Photo credit: humphery / Shutterstock.com
Starting on 7 June this year, factories of Akcome Technology in Zhejiang, Jiangxi and Jiangsu suddenly announced production stoppages and required employees to take a 2-3 month leave. The next day, workers gathered in the administrative office of the factories. They protested that the company tried to avoid economic compensation by arranging a lengthy furlough period and leaving workers with meagre pay. The company’s self-claimed business partners, who are regulated by the German Supply Chain Law (such as Bosch), should start conducting due diligence investigations about potential harm to workers' interests.
A furlough plan that forced workers to resign voluntarily
Akcome Technology is an early entrant in the solar panel industry and is the first listed private enterprise in the sector in China. The company has been listed on the Shenzhen Stock Exchange since 2011, raising over 5 billion yuan from the capital market. Many of its group's subsidiaries have registered capital in billions of yuan.
The solar panel industry has faced significant upheaval over the past two years, and the group has not been exempted. A worker revealed that its factory in Ganzhou, Jiangxi, had partial shutdowns as early as March 2024. On 8 June 2024, the Ganzhou factory and the factory in Huzhou, Zhejiang, issued notices about the production suspension.
Management of the Ganzhou factory stated that production would halt from June 8 until 31 August. Employees would still receive their usual salary levels for the first month. However, they would only receive 70% of the local minimum wage from the second month onward. Also, workers would have to pay for their social security contributions, housing provident fund, personal income tax, and dormitory utilities.
In addition, workers were prohibited from engaging in other jobs. If workers find a new job, their living allowances will be cut. This puts workers in a dilemma: they must either accept a few hundred yuan per month while waiting to resume work, or find another job and forfeit any severance payment since they voluntarily resign. A worker said online,
"Basic salary 1,720 yuan × 70% — about 600 yuan by deducting the social insurance and housing fund, and we are not allowed to take other jobs. How can we live like this?"
According to workers’ calculations, they would only receive around 600 yuan per month, and they refused to accept a wage that could not even cover living expenses. They demanded that the company provide a new plan and compensate those who chose to resign. A worker said,
"It's a shutdown, an unreasonable long-term holiday arrangement, forcing people to leave without wanting to pay compensation. We ask every worker who sees this to spread the word."
A video showed workers in the Huzhou factory saying to the management, "We do not accept the plan you proposed."
Photo: Workers of Akcome Technology gathered in the administrative office of the factory in Huzhou, Zhejiang
Company management showed no intention to negotiate with workers
According to Labour Law in China, when a company makes a decision that directly impacts workers' interests (like a work stoppage), it must hold a conference of workers or discuss it with all employees.
However, based on statements from workers at the Akcome factories, the decision to stop production was implemented the day after the announcement. A worker said,
"We were working on the morning of the 7th, and the notice came out in the afternoon. It's a disguised layoff, and we don't even know if we'll get our wages."
The abrupt implementation showed that the management had not considered negotiating with the workers beforehand. From this perspective, their approach may have violated the Labour Contract Law. Article 4 of the law stipulates that when an employer makes important decisions related to labour remuneration, working hours, rest and vacation, etc., “which have a direct bearing on the immediate interests of workers”, such decisions must be discussed by the conference or all employees. Companies must “make decisions after consulting with the trade union or the representatives of the workers on an equal footing”.
The management also violated Company Law Article 17, which stipulates that when a company decides on major issues in its operations, it should listen to the opinions of the company's trade union and suggestions of employees through a conference of workers or other forms.
Photo: The company notice issued by the management of the Ganzhou factory
The company notified employees on 7 June and implemented the arrangement the next day. With such a short notice period, workers could not prevent the execution of the plan even if they raised objections. The company also did not negotiate with the trade union and workers' representatives.
Possible wage arrears and prohibiting workers from finding temporary work
Some workers at the Ganzhou Akcome factory also reported that their wages for May and June had not been paid. Since there were reports that the chairperson was under investigation by the China Securities Regulatory Commission, the gates of the company headquarters in Hangzhou were locked and the place was deserted. Workers were also protesting wage arrears and were concerned about whether the factories would resume production.
Akcome’s announcement of furlough without paying wages for the previous month violates Article 50 of the Labour Law, which regulates that "wages shall be paid to the workers themselves in currency on a monthly basis. No deductions or unjustified delays in wage payments are allowed."
However, the company’s arrangement to suspend production deserves a more nuanced analysis. While companies facing adverse market conditions can temporarily suspend production, it should be added that a suspension of more than six months needs justification, or else the company’s license will be revoked. Article 211 of the Company Law states that if a company, without justified reasons, “suspends business for six consecutive months after commencement, its business license can be revoked by the company registration authority."
Regulations of wage payment during production suspensions vary locally. For example, the Zhejiang government stipulates that wages should be paid according to the labour contract during the first month of suspension. However, the living allowance can be lowered to 80% of the minimum wage starting from the second month. The Jiangxi government did not specify the living allowance for the second month onwards, but a legal case in 2022 shows that the Jiangxi Higher People's Court supports paying workers 70% of the local minimum wage during the standby period. Therefore, the allowance payment did not violate the law in China, although it is insufficient for workers to live in the local area.
As for the prohibition of seeking temporary or part-time work during production suspension, legally, the company does not hold the right to do so. Akcome's notice stated that workers should voluntarily resign and terminate their labour contract if they wanted to establish a labour relationship with another company. In reality, the company does not have the authority to establish these rules unilaterally without the workers' consent. Forcing workers to live on less than a thousand yuan per month for three months while prohibiting them from earning extra income constitutes a potential abuse of power.
Business partners of Akcome should conduct due diligence investigations
Akcome Technology’s official website claims that its clients include well-known multinational companies such as Bosch, Panasonic, Toyota, LG, SolarCity (the largest solar power company in the United States) and others. Bosch is a multinational company regulated by the German Supply Chain Act and has a responsibility to investigate whether the Akcome Group harmed workers' rights when planning production stoppages.
Photo: Companies claimed as business partners by the Akcome Technology Group
The scope of the investigation should include the following concerns:
1) Did Akcome owe workers’ wages for months?
2) Did Akcome implement work stoppages without consultation with workers and unions?
3) Were workers forbidden to take up other jobs during the stoppages? Did Akcome use the stoppages to evade legally required compensation?