Former Wal-Mart China employees prepare to file suit

SHANGHAI (Reuters) — Former employees are preparing to sue Wal-Mart in China after an arbitration committee rejected their case for better compensation than the company has offered after closing the store where they worked in central Hunan province.

Dozens of workers challenged the way that Wal-Mart Stores Inc closed the underperforming store in the city of Changde in March and attempted negotiations for better compensation before turning to arbitration.

Labour activists, scholars and lawyers have closely followed the case because the store's branch of the state-run All-China Federation of Trade Unions (ACFTU) has taken the unusual step of leading the protest.

Critics say the ACFTU - the only legal union in China - has long prioritised stability over worker's rights and interests, and has a history of sitting out disputes or siding with management.

An arbitration committee heard the case over a two-day period late last month and issued its decision on Wednesday turning down the workers' arbitration requests.

Meanwhile, Changde's neighbourhood committees - grassroots arms of the government - have pressured the workers to accept an offer from Wal-Mart of 3,000 yuan ($480) each and end the dispute, workers said.

Huang Xingguo, the store's union boss who has been leading the challenge, said on Thursday that most had come around to accepting the deal and only 18 were left preparing to continue the fight.

"It doesn't matter, though. The law won't change because the number of people goes up or down," he said.

Still, he was unhappy after the arbitration result.

"I feel like workers will always be at the bottom rung in the face of capital, the government and the union, and we will always have a weak voice," Huang said.

Wal-Mart closed the Changde store as part of plans to restructure in China. It said in October it planned to shut 15-30 China stores through 2016 while opening up to 110 and creating nearly 19,000 jobs as part of efforts to revitalise its business.

Employees say there were not given proper notice or compensation when the company decided to close the Changde store.

A Wal-Mart spokesman has said the company was fully compliant with the law and had the support of the local government.

Former worker Zhou Zhigang said the remaining workers were asking for a payoff of two times their monthly salary multiplied by the number of years they worked at the store.

"We want Wal-Mart to admit that it went about closing the store in the wrong way," he said.

The workers had 15 days from the date of the arbitration decision to file suit, a copy of the decision seen by Reuters said.