Beijing Imposes “Union Preparation Fees”

From January 1, 2011, Beijing employers without enterprise unions are required to pay “union preparation fees” pursuant to a notice issued by the Beijing Local Tax Bureau and the Beijing Branch of All-China Federation of Trade Union (Beijing ACFTU).  

The notice requires that employers without enterprise unions pay the fees at the rate of 2% of total payroll, which is the same rate that employers having enterprise unions must make as union contributions.  The preparation fees or the union contributions must be paid quarterly to the local tax bureau, while in the past, union contributions were paid directly to enterprise unions.  The first payment of union preparation fees was due on April 15, 2011.  A penalty of 0.5% per day of the outstanding amount will be assessed on unpaid preparatory fees and union contributions.  The notice also provides that a minimum of 60% of paid preparation fees will be refunded to the enterprise union after the union is established.  However, the percentage may be lower for companies that fail to follow written instructions from Beijing ACFTU to set up a union. 

This development expects to have national repercussions.  Currently, only a few jurisdictions, such as Jiangsu province, impose union preparation fees.

Posted by: Pei Zhang

Categories: China Desk