New Rules On Democratic Organization In Chinese Enterprises

The PRC Labor Contract Law, effective since 1 January 2008, requires an enterprise to follow democratic procedures whenever it formulates or amends any rules or makes any important decisions that are directly related to the interests of the employees. It stipulates that the enterprise shall discuss the above rules and decisions with the employees, negotiate with the labor union or the employees' representatives on an equal basis. However, the law did not provide in details about the organization which can represents all employees to execute their legal rights in an enterprise.

On 13 February 2012, the Provisions on Democratic Management in Enterprises ("New Rules") were issued by the All China Trade Unions Federation jointly, together with other relevant Chinese authorities. The New Rules expressly provide that the Employees' Representative Congress ("ERC") is a democratic organization for employees to participate in the management of an enterprise. The New Rules