Migrant Workers start to win significant compensation awards in the courts

In August 2006, a 36 year old migrant worker from Hubei was seriously injured after falling at a construction site in Shenzhen. According to the Shenzhen Commercial Daily, the worker named Hong was paralyzed by the accident preventing him from working again. He'd also run up huge debts due to his medical expenses. In May 2007, Hong filed a complaint with Shenzhen's Bao'an Labour Dispute Arbitration Committee (LDAC) demanding compensation from his employer. The committee decided that, given his substantial medical bills and the fact that Hong was his family's main breadwinner, he should be awarded the ground-breaking figure of 440,000 yuan in compensation. The construction company initially challenged the committee's decision but on 16 October, the Bao'an District Court ruled that the award should stand.

China's more than 120 million migrant workers routinely suffer the worse forms exploitation and discrimination in the workplace; they work long hours for low pay, and all too frequently are cheated out of their legitimate wages. They work in extremely hazardous conditions but when they get injured or contract a work-related illness, employers will often deny any liability and seek to avoid paying anything but token compensation. Factory owners and managers exploit workers' lack of legal knowledge and awareness of their right in a bid to circumvent their own legal obligations. However, more and more workers are now seeking compensation for injury or non-payment of wages, and many like Hong are winning important judgments in the courts.

Higher and wider-ranging compensation awards

While Hong's compensation was noteworthy because the amount awarded – more than twice the standard 200,000 yuan offered in the case of mining fatalities - other recent compensation awards have significantly broadened the scope of successful claims. On 22 October 2007, Southern Daily reported that the Xingning Municipal People's Court in Guangdong awarded a worker named Song Wei 44,000 yuan in damages even though he had signed a contract waiving his rights to work related compensation. Song's left hand had been crushed in an accident at a mine in Xingning in August 2005. Even though the local labour department confirmed that Song had suffered a Grade-8 work-related injury, the Jiahua Mining Company refused to pay any compensation. There are ten grades of work-related injury, with Grade-1 being the most severe.

The following year, Song took his case to the Xingning LDAC which ordered the company to pay Song 45,000 yuan in compensation. Once again Jiahua Co refused to pay, this time on the grounds that Song, like millions of other migrant workers, was employed by a sub-contractor, and that he had signed a contract waiving his rights to compensation. When the case was brought to trial, the Xingning court ruled firstly that contracts signed by employees waiving their right to industrial injury compensation had no legal grounds and therefore no binding force; and secondly that even though Song worked for a sub-contractor, he still had an employment relationship with the main contractor. The court re-affirmed Jiahua's legal obligations and ordered it to pay Song 44,000 yuan in compensation.

Companies ordered to pay up

Probably the most widespread grievance of migrant workers is the non-payment of wages. However workers' attempts to claim wages in arrears though the arbitration and court systems have been hampered by a common misunderstanding of China's Labour Law. Article 82 of the Labour Law states that: “In raising an arbitration claim a party should make a written application to the LDAC within 60 days of when the labour dispute first occurred.” Many legal and government officials have assumed this stipulation meant claims for wages in arrears could only be for two months at the most. However, in December 2006, the Longgang District Court in Shenzhen awarded a migrant worker named Hu two years worth of unpaid overtime wages, totaling more than 46,000 yuan.

The Southern Workers' Daily reported that Hu first started working at the Lichang furniture factory in Longgang in July 2000 on a monthly wage of 1,350 yuan. For the next six years, Hu worked at least nine hours a day every day, including weekends, and sometimes had to work three or four hours overtime, yet the factory refused to pay him any overtime, saying his wages were calculated on a piece-rate system. On 18 April 2006, Hu resigned due to ill-health , and soon afterwards filed a complaint with the Longgang District LDAC demanding unpaid overtime. The committee ordered Lichang Co to pay Hu two months worth of unpaid wages, plus an additional 25 percent in compensation, totaling about 3,800 yuan.

Hu refused to accept the ruling and sued Lichang in the Longgang District Court for two year's unpaid overtime, or more than 67,000 RMB. The court ruled, based on the "interpretation of the Supreme People's Court's laws related to labour dispute cases," that because the defendant was unable to produce the plaintiff's work records for the last two years, it should bear the legal consequences. Lichang was ordered to pay a total of 46,000 yuan in back pay and compensation. Lichang appealed the judgment and the outcome of the case is currently unclear.

China's two decade long economic boom has been accompanied by a commensurate rise in the number of labour disputes handled by LDACs. In 1991, LDACs across the country accepted 7,633 cases; by 2005 this figure had increased a staggering 41 times to 313,773. Under Chinese law, labour disputes have to be accepted by a LDAC before they can be accepted as civil case in a court of law. The LDAC arbitration system includes representatives of the workers, trade union and employer. However, according to a survey conducted by the Shanghai Municipal Trade Union in 2002, little more than one third of trade union representatives are directly elected by the workers. Many trade union representatives are indirectly controlled or influenced by employers, and in some cases appear at the committee as the representative of management. For example, in June 2007, when Lu Guorong was fired after losing one of her fingers operating crude machinery at a small rural factory in Hebei, she sought compensation at her local LDAC. During the arbitration hearing her official trade union representative appeared on behalf of the factory owner.

The ineffectiveness of the arbitration system

The arbitration system was established to handle individual workers' complaints, however most labour disputes are collective in nature, resulting, for example, from a factory's failure to pay any wages or health and safety issues that affect the entire factory. In these cases, workers find it is often more productive to strike or stage a public protest rather than go through the cumbersome and often ineffective arbitration process. From 1993 to 2003, according to official police figures, the number of mass protests grew from 10,000 incidents involving 730,000 protestors to 60,000 incidents involving 3.07 million protestors. And the single most important cause of these mass protests was labour disputes.

Many arbitration hearings end unsatisfactorily for workers, and even when the committee rules in favour of the complainant, because it is an administrative body with non-binding rulings, there is no guarantee the employer will agree to pay the compensation ordered.

However, the court system has recently proved to be a more beneficial avenue for the resolution of labour disputes. In 1995 China's courts handled 28,285 labour disputes; by 2004 that number had increased fourfold to 114,997. And if workers could get their case accepted by the courts they stood a much greater chance of success. Based on figures issued by the State Statistical Bureau, in 2005, workers won 47 percent of all cases accepted, employers 13 percent, with 40 percent having no clear winner. In other words workers had a 3.7 times greater chance of winning than losing a labour dispute in a court of law.

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