Answer: According to the Employment Contract Law in China, after employees negotiate collectively and sign collective contract with their employer, the collective contract shall be registered with labor administrative agencies (normally the local labor Bureau). If the agency did not raise objection within 15 days, this collective contract just becomes effective.¹Articles 51 and 54 of the Employment Contract Law of the People’s Republic of China

Whether the collective contract is effective or not may be related to the determination of whether the employer has effectively signed employment contracts with their employees and the corresponding liability for double-wage damages in the absence of written employment contract. ² This is a special damages under the Employment Contract Law 2008 where an employer is liable to pay the same amount of wages as punishment for the duration in which no written employment contract is in place without legitimate reasons. For example, in the case of He Zijian before Shenzhen Intermediate Court of Guangdong Province in 2021, the court held that although the employee had signed a collective contract with the employer, the collective contract had not come into effect because it had not been submitted to the labor administrative department, and that the employer was deemed not to have signed a employment contract with the employee and should compensate double-wage damages.³Siping Pengcheng Property Management Co., Ltd. and Zhang Jinhua Employment dispute Appeal Case Civil Judgment before the Siping Intermediate People’s Court of Jilin Province (2016) Ji 03 Min Zhong No.1144. Shenzhen Lingqi Industrial Co., Ltd., He Zijian Employment Dispute Civil Judgment of Second Instance Civil Judgment of Shenzhen Intermediate People’s Court of Guangdong Province (2021) Yue 03 Min Zhong 16252 No. Bazhou Ditong Trenchless Engineering Co., Ltd. v. Hongjiang Employment Dispute Case, People’s Court of Korla City, Bayingolin Mongol Autonomous Prefecture, Xinjiang Civil Judgment (2015) KMCZ No.1828.In addition, there are also decisions, such as the case of Pan Yabao before Zhaoqing Intermediate Court in 2016 and the case of Tian Fan before Beijing Third Intermediate Court in 2022, which hold that even if a collective contract has been signed, it can not be regarded as a signed employment contract and exempted from the responsibility of double-wage damages.⁴Employment Dispute between Guangdong Tairi Elevator Co., Ltd. and Pan Yabao Civil Judgment before the Guangdong Zhaoqing Intermediate People’s Court (2016) Yue 12 Min Zhong No.287. ¡°Even if the employer and the trade union have signed a collective employment contract, they should also sign individual employment contracts with the workers.¡± Civil Judgment of Second Instance of Employment Dispute between Beijing Aozhiya Trading Co., Ltd. and Tian Fan Civil Judgment before the Third Intermediate People’s Court of Beijing (2020) Jing 03 Min Zhong No.11595.

The entry into force of a collective contract may also affect the terms and conditions of an employee’s individual employment. Although Article 55 of the Employment Contract Law means that the wage level of an employee’s individual employment contract shall not be lower than the wage level of the equal position in the collective contract, in the judicial practice, some courts have made contradictory decisions based on the rules of Article 11 of the Employment Contract Law on the determination of wage amount.⁵Luo Rongheng, Dujiangyan Branch of Chengdu Rural Commercial Bank Co., Ltd. Civil Ruling on Employment Dispute Retrial Review and Trial Supervision, Sichuan High Court Civil Ruling (2018) Chuan Min Shen No.4332. ¡°Article 11 of the Employment Contract Law of the People’s Republic of China stipulates that¡­¡­that is to say, wages are determined first according to the employment contract, the collective contract is applicable only when there is no or unclear provision in the employment contract, and the principle of equal pay for equal work is implemented only when further there is no collective contract. Therefore, it is not necessary to consider the rule of individual contracts¡¯ conditions not being lower than that of collective contract.¡±In the case of Xu Xiaohong before Shenzhen Intermediate Court in 2014, the court also held that the wage growth ratio of individual contracts could not refer to the average wage growth ratio stipulated in collective contracts.⁶Xu Xiaohong and Wal-Mart SZITIC Department Store Co., Ltd. Shenzhen Zhongshan Branch, Wal-Mart SZITIC Department Store Co., Ltd. Employment Dispute Civil Judgment of Second Instance Civil Judgment before the Shenzhen Intermediate People’s Court of Guangdong Province (2014) Shen Zhong Fa Lao Zhong Zi No.4500.Therefore, the rule that the conditions of individual contracts must not be inferior to those of collective contracts does not appear to be enforceable in practice.

