Labor Disputes in China’s Local Government-Led Enterprise Restructuring: A Litigation Case Study*, **

Abstract

In legal practice in contemporary China, courts usually distinguish between government-led enterprise restructuring 政府主导的企业改制 and independent enterprise restructuring 企业自主改制. Following contract logic, the courts believe that labor disputes related to government-led enterprise restructuring are not contract disputes—that is, they are not disputes between equal parties, which is required for civil litigation—and are therefore generally not accepted. Moreover, in actual legal practice, the scope of application of the principle of government-led restructuring has been expanded, with the courts adopting a very broad standard. In addition, a considerable number of cases are excluded on the grounds that the time limit imposed on arbitration has been exceeded. This in effect has replaced the older principles surrounding labor relations in enterprise restructuring led by local governments. The actual practice of the principle of government-led restructuring should be understood in the larger framework of multidimensional and complex relationships between local governments and the market. The use of local government power in conjunction with the logic of contract in effect enlarges the scope for setting aside the older principles of labor relations for the purpose of enhancing the market competitiveness of enterprises and promoting economic development. The result has been a marked degree of social injustice. The construction of labor laws should be rooted in actual conditions, and not overemphasize the formalism of contract logic and ignore the substantive logic of labor relations.