Rare decision: Xiamen labour panel punishes foreign-run company in dispute over workers' strike

Legal experts say ruling is 'rare' as companies usually win the upper hand in such cases due to loopholes in the law

PUBLISHED : Wednesday, 11 June, 2014, 12:08pm
UPDATED : Wednesday, 11 June, 2014, 2:25pm

A labour dispute committee penalised a foreign-run electronics company for firing 34 workers after going on strike - in a rare move that challenges an arbitration system typically seen as favouring employers.

The workers had walked out of the plant in Xiamen, Fujian province, earlier this year to oppose plans to relocate the factory. Kewei Tongchuang, backed by Singapore investment and managed by Americans, had accused the 34 employees on strike of violating company regulations by not showing up to work.

The company issued an ultimatum, saying they should be back to work by February 28 or they would be fired. The striking workers returned to the factory floor on March 3, but were sacked the next day due to “violations to company policy”.

The workers challenged their termination before the Xiamen government’s labour arbitration committee.

Local governments bear huge pressure of maintaining stability. Many don’t want to convey the impression that strike is a way to solve [a] dispute
Legal expert

The panel ruled yesterday that the workers had reasonable cause not to show up to work and that their industrial action should not be seen simply as a company rule violation. On top of that, the committee ordered the firm to compensate the workers.

The labour committee’s decision was extraordinary as mainland labour dispute arbiters – under pressure from stability-obsessed local governments – typically decide on the basis of discouraging future strikes, according to legal experts.

"Local governments bear huge pressure of maintaining stability,” a legal expert familiar with the Kewei case said. “Many don’t want to convey the impression that strike is a way to solve [a] dispute.”

The company refused to accept yesterday’s decision and will take the case to court. Calls to Kewei’s offices went unanswered.

Thirty-four senior workers led negotiations from last May to February about Kewei’s proposed relocation, before deciding to go on strike for 16 days that month. They said they were barred from entering the gates on February 14.

Kewei, which proposed the plan in May, had offered to pay relocation fees, such as transport and housing, but the workers still opposed the move.

The term “strike” does not have a legal definition in the Labour Contract Law in China – but “violations to company regulations” does, Ge Lei, a labour dispute lawyer in Beijing, told the South China Morning Post.

Although the right to strike is enshrined in the constitution, “often [a] strike is treated as absenteeism, which violates company regulations”, according to the legal expert, who asked for anonymity due to the sensitivity of the matter. The expert said court rulings or arbitration decisions not in favour of companies were “very infrequent”.

According to the source, the committee argued that absenteeism was caused only by personal reasons – which was not applicable in the Kewei workers’ case. It also noted that the factory shut the gates at one point, preventing the striking workers from returning to work, should they choose to.

The committee found that Kewei Tongchuang violated the Trade Union Law, which states that “trade unions shall coordinate labour relations, and safeguard the labour rights and interests of … employees through equal negotiation and a collective contract system”.

But Kewei’s management unilaterally terminated contracts without informing the union.

The legal expert said the Xiamen committee in this case was not subjected to any outside pressure. “Xiamen has a healthy legal environment. The administration doesn’t interfere too much in the legal system. The case [did not face] interference from the local government.”