Solutions to Labor Dispute on the Employment of Foreigners in China

By Albert Chen

A subscriber of our website raised a question to us: what to do when countered a labor dispute for foreigners in China, who shall also be protected by local laws? To this question, you may find your answer in today’s post.

I. Are Chinese laws and regulations applying to labor disputes of foreigners?

The main existing laws regulating the employment of foreigners in China is RULES FOR THE ADMINISTRATION OF EMPLOYMENT OF FOREIGNERS IN CHINA (Rules) issued by police, labor and other two departments. According to Article 26 of the Rules:

“Should the labor disputes arise between the employer and its foreign employee， they should be handled in accordance With the Labor Law of the People’s Republic of China and the Regulations of the people’s Republic of China on Settlement of Labor Disputes in Enterprises”

Despite the later promulgation of Labor Contract Law, according to the above principle in the Rules, the latest articles in the Labor Contract Law shall also be applied when occuring labor dispute.

In fact, by the legislature of highest level of China, the labor relationship of foreign employees shall also be regulated by Labor Law and Labor Contract Law.

Article 2 of Labor Law: This Law shall apply to enterprises, individual economic organizations (hereinafter referred to as employing units) and laborers who form a labor relationship therewith within the territory of the People’s Republic of China.

Article 2 of Labor Contract Law: This Law governs the establishment of employment relationships between, and the conclusion, performance, amendment, termination and ending of employment contracts by, organizations such as enterprises, individual economic organizations and private non-enterprise units in the People’s Republic of China (“Employers”) on the one hand and Employees in the People’s Republic of China on the other hand.

II. How to settle the labor dispute?

By the existing laws, after the break out of the dispute, the foreign employee could choose the solution through negotiation or mediation, yet such procedures are not necessary in law. And once the employer refused to perform the agreement on the dispute settlement, the employee has no other choices but to file the arbitration for the coercive enforcement of the agreed plans. It also deserves your attention that the lawsuit for labor dispute in China could not be directly filed until the judgment of arbitration.

(1) Procedure of arbitration

By Law of the People’s Republic of China on Mediation and Arbitration of Labor Disputes (Mediation and Arbitration Law), any arbitration on the labor dispute shall be filed within 1 year after knowing or shall be known to the employee, unless the dispute is mainly for the remuneration within the employment, for which the employer could file the arbitration at any time within the employment, yet once the employment is terminated, such claims through arbitration shall also be filed within 1 year after the termination of the employment.

After receiving the application, the arbitration committee shall decide on the acceptance of the case within 5 days after it, and for the decision of refusal or failure to reply within legal period, the applicant could directly appeal to the local court.

After accepting the labor dispute, usually a tribunal consisting of 3 arbitrators will be in charge of the hearing, which shall be concluded within 45 days after the case filing as regulated in Mediation and Arbitration Law. Yet such hearing may last as longest as another 15 days once approved by the director of the committee when in complicated cases. By our experiences, the hearing of the labor dispute will be normally prolonged for a time, but the whole-lasting of it will no more than 2 months.

(2) Procedure of lawsuit

Usually the adjudication made by the committee could be appealed, excluding: 1) disputes in relation to the claim of labor remunerations, work-related injury medical expenses, economic compensation or damages which do not exceed the local monthly wage standard for an amount of 12 months; 2) disputes arising from working hours, rest days and leave days and social insurance in the implementation of state labor standards.

In addition to the above final adjudication, the parties in the arbitration, including both the employer and the employee, could file the appeal for their satisfaction on the arbitration decision. And the procedure of civil lawsuit will be followed for the hearing on the labor dispute. Generally, the appealed labor dispute will be heard for 6 months which may be prolonged for another 6 months as approved by head judge of the court. Surely, like other civil cases, the parties may file the appeal on the 1st instance judgment.

Furthermore, it shall also be alerting to foreign employers that the applicant’s failure to be present without proper reason or withdraws from the hearing without the approval of the arbitral tribunal, may lead to the decision on the revocation of arbitration application.

Actually, the legislature in China is emphasizing on the protection of employer’s interests, including those foreign labors. To take the Social Insurance Law as the example, it stress that all the foreign employees shall be included in the social insurance system, yet for reasons, mainly the self interests of the employees, such regulations are not coercive and the foreign employee may choose to participate in it at his/her wills. But these regulations also underline China’s effort to protect legal interests of foreign employees, and to our suggestions, once trapped in a labor dispute, the foreign employee could claim their legal interests with the help of local professionals.

Lawyer Contacts

You Yunting

86-21-52134918

youyunting@debund.com, yytbest@gmail.com

For further information, please contact the lawyer as listed above or through the methods in our CONTACTS.

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