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Branch Union at Walmart Store in Hunan Province Appeals for Help

IHLO, 24 March 2014

Notice posted on 5 March at Walmart Chengde Store about business closure



Walmart has been planning to downsize their presence and close down the store at Chengde city of Hunan province. The branch union at Chengde store is representing its members for due compensation and involving the district FTU for support in every step it makes. Walmart agrees to pay the legal severance to workers, but not any economic compensation which the branch union claims for lack of a due procedure in closing down a company. Under the Labour Law, the employer should give one-month’s prior notice and consult the union before contract termination, retrenchment or deciding a re-structuring package.

The district and municipal FTU have failed to back up their subsidiary and get a settlement from Walmart which has secured the support and protection from the municipal government. The municipal government chooses to protect the world’s largest retailer arguing that there is no undue procedure. The branch union is pressed by the government to mediate a compromise and its members are harassed by Walmart to accept the company’s deal. Now assisted by a group of lawyers and labour academics as their consultants including Professor Chang Kai, who represented the Honda workers in the negotiation with the management in 2010, the branch union is also calling the provincial FTU and ACFTU for support.

Case Development  
Workers and the trade union at Chengde Store of Hunan province kept hearing rumours that the store was closing down due to poor business. The store employs 143 workers and 90% of them are women, with non-fixed term contract. The branch union at Chengde Store collected 15 demands from its members and drew up a plan for negotiation with the store manager. They demand economic compensation for the retrenchment under the 2N+1 plan, which is double of the legal minimum of severance compensation (of one month’s salary per year of service) plus an extra month’s salary of the 2014 level).

Other demands include their bonuses and incentives of the previous year, extra compensation to the pregnant workers, trade union fees (due to pay the branch union), unemployment insurance, pension premiums and other compensations. The branch union also wrote a letter to the district FTU and municipal FTU to inform and prepare them for support to future actions.

    1. Management secured the consent of the municipal government and party committee over the closure of Chengde Store and settlement of workers’ severances according to the law.


3.4 The District HR and Operation Mangers of Walmart began to call workers in for one-on-one ‘preliminary communication’. Workers rejected while the branch union requested the management to initiate an official negotiation and informing the upper FTU.

    1. Management posted up the closure notice, to be effective on 19 March. According to the pack, workers who volunteer to work in another store will be guaranteed the same pay and benefits. That applies mainly to the deputy store managers and above grade while most store employees do not want to leave their family to work in anther city. Those who prefer to quit the job are entitled to severances according to the law (ie one month salary per year of service). The management sent in a batch of workers and security guards from other stores to take up work from the current workers and ensure control over the goods and assets. In reaction the branch union arranged members to take shifts to keep a watch on their moves. The branch union went to the municipal FTU and labour bureau for assistance.  


3.6 Workers staged a protest at the store.
3.7 The first negotiation took place in the store office with the government’s facilitation and the participation of three branch union committee members and three workers as observers. The negotiation got into a deadlock right away with the management pointing at the non-cooperation and discipline issues and the branch union accusing the management of violating the legal procedure in laying off workers.

    1. Management sent out the official letter of contract termination to workers.
    2. The municipal FTU agreed the lay off was not conforming to the law. But it failed to get a settlement out of the two meetings it had with the management on 10 and 11 March.


3.14 The government called a second mediation meeting at the store attended by more government representatives from the labor bureau and the department of commerce. The labour bureau representatives dismissed the branch union’s demand for economic compensation claiming that the contract termination in Chengde store was forced by bankruptcy rather than retrenchment, and there is no legal obligation on the employer for compensation. Other government representatives urged the workers to accept the company’s severance offer. Meanwhile the management announced a special award, on top of the severance pack, if workers terminated their contract before 19 March.

    1. Police were sent to the store to assist the management which started to pack up the goods for moving.
    2. The third mediation meeting was held by the government. The government representatives sided with the management against the branch union on compensation and due procedure for retrenchment, insisting that Walmart had committed no violation. Pressured by the government, the chairperson and vice chairperson of the branch union started to prepare for delegation of authority to two committee members if they are unable to perform their role in the union.


3.19 Lawyers volunteering to help the union came over and advised them to change the strategy and press for a negotiation with the management without the presence of the government which protected the company rather than workers. Meanwhile the management was pressing the workers harder to accept the severance pack with more phone calls and lobbying.

3.20 The branch union requested the management for a new round of negotiation on 21 March to find a resolution. The three tough issues to be conceded from the management are: (1) double the legal compensation for retrenchment and termination of contract (of one month salary per year of service) plus one extra month salary, called the 2N+1 plan; (2) compensation based on the 2014 wage standard based on the increment signed off in the collective contract; (3) compensation on housing and children’s schooling.
The chairperson and vice-chairperson of the branch union were called to the government office where the officials pressured them to mediate a compromise with the management on the spot and without success. The branch union committee entrusted a group of lawyers and labour academics as their legal advisors including Professor Chang Kai, who took part in the negotiation in the Honda strike in 2010. The union also sent letters to the Hunan Provincial FTU and ACFTU for assistance.


3.21 Police were sent to the store to disperse the workers and took a number of them away, including ZHOU Zhigang who was put under administrative detention. The branch union initiated online fund raising to support further actions.
3.23 The branch union sent an open appeal for solidarity from AFL-CIO.
3.25 Management extended the deadline to 29 March for workers to sign up the company’s severance pack. Zhou was released from custody in the evening.

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