Chinese Labor Dispute Resolution

Labor Dispute Mediation and Arbitration Law

The Labor Dispute Mediation and Arbitration Law of the People’s Republic of China (láodòng zhēngyì tiáojiě zhòngcái fǎ), effective 1 May 2008, establishes the framework for resolving individual and collective labour disputes. The Law creates a three-tier dispute resolution system: negotiation and mediation, compulsory arbitration, and judicial review. The Law was enacted in response to the rapid increase in labour disputes following the 2007 Labour Contract Law and the growing formalisation of China’s labour market.

The Law applies to disputes arising from: (1) confirmation of labour relationships; (2) conclusion, performance, variation, rescission, and termination of labour contracts; (3) dismissal, resignation, and resignation procedures; (4) working hours, rest, and leave; (5) social insurance; (6) remuneration, overtime pay, and economic compensation; and (7) other matters specified under labour laws and regulations.

Arbitration Procedure

Labour dispute arbitration in China is mandatory and preliminary — parties must submit their dispute to arbitration before seeking judicial review. The Labor Dispute Arbitration Commission (láodòng zhēngyì zhòngcái wěiyuánhuì), established at the municipal and county levels, has exclusive first-instance jurisdiction. The Commission comprises representatives from the local labour administration department, trade unions, and enterprise organisations.

The arbitration process begins with the filing of an application within one year of the date on which the party knew or should have known that their rights were infringed. The Commission must accept or reject the application within five working days. Accepted cases are assigned to an arbitrator or a three-member arbitration panel for hearing within 45 days of acceptance, extendable by 15 days. The hearing is conducted with the parties presenting evidence and arguments, and the arbitrator(s) may attempt mediation during the process. The arbitration award must be issued in writing with reasons and served on the parties.

Labor Departments

The Ministry of Human Resources and Social Security (MOHRSS) sets national policy for labour dispute resolution and oversees the arbitration system. At the local level, the Bureau of Human Resources and Social Security in each province, municipality, and county administers the arbitration commissions, appoints and trains arbitrators, and monitors case processing performance.

The labour inspection system operates in parallel with the dispute resolution system. The Labour Inspection Regulations (2004) empower labour inspectors to investigate employer compliance with labour laws, impose administrative penalties, and order corrections. Labour inspection findings may be used as evidence in arbitration proceedings, and labour inspectors may issue labour inspection recommendations that arbitrators consider.

Evidence Rules

The Rules of Evidence for Labor Dispute Arbitration (2010) establish the evidentiary framework for labour arbitration proceedings. The general burden of proof falls on the claimant, but the law shifts the burden to the employer in certain circumstances. The employer bears the burden of proving: (1) the existence of a lawful basis for dismissal; (2) compliance with overtime pay obligations; (3) the provision of statutory leave; and (4) the accuracy of wage records.

Employers who fail to maintain required records (including wage ledgers, attendance records, and labour contract records) face adverse evidentiary inferences. The arbitration commission may draw such inferences as are unfavourable to the employer where records are missing or incomplete. Documentary evidence is given primary weight, supplemented by witness testimony, expert opinions, and physical evidence. Electronic evidence, including email, instant messaging records, and electronic attendance data, is admissible subject to authentication requirements.

Enforcement of Arbitration Awards

Arbitration awards in labour disputes distinguish between non-final awards (fēi zhōngjú cáijué) and final awards (zhōngjú cáijué). For certain categories of claims — including remuneration, medical expenses, and economic compensation — the arbitration award is final and binding on the employer but subject to review on application by the employee. The employer may challenge the award only through an application to set aside within 30 days, and only on limited grounds.

Non-final awards may be appealed to the people’s court within 15 days of receipt. The court hears the case de novo and may uphold, vary, or reverse the arbitration award. Court judgments in labour cases may be appealed to the intermediate people’s court. The enforcement of final arbitration awards and court judgments is under the Civil Procedure Law, with labour claims enjoying priority in distribution and simplified enforcement procedures.

Collective Disputes

The Labor Dispute Mediation and Arbitration Law provides specific procedures for collective labour disputes (jítǐ láodòng zhēngyì) involving multiple workers. Where 10 or more workers have the same claim against the same employer, they may elect representatives (up to five) to participate in arbitration proceedings on their behalf. Collective disputes are given priority processing and must be resolved within a shortened timetable.

For collective contract disputes concerning the negotiation and performance of collective agreements, the law requires mediation as a precondition to arbitration. If mediation fails, the dispute may be submitted to the Labor Dispute Arbitration Commission, which applies specialised procedures for collective contract cases. Strikes and lockouts are not explicitly addressed in the arbitration law but are regulated under other legislation and Party-state guidance emphasising social stability and the resolution of collective disputes through institutional channels.

Model Cases

The Supreme People’s Court and MOHRSS jointly publish typical cases (diǎnxíng ànlì) of labour dispute resolution to guide lower courts and arbitration commissions. These model cases address recurring issues including: the determination of labour relationships in the platform economy (gig workers); the validity of non-compete clauses; the calculation of overtime pay under flexible working arrangements; and the rights of workers during enterprise reorganisation.

The model case system has been particularly active in addressing the legal status of delivery drivers and ride-hailing drivers employed through digital platforms. These cases have established principles including: (1) that platform workers may be deemed employees where the platform exercises significant control over their work; (2) that algorithms used to manage platform workers must comply with labour law; and (3) that platform workers are entitled to minimum wage and social insurance coverage in appropriate circumstances.