The best way to get sued in China

A few days ago, Dan Harris of the China Law Blog confirmed a trend that we at CLB and others have noticed recently, namely that the non-payment of overtime is becoming the biggest single cause of labour-related lawsuits and arbitration cases in China.

The problem has become particularly severe as the economy picks up again and enterprises, many of whom sacked vast numbers of workers last year, pressure their remaining employees to work long hours in order to fulfill new contracts.

But as Dan Harris notes, there are very clear legal provisions in China on the remuneration of overtime, and there is “no excuse for not paying overtime… or for not having a written contract with your employees.”

“My firm has handled around a half a dozen cases where foreign companies came to us after having been sued for having failed to pay overtime. In every single instance, our advice and eventual action was to settle the claims because they were all valid.”

He goes on to say: “Interestingly, despite all of them having been valid, we were able to settle them for considerably less than full value because the employees were so desirous of getting a lump sum payment and fast.”

This backs up another trend we have noticed recently in the labour dispute resolution process; namely that more and more cases are being settled out of court or through mediation. This is partly because the Chinese government is actively encouraging the use of mediation, but also because the courts and labour dispute arbitration committees are so overwhelmed with caseloads at present. In many cases, workers are reluctantly agreeing to settle for less than they are legally entitled to, just so that they can get some cash in hand and don’t have to wait for up to a year to go through the whole legal process – a process that can in any case be deliberately extended by employers maliciously appealing clearly just verdicts in favour of the workers.
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