Trade union participation in company layoffs does not completely take away the flexibility of employers to fire, labor law experts say.
"The government is not using unions to interfere with companies' management," said Professor Jia Junling from the Law School of Peking University, who was involved in reviewing the draft of a new law regulating employment contracts. "Unions aim to safeguard the rights and interests of workers who are placed in a disadvantaged position in the market economy."
The labor contract law, which has been put forward in draft form and has invited public comment, has aroused concerns from foreign companies because a provision states that employers might have to consult unions or representative assemblies of workers about mass layoffs.
Employers are worried their flexibility in hiring and firing, guaranteed in Chinese economic reforms, might be taken away, even though the National People's Congress (NPC), the country's top legislature, still needs to make a final review to ensure the draft becomes law.
"Foreign companies will probably be concerned and their worries are legitimate," said Jin Jun, a lawyer with a law firm called Siway & Seaway in east China's Jiangsu Province, even though the firm has not received a single complaint from its clients, ranging from large multinationals to small privately owned businesses.
"Unions should be excluded from the two main bodies that deal with labor contracts," he said. "But the law coerces companies to accept the interference of unions when they plan layoffs."
He said the provision would be difficult to run because the proposed law and related rules do not regulate the legal liability or punishment for employers if they axe workers without consulting workers' organizations.
But labor experts participating in reviewing the draft believe the provision could be run and stressed the law was designed to protect the rights of Chinese laborers whose collective bargaining ability was weaker than that of management.
"The provision applies only when companies face financial difficulties, acquisition or merging, and when they need ratifications," said Jia, who is among a panel of experts appointed by the top legislature to explain the law.
It aims to curb employers from firing without consequences when there is an economic recession, she said.
Also, the exact wording of the provision states that employers should explain the conditions of any redundancies to unions or representative assemblies of workers when they need to axe more than 50 workers, and reach an agreement with the latter, showing the power is not totally in the hands of employers.
And Rui Lixin, an official with the legal affairs department of the Ministry of Labor and Social Security, said the employer could sack less than 50 workers without any communication with unions.
"It complies with Labor Law and Trade Union Law," said Li Jianfei, a law school professor with Renmin University of China, because it has been considered legal for unions' to participate when employers plan regular or economic layoffs.
"It's an international norm that hiring is easier than firing," he said.
(China Daily March 27, 2006)