A Study On The Legal Protection Mechanism Of Chinese Workers' Participation In Corporate Governance

As the new round of domestic market economy reform gradually expands, companies, as an important economic entity, will undertake more social responsibilities to meet the new trend. Employees are of great importance in the development of companies, and the idea of equality between labor and capital justifies employees’ participation in the corporate governance. Traditional corporate governance mechanisms cannot meet the requirements of current social development, so the need to establish a modern mechanism of staff participation is urgent. Corporate governance with the participation of staff will change the single governance pattern into bilateral pattern with both shareholders and employees. Specifying the justification of employee participation in corporate governance will be the bridge connecting the employee participation and corporate governance. This paper clarifies employees as stakeholders of companies, and takes their status, the owner of labor rights, as a starting point to reflect how companies fulfill their social responsibilities in corporate governance. Taking the above-mentioned as the perspective, this paper intends to analyze China’s current laws and regulations regarding corporate governance and reach conclusions on deficiencies of them. By analyzing the codetermination mechanism in Germany, worker holding share mechanism in the USA and coordination mechanism between labor and capital in Japan, this paper has concluded some experience and inspiration. Based on our own situation, this paper has proposed legal mechanism regarding employee participation in corporate governance in China. Employee participation in corporate governance will not only change the traditional structure of corporate governance and promote scientific decision-making, but also stimulate the enthusiasm of employees and increase corporate profitability. Meanwhile, employee participat ion in corporate governance is an effective way for companies to fulfill social responsibilities, thus to form a positive interactive development. There are four parts and nearly 39,000 words in this paper.Firstly, this paper explains the employee participation in corporate governance from a theoretical point of view and demonstrates the theoretical basis. According to stakeholder theory, employees’ interests in corporate governance should be reflected, which is based on the employees’ labor rights and justified by labor property rights theory. On one hand, employee participation in corporate governance will maintain the rights of employees themselves; on the other hand that is the result of the company’s fulfilling social responsibilities, which can make the company in a positive development.Secondly, this paper analyzes and summarizes provisions regarding the employee participation in our existing laws, and also the status quo of employee participation in China. It points out the main problems of the status quo, mainly reflected in the Workers Congress System, labor union organization and systems of worker directors and supervisors. There is also deficiency existing in relevant legislation, which cannot legally guarantee the employee participation in corporate governance.Furthermore, this paper analyzes relevant foreign laws from a comparative perspective, including the codetermination mechanism in Germany, worker holding share mechanism in the USA and coordination mechanism between labor and capital in Japan. It affirms the positive role of worker directors and supervisors in the German corporate governance and strength of the American labor union organization, but carefully considers worker holding share mechanism in the USA not applicable to the logical analysis of corporate governance. This paper favors the compromise learned from Japan, which combines the experience from the USA and Germany and is considered as excellent experience for Chinese corporate governance.Finally, this paper proposes perfecting suggestion. Under the guidance of theoretical basis in this area, from outstanding foreign experience, aiming at the deficiencies of Chinese status quo on employee participation in corporate governance, it proposes suggestions for Chinese corporate governance system, in order to promote the formation of the legal protection mechanism and thus benefit the employee participation in corporate governance practices.