How to prevent group disputes in placement of employees

In recent years, a new round of industrial transfer, especially in the manufacturing industry, has emerged in China because of rising land prices, relocations of industrial parks, a rise in environmental protection, and an increase in labour costs. Many enterprises, especially foreign-owned ones, responded to this new challenge by means of equity or business transfer, merger, relocation, or even by moving out of China. All these circumstances involve placement of employees (including redundancies).

It has been more than 10 years since the Labour Contract Law came into effect. Employees’ consciousness of rights has been continuously strengthened and the trend of labour disputes has changed from “disputes over rights” to “disputes over interests”. The arrangement of employee placements has been become increasingly difficult for enterprises, and it is easy to cause group disputes if an improper decision is made. A recent case is a group dispute over the cuts of certain production lines of Nitto Denko, in Suzhou, in January this year.

The reasons for group disputes are various and include insufficient prior investigation, unreasonable placement plan, untimely communication between management and employees or labour unions, absence of strong support from local governments and labour unions at higher levels, or non-co-operation of key employees and improper on-site actions. To avoid group disputes and ensure smooth placement of employees, the following recommendations are provided.

Qi Bin is the PRC employment legal service leader and Felix Wu is a senior attorney at Xin Bai Law Firm. Rui Bai and Xin Bai are independent law firms and members of the PwC global network of firms.