that equity transfer occurred in parent company
without the electronics company getting involved in any equity
transfer or name changing. In accordance with laws and regulations
of P.R.C, the equity transfer or change in investors shall not
affect the continuing performance of employment contract. The
electronics company regarded employees’ appeal unreasonable and
lacking legal basis, and thus disagreed with their appeal for
buy-out of service years.

After the occurrence of strike, in order to reward the employees
who stuck to their posts and to encourage striking staff to return
to work as soon as possible and thus ease conflicts, the
electronics company proposed an incentive scheme, based on which
the employees who stuck to their posts or has returned to work
timely would be rewarded on a daily basis. At the meantime, the
management of electronics company promised that employees’
benefits will remain unchanged. After the proposal of incentive
scheme, most employees returned to work, but a small number of
employees still refused to return. The electronics company took
appropriate disciplinary actions even up to termination of
employment contract on those employees who refused to return, in
accordance with the actual situation of each employee.

For another strike occurring in a foreign-invested electric
company in Zhejiang Province (hereinafter referred to as the
“electric company”), the employees on production line
stopped the work and production triggered by the rename of the
electric company due to the divestment of its parent company. The
management of the electric company had made it clear that the
rename of the electric company, relative to the divestment of the
parent company, would not involve any adjustment to the employment
contracts. The service years of the employees would be counted in
succession and employees’ benefits would remain unchanged.
Employees’ appeal in the first place is buy-off of service
year, and then they challenged the working hours system, and
requested for adjustment to the pay cycle of overtime compensation.
During the strike, a number of employees commuted to work as
before, but did not work, just sitting in the canteen or leisure
area for protest. Some employees even did not come to the
company’s domicile. Electric company proposed incentive and
punishment scheme, according to which the employees who returned to
work timely would be rewarded, while for those who did not return
to work within the prescribed time, the electric company took
disciplinary actions such as sending warning letter or even
termination of employment contract in accordance with the company
policies.

The above two cases can indicate that in most cases,
employees’ strikes are usually not triggered by the
infringement on their legitimate rights, but reversely for the
appeals of benefits without statutory basis, such as asking for the
buy-off of service years, salary and benefit increase. In China,
lots of enterprises concern about whether employees have the right
to strike, whether the strike is illegal, and what the employer
should do to settle a strike.

2. Right of Strike in China

The existing Constitution Law of P.RC. issued in 1982
does not specify the right of strike, however, in the previous
version of Constitution Law issued in 1975 and in 1978,
there were some relevant provisions. Article 28 of the 1975
Constitution Law and Article 45 of the 1978
Constitution Law stipulated that “Citizens shall have
the freedom of expression, communication, publication, assembly,
association, procession, demonstration and strike”.

Article 8 of the International Covenant on Economic, Social
and Cultural Rights provides that: laborers shall “have
the right to strike, but shall exercise such right in accordance
with the laws of each country”. In October of 1997, the
Chinese Government signed the International Covenant, and in
February of 2001, when it was reviewed and ratified by the Standing
Committee of the National People’s Congress, no reservation
about the right of strike was proposed. In another word, our
legislation has recognized laborers’ right of strike under
international conventions, and in China, exercising right of strike
has international law basis.

Article 27 of the Trade Union Law of P.R.C provides
that “In the event of work stoppage or slack occurring in an
enterprise or public institution, the trade union shall, on behalf
of the employees, consult with the enterprise/institution or
parties concerned, reflect the thoughts and demands of the
employees and offer suggestions for the settlement.
Enterprise/institution shall solve the reasonable requirements of
employees. Trade unions shall assist enterprise/institution to well
response and resume the production and work order as soon as
possible”. This provision, which mainly sets out the rights
and obligations of trade unions in a strike, does not address the
specific issue of strikes by laborers.

In addition, article 59 item (2) of the Civil Servants Law
of P.R.C clearly stipulates that: civil servants may not
“organize or participate in illegal organizations, organize or
participate in strikes”. This provision is a prohibition on
strikes to the particular subject as civil servants.

In summary, in China, the exercise of right of strike has
international law basis. In another word, the laborers have the
right of strike, however, there are no relevant provisions in China
on how to exercise or regulate the right of strike. If right of
strike can be clarified by legislation in our country, as well as
how to rule and regulate such right in order to make the right of
strike be exercised in an orderly manner, it probably may play a
role of dynamic mediation to labor relations, which is beneficial
to labor balance and harmony.

