More Than 25 Employees: Do I Need To Establish A Trade Union?

More than 25 Employees: Do I Need to Establish a Trade Union?

Lucy Weng, Labor and Compliance Department

The establishment of a trade union in a company is always a point of focus between labour and capital. As far as management is concerned, especially for foreign invested companies, “trade unions” are synonymous with the term “trouble” in considering the difficulties companies might meet when dealing with collective bargaining and employment matters with the chairman of the trade union. Therefore, a vast amount of companies try to avoid the establishment of trade unions.

Many people say that a company with more than 25 employees should establish a trade union. In this context, certain companies might agree to set up trade unions where a higher level authority requires the company to do so, while some companies might question the authenticity of such a statement and refuse to set up a trade union.

As such, it must be asked whether the above-mentioned statement is true. In early August 2015, the Shanghai Federation of Trade Unions issued Tentative Measures for Employees to Join the Trade Union Outside the Enterprise 《关于在企业体制外组织职工加入工会的试行办法》(hereinafter “Tentative Measures”). What do these Tentative Measures mean? How would they affect the establishment of trade unions? 

1. Legal grounds for the establishment of a trade union

Article 3 of Trade Union Law: “All manual and mental workers in enterprises, governmental institutions and authorities within China who take wages as their main living support have the right to participate in and form trade union organizations in accordance with the law, regardless of their nationality, race, sex, occupation, religious belief, or education background. No organization or individual is allowed to obstruct or restrict this right.” 《工会法》第3条：“在中国境内的企业、事业单位、机关中以工资收入为主要生活来源的体力劳动者和脑力劳动者，不分民族、种族、性别、职业、宗教信仰、教育程度，都有依法参加和组织工会的权利。任何组织和个人不得阻挠和限制。”

Article 10 of Trade Union Law: “Any enterprise, governmental institution, or authority that has 25 or more members shall establish a grassroots trade union committee. Any enterprise, governmental institution, or authority with less than 25 members may establish a grassroots trade union committee either independently or jointly with the members of one or more other units, or may elect an organizer to organize the members to carry out their activities.” 《工会法》第10条：“企业、事业单位、机关有会员25人以上的，应当建立基层工会委员会；不足25人的，可以单独建立基层工会委员会，也可以由两个以上单位的会员联合建立基层工会委员会，也可以选举组织员1人，组织会员开展活动。”

According to the Trade Union Law, it is not a necessity for companies to establish a trade union unless the company has more than 25 trade union members. The aim of the Tentative Measures is to develop the employees of a non-trade-union company to become a trade union member in order to make sure the company meets the requirements of establishment of a trade union.

As a matter of fact, some trade unions have already taken such measures to force companies to establish a trade union. Currently, the measure is explicitly stipulated in the Tentative Measures, trade union committees at various levels might take such measure more actively.

2. The consequences of refusing to form a trade union

According to the Trade Union Law, “Any party that obstructs an employee from lawfully participating in or organizing a trade union, or obstructs a trade union at a higher level from assisting or guiding employees to establish a trade union, shall be ordered to take remedial action by the administrative department of labour. Where the party responsible fails to take remedial action, the administrative department of labour shall submit the case to the appropriate people's government at or above the county level to be dealt with. Where the obstruction is in the form of violence, threats, etc., resulting in serious consequences, and constitutes a criminal offence, criminal liability shall be pursued in accordance with the law.” “阻挠职工依法参加和组织工会或者阻挠上级工会帮助、指导职工筹建工会的，由劳动行政部门责令其改正；拒不改正的，由劳动行政部门提请县级以上人民政府处理；以暴力、威胁等手段阻挠造成严重后果，构成犯罪的，依法追究刑事责任。”

That is to say, where a trade union at a higher level persuades employees to join the union, the company is not at liberty to obstruct the process. Any company which fails to obey the Tentative Measures shall be ordered to take remedial action. However, this penalty appears to be weak with regard to promoting the establishment of a trade union, especially in comparison with some provinces, including Beijing and Jiangsu, where they employ such measures as collecting trade union preparation funds.

3. Other measures to promote the establishment of a trade union

In addition to the measures stipulated in the Tentative Measures, a question to be asked is whether a trade union at a higher level has any other measure to force a company to establish a grassroots trade union committee within the company.

In Beijing, Guangdong, and Jiangsu, companies which have not established a trade union are to pay the preparation funds pursuant to the standard of 2% of the total amount of the salaries of all employees. Additionally, in order to avoid the default of payment, the local tax authorities will collect on an agency-basis the trade union preparation funds from the companies.

Some local trade unions work together with other governmental sectors to promote the establishment of trade unions, for example, by working with the Fire Department or Work and Safety Supervision Bureau. Such departments or bureaus might make a sudden unannounced investigation, bringing up different kinds of security issues and concerns pushing the company to establish a trade union to strengthen the administrative management of the company and to avoid such issues and concerns. Though measures such as the aforementioned are non-formal actions, they would put significant pressure on a company and force them to establish a trade union.

The basic duty of a trade union in China is to protect the legitimate rights and interests of employees. In addition, a trade union also has the obligation to support general business administration, increase working quality, educate employees on rules and regulations, and mobilize employee enthusiasm. Unlike trade unions in Europe, Chinese trade unions do not possess the right to organize a strike. Therefore, Chinese companies do not need to react strongly against trade unions, and can consider the establishment of trade unions with the “right timing” according to their own circumstances.