The rule that individual contract conditions shall not be less favourable than collective contract conditions in China’s employment law is different from the rule of collective contract under common law. Common law countries such as New Zealand stipulate that “collective contract conditions shall not be applied automatically unless the employee joins the trade union”, in order to protect the collective bargaining advantage of the trade union. Employees shall be formally entitled to the conditions stipulated in the collective contract only if they pay union dues to become members.

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Mr. Wangdong

Mr. Dong Wang has been in practice for over 20 years, specializing in business law, including employment law, commercial law, company law, and intellectual property law. Mr. Wang has earned respect and trust from his clients due to his professionalism, fidielty, and kindness.

Email: wangdong@royalaw.com

• 1
  Articles 51 and 54 of the Employment Contract Law of the People’s Republic of China
• 2
  This is a special damages under the Employment Contract Law 2008 where an employer is liable to pay the same amount of wages as punishment for the duration in which no written employment contract is in place without legitimate reasons.
• 3
  Siping Pengcheng Property Management Co., Ltd. and Zhang Jinhua Employment dispute Appeal Case Civil Judgment before the Siping Intermediate People’s Court of Jilin Province (2016) Ji 03 Min Zhong No.1144. Shenzhen Lingqi Industrial Co., Ltd., He Zijian Employment Dispute Civil Judgment of Second Instance Civil Judgment of Shenzhen Intermediate People’s Court of Guangdong Province (2021) Yue 03 Min Zhong 16252 No. Bazhou Ditong Trenchless Engineering Co., Ltd. v. Hongjiang Employment Dispute Case, People’s Court of Korla City, Bayingolin Mongol Autonomous Prefecture, Xinjiang Civil Judgment (2015) KMCZ No.1828.
• 4
  Employment Dispute between Guangdong Tairi Elevator Co., Ltd. and Pan Yabao Civil Judgment before the Guangdong Zhaoqing Intermediate People’s Court (2016) Yue 12 Min Zhong No.287. ¡°Even if the employer and the trade union have signed a collective employment contract, they should also sign individual employment contracts with the workers.¡± Civil Judgment of Second Instance of Employment Dispute between Beijing Aozhiya Trading Co., Ltd. and Tian Fan Civil Judgment before the Third Intermediate People’s Court of Beijing (2020) Jing 03 Min Zhong No.11595.
• 5
  Luo Rongheng, Dujiangyan Branch of Chengdu Rural Commercial Bank Co., Ltd. Civil Ruling on Employment Dispute Retrial Review and Trial Supervision, Sichuan High Court Civil Ruling (2018) Chuan Min Shen No.4332. ¡°Article 11 of the Employment Contract Law of the People’s Republic of China stipulates that¡­¡­that is to say, wages are determined first according to the employment contract, the collective contract is applicable only when there is no or unclear provision in the employment contract, and the principle of equal pay for equal work is implemented only when further there is no collective contract. Therefore, it is not necessary to consider the rule of individual contracts¡¯ conditions not being lower than that of collective contract.¡±
• 6
  Xu Xiaohong and Wal-Mart SZITIC Department Store Co., Ltd. Shenzhen Zhongshan Branch, Wal-Mart SZITIC Department Store Co., Ltd. Employment Dispute Civil Judgment of Second Instance Civil Judgment before the Shenzhen Intermediate People’s Court of Guangdong Province (2014) Shen Zhong Fa Lao Zhong Zi No.4500.