3. Right of Strike in U.S.

The National Labor Relations Act (NLRA) protects the
rights of employees who engage in concerted activities for lawful
purpose, such as strikes for a lawful objective. Strikes for a
lawful objective include economic strikes and strike against unfair
employment. If the objective of a strike is to obtain from the
employer some economic concession, such as higher wages, shorter
hours, or better working conditions, the strikes are called
economic strikes and the striking employees are called economic
strikers. They retain their status as employees and cannot be
discharged, but they can be replaced by their employer. If the
employer has hired bona fide permanent replacements who are filling
the jobs of the economic strikers when the strikers apply
unconditionally to go back to work, the strikers are not entitled
to reinstatement at that time. However, if the jobs are available
and the strikers have made an unconditional request for their
reinstatement, they are entitled to be recalled to the jobs. The
strikes to protest an unfair employment practice committed by the
employers are called strikes for unfair employment. These striking
employees are called unfair employment strikers. Such strikers can
be neither discharged nor permanently replaced. When the strike
ends, unfair employment strikers, absent serious misconduct on
their part, are entitled to have their jobs back even if employees
hired to do their work have to be discharged. If the National Labor
Relations Board (NLRB) finds that the lawful strikers who have made
an unconditional request for reinstatement have been unlawfully
denied reinstatement by their employer, the NLRB may award such
strikers backpay since the date they should have been
reinstated.

The employers have the right to discharge the employees who
participate in an unlawful strike. The examples of the unlawful
strikes would be a strike to compel Employer A to cease doing
business with Employer B, a strike to violate a no-strike provision
of a collective contract, a strike to terminate or change a
collective contract. Strikes are unlawful because of serious
misconduct of strikers. This applies to both economic strikes and
unfair labor practices strikes. Serious misconduct includes but not
limited to violence and threats of violence. Examples of serious
misconduct include strikers physically blocking persons from
entering or leaving a plant, strikers threatening violence against
non-striking employees, strikers attacking management
representatives.

4. Characteristic of Strike

Generally, strikes can be divided into political strikes and
economic strikes. The so-called political strike mainly refers to
the suspension of work targeted at state public authorities in
order to realize the specific political proposition. Economic
strike, on the other hand, refers to the suspension of work by
employees in order to improve working conditions or increase wages
and other economic benefits. From the current situation, the
strikes in our country are all economic strikes, mainly with
respect to the disputes in labor relations and mostly in
foreign-invested enterprises and private enterprises. Strike once
occurred will cause great loss to the enterprises and employees may
take strike as a customary practice.

At present, most local governmental authorities keep an
ambiguous attitude towards employees’ strike attitude, namely
not making any judgment, just solving the incident mainly through
communication and negotiation, making stability and harmonization a
priority.

5. Prevention and Response to Strike

Though strike usually occurs abruptly, it is still in some cases
predictable and foreseeable. It is highly recommended that the
enterprise shall prepare the emergency plan before making or
announcing major decision as the key to prevent strike.

Firstly, enterprise shall fully understand its internal
employment situation and assess the potential employment risks as
far as possible to prepare the solution.

Secondly, enterprise shall establish communication mechanisms,
improve all kinds of communication channels and make them
unhindered, which allow employees to feedback their appeals through
various channels. Enterprise shall respect views or suggestions
collected from the employees.

Thirdly, enterprise shall set up emergency team. In the event of
strike or other similar group incidents, the emergency team can
perform its functions to rationally control the situation, avoiding
aggressive or extreme acts to prevent the employment conflict from
“politicization”.

Last but not least, the functions of all parties shall not be
absent during the settlement. It shall resort to the power of trade
unions and the government under such incidents or potential
scenarios. Before making or announcing major decisions to be made
or announced, the enterprise shall conduct effective communication
with trade unions, labor administrative departments, public
security departments and etc.

In the event of a strike, enterprise shall face up and actively
respond to the strike, and properly deal with the relationships as
follows:

First is the relationship with the employees. Active
communication is an effective way to settle employment conflicts.
The enterprise shall face up to the contradictions without
sidestepping the problems; establish a mechanism for collective
bargaining as soon as possible to actively communicate with the
employees; fully understand employees’ demand, and answer
questions raised by employees in good faith. The enterprise shall
make active response to employees’ legitimate demands, and as
to demands without statutory basis, the enterprise may formulate
pacification plan according to the actual situation on the basis of
full consideration to the pros and cons. If there is violence in
the strike, such as destroying enterprise’s production
materials or facilities or other illegal acts or severe violations
of discipline, the management shall make a prompt decision, such as
to call the police or terminate the employment contract.

Second is the relationship with the government. The enterprise
shall have advanced, in-process and subsequent communication with
the labor administrative departments, public security departments,
trade union and other relevant functional departments so that they
can make a positive impact on the settlement of strike and enforce
the laws in a neutral attitude.

Third is the relationship with the media. The enterprise shall
consolidate an internal consistent statement on the incident, and
designate professionals to have dialogues with media to avoid the
negative effects on the media.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.