Recently we helped one of our clients to win a labor related arbitration verses a former employee . One of the most important factors that allowed us to win the case is that the arbitration tribunal judged that the client’s company bylaws and rules were valid and the evidence we provided showed clearly that the employee had broken them. The client thanked us not only because we win this particular employment dispute, but also because our firm helped this client to formulate valid company bylaws and rules at the very beginning when their China company was incorporated.
Most companies formulate their own bylaws and rules, thinking they do not need a Lawyer to do this for them. However these internally formulated rules are almost always not effective for China and do not accomplish what a China company needs from its internal regulations. Moreover, may foreign companies simply import their corporate bylaws from their home country, in such situations it is difficult to ensure these bylaws are valid and will be enforceable by a court or the arbitration tribunal in case of a dispute.
According to the China Labor Contract Law and relevant Judicial Interpretations, the requirements for formulating the company bylaws are generally as follows:
- The Contents of the bylaws must within the requirements of the present laws and regulation;
- The procedures of formulating such bylaws must legitimate. There are a lot procedural requirements for formulating the company rules, for example, the rules must be determined after consultation with the labor union or employee representative on the basis of equality and must go through the publicity process. Internal company bylaws almost never complete this process appropriately.
- The articles of the bylaws must be reasonable.
- There can be no retroactive applicability.
To formulate effective company bylaws requires legal knowledge and experience. If you are not sure about whether your company’s bylaws are valid or not, contact our China lawyers to review your China company’s regulations.