Foreign-funded companies have been urged by an official from China's top trade union body to consider using professional mediators to help handle an increasing number of disputes involving Chinese employees.

Labor disputes have emerged as a worrying trend that can affect social stability, said Guo Jun, head of the legal affairs department at the All-China Federation of Trade Unions.

Last year, courts nationwide handled about 300,000 labor dispute cases, in addition to more than 1 million such cases mediated by trade unions, Guo said.

Arbitration tribunals handled about 666,000 labor disputes, an increase of 23,000 from 2012.

"As China is becoming a market economy, it's natural for companies to reshuffle, merge or even shut down some under-performing businesses. Such decisions inevitably affect workers," Guo said.

"If employers cannot communicate these moves to their workers effectively through professional mediators, workers might resort to strikes or other extreme behavior to defend their rights."

Guo cited an ongoing dispute between retail giant Wal-Mart Stores Inc and a trade union in Changde, Hunan province, as an example.

Wal-Mart shut down more than 10 of its supermarkets in China without facing any significant obstacles until announcing the closure of its Changde outlet in March.

About 70 of 135 former employees from the outlet turned to their trade union to protest. They were disappointed with what they felt was an abrupt decision and a non-negotiable compensation package from the retailer.

They protested peacefully for days and tried to stop the company from moving equipment and other assets from a warehouse.

"Wal-Mart must have consulted its lawyers about the store closure, but rigid interpretation of China's labor laws can be inaccurate," Guo said.

"The law can only spell out the bottom line. Employers cannot expect to solve labor disputes smoothly, even if their decision seems flawless under the law. Their behavior can still be seen as arrogant and unreasonable. It's important to have a mediator to communicate with workers."

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