China: CPC Central Committee and the State Council: Strengthening the Role of Employee Representative Congress to Protect the Vital Interests of Industrial Workers
On 21st October 2024, the State Council published the Opinions of the Communist Party of China (CPC) Central Committee and the State Council on Deepening Reform of the Industrial Workforce (the “Opinions“).
The Opinions outline 27 items across nine key areas, with a clear focus on improving enterprise democratic management policies. It emphasizes the need to strengthen democratic management policies in enterprises and public institutions by strengthening the employee representative congresses as the fundamental form. The Opinions stipulate that major matters concerning the vital interests of industrial workers shall be consulted with and approved by the employee representative congress in accordance with the law and the articles of association.
Furthermore, the Opinions reaffirm the importance of the roles of employee directors and employee supervisors within corporate governance structures. This is in direct alignment with the new Company Law that came into force in July of this year. The Company Law stipulates that for companies employing more than three hundred staff, excluding those that legally establish a supervisory board with employee representatives, the board of directors shall include representatives of the employees.
Key Action Points
Under PRC Employment Contract Law, the employer could formulate its internal policies in accordance with law. If such policies involve the matters such as working hours, work discipline, etc., which have a direct impact on employees’ immediate rights and interests, the said policies shall be discussed by the employee representative congress or all employees, and then determined by the employer after consultation with the trade union or employee representatives. This process is known as “Democratic Procedures” within the context of China’s employment law.
The Opinions potentially elevate the requirements for Democratic Procedures. When it comes to matters affecting the vital interests of industrial workers, the necessary Democratic Procedures extend beyond simple consultation; they necessitate the approval of the employee representative congress. However, it remains to be seen how this requirement will be interpreted and applied in judicial practice and will require further close observation.
