Unveiling the legal effect of collective agreements in China

Purpose The purpose of this paper is to examine the actual legal effect of collective agreements by focusing on the litigation regarding the implementation of collective agreements in China where current literature on the topic is scarce. Design/methodology/approach This paper deploys both quantitative and qualitative methods to investigate the features of litigation regarding collective agreements. The judgments on collective agreement by people’s courts nationwide from 1 January 2014 to 31 December 2018 provide the primary empirical data. The intrinsic features of collective agreement disputes are investigated to delineate different sorts of theoretically presumed legal effect, namely contractual, normative and other (if any). A number of collective agreement templates and texts have been gathered and analysed to further explore the factors leading to collective agreement disputes. A dozen of labour law professionals, workers, scholars and trade union officials, were interviewed to verify the findings. Findings The number of collective agreement disputes is relatively small compared to the number of valid collective agreements or the volume of other labour disputes. This study found no litigation initiated by trade unions to claim a remedy against a violation of a collective agreement by an employer. However, a growing number of cases were filed by individual workers to complain about the terms and conditions of their individual employment agreements in contradiction to the existing collective agreement. These data do not mean that collective agreements lack problems or have no significance in action. A novel effect – a “substitution effect” – is evident in the existing labour litigations and relatively popular amongst employers, as they often refer to the collective agreement when a written individual agreement, as the mandatory document, is absent. The advent of substitution effect reflects a pragmatic view amongst Chinese labour law professionals, employers and workers. Research limitations/implications Due to the recent establishment of the online judgments database, this study has focused on collective agreement litigation in people’s courts from 2014 to 2018, which is representative of the national trend of such disputes and thus provides valuable insights. Future studies should cover a wider time span and extend to the collective agreement disputes subject to labour arbitration to provide a fuller picture of the challenges and potential solutions. Practical implications By understanding the legal effect of collective agreements in reality, the legislature, workers and employers can act accordingly to enhance or empower it. The insignificant volume of both contractual and normative claims on collective agreements indicates the pressing need to inject something concrete into both substantive rights and the implementation mechanisms of collective agreements. The existence of substitution claims illustrates the room for further implementation of written individual agreements to reduce the need to borrow from collective agreements to fill the void left by the absence of individual agreements. Originality/value This study uniquely evaluates collective agreement disputes in China to seek their true legal effect, finding the substitution effect of collective agreements that was absent from the prior literature. The features of collective agreements are reflected in this work, together with public policy and theoretical implications.