Progress in Employee Participation? A Critical Analysis of Board-level Employee Representation in China’s New Company Law

Board-level employee representation (BLER) is a practice in company law that allows employees to elect representatives to the board of directors and the supervisory board (i.e. employee directors and employee supervisors, respectively) so that employees can participate in corporate governance. China’s Company Law, adopted on 29 December 2023 (the 2023 Company Law), introduces significant changes to BLER. This article traces the evolution of BLER in China and explains the rationale for promoting employee directors in the 2023 Company Law. The revised law encourages the inclusion of employee directors across all company types. Although the 2023 Company Law indicates progress over earlier versions of company laws, significant limitations persist. Employee supervisors face obstacles to discharging their duties; the proportion of employee directors required on the board of directors is unspecified; and the law lacks specific provisions for the qualifications of employee representatives, their competence to perform their functions, and their professional safeguards. In other words, the 2023 Company Law may not substantially enhance BLER.