The “Judgment Guideline of Shenzhen Intermediate People’s Court on Trial of Labor Dispute Case” (hereinafter as “Judgment Guideline”) issued in December, 2015 summarizes and revises “Guiding Opinions of Shenzhen Intermediate People’s Court on Several Issues Concerning Trial of Cases on Labor Disputes” (hereinafter as “Guiding Opinions”), which reflects the latest opinions of Shenzhen Intermediate People’s Court on trial of labor dispute cases. To understand and apply Judgment Guideline accurately, on the one hand, clarifies the thoughts of judges concerning trail on labor dispute cases, on the other hand, helps both employer and employee to predict the final result of judgment.

This article interprets and analyzes part of the revised content in Judgment Guideline in the spirit to induce further discussions.

The confirmation of a litigant during civil procedure where an employer has not been legally liquidated but deregistered

Article 17 in “Guiding Opinions” prescribes, where an enterprise has not been liquidated but deregistered, this enterprise shall be taken as a litigant. But a deregistered enterprise has no procedural subject qualification, hence there are many difficulties in actual practice.

To solve this problem, it is stipulated in Article 19 of Judgment Guideline, where an employer has been deregistered without legal liquidation, members of a liquidation group, liquidation obligors, or third party consenting to be responsible for the debt of company while deregistering at the company registration authority, may be taken as a procedural party.

Compared with previous regulations, the procedural subject has been expanded from “the head of the liquidation group” to “members of a liquidation group” in Judgment Guideline. In addition, Judgment Guideline absorbs the content of Article 20 in “Provisions of the Supreme People's Court on Several Issues concerning the Application of the Company Law of the People's Republic of China (II)” and adds “third party consenting to be responsible for the debt of company” into qualified procedural party. This rule expands the scope of procedural subject under circumstances when an employer has not been legally liquidated but deregistered, facilitating determination of the other party for the employee and the court in the filing of a lawsuit.

Where an employee reaches the statutory retirement age, it shall be handled in accordance with labor service relation

It is stipulated in the “Labor Contract Law” and its Implementation Regulations, where an employer enjoys basic pension insurance treatment or reaches the statutory retirement age, the labor contract is terminated. But there are a great number of disputes regarding confirmation of labor relations due to lack of basic pension insurance treatment in judicial practice.

Pursuant to the regulations of Article 69 in Guiding Opinions, an employee who has reached the statutory retirement age, but hasn’t enjoyed basic pension insurance treatment is entitled to maintain labor relations with the employer. The same rationale is backed by Article 17 in “Guiding Opinions on Several Issues regarding Application of ‘Labor Dispute Mediation and Arbitration Law’ ‘Labor Contract Law’” issued jointly by Guangdong Higher People's Court and The Labor Dispute Arbitration Commission of Guangdong Province as well.

However, it is stipulated in the Article 56 of Judgment Guideline, where a dispute occurs between the employer and employee who reaches the statutory retirement age, the court shall treat such lawsuit relation as labor service relation cases. This article doesn’t differentiate employees with and without basic pension insurance, and handles such disputes as labor service relation disputes, which embodies the present judicial practical situation in Shenzhen.

An Employer shall terminate labor relations with the employee who refuses to sign a written labor contract

It has been written in the Labor Contract Law that an employer is obliged to sign written labor contracts with the employee. If the former doesn’t fulfill its legal obligation, the employer shall bear the responsibility to pay the employee double wages. Where an employee refuses to sign a written labor contract, it is only regulated in the “Implementation Regulations of Labor Contract Law”, that the employer is entitled to terminate the labor relations.

Given the situation that some employees refuse to sign written labor contracts deliberately, it is stipulated in Article 76 in Guiding Opinions, if the employer has sufficient evidence to prove the legitimacy of not signing a written labor contract and liability of the employee at no fault of its own, double pay doesn’t apply. Nevertheless, it is still regulated in Article 14 in “Minutes of Symposium of Guangdong Higher People's Court and The Labor Dispute Arbitration Commission of Guangdong Province concerning Several Issues on Trial of Case of Labor Dispute” (hereinafter as “Minutes of Symposium”), where an employee refuses to sign written labor contracts without proper reasons and the employer doesn’t terminate labor relations in written, it shall bear obligation to pay double wages. It is obvious that there is a discrepancy between the previous regulation of the Shenzhen Intermediate Court and the viewpoint of the Guangdong Higher People's Court.

It is specified in Article 64 Paragraph 2 in Judgment Guideline, where an employee refuses to sign a written labor contract and the employer doesn’t terminate labor relations in accordance with law, the court shall support the employee’s request on wage at double amount for not signing written labor contract. The employer should not delay signing written labor contract by reason of employee’s fault and shall exercise right to terminate labor relations. Otherwise it may assume the responsibility to pay double wages.

Severance compensation and liquidated damages exceeding the statutory standard are deemed valid.

Labor Contract Law stipulated the circumstances where an employer shall pay financial compensation and liquidated damages to an employee as well as the standards. In terms of payment different from the statutory standard, the validity of such agreement is not specified. Article 88 of Guiding Opinions stipulated that severance compensation and liquidated damages different from the statutory standard paid to the employee after termination of labor contract shall be deemed invalid.

Theoretically, a contract is rarely deemed non-effective immediately unless it jeopardizes public interests or violates compulsory provisions on validity. The legislative spirit of Labor Contract Law reflected in the inclined protection towards employees. If the agreement reached by both parties is higher than the statutory standard and in favor of the employee, such agreement shall be applicable under certain circumstances. Article 88 of Guiding Opinions contradicts the legislative spirit of Labor Contract Law, inducing a great deal of contention after its debut.

Currently, as stated in the Article 98 of the Judgment Guideline, during conclusion or performance of the labor contract, if the agreement reached by both parties is higher than the statutory standard and in favor of the employee, such agreement shall be deemed valid. But where the standard of the agreed compensation or liquidated damages is too high, the court can make adjustments accordingly.

The terms dictating the validity of an agreement has to be “during the conclusion or performance of the labor contract”. The validity of an agreement reached on settlement of disputes for compensation or liquidated damages is still subject to Article 10 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Labor Dispute Cases (III).