Year in review
- In 2017, there were calls from many sectors of society for the Labour Contract Law to be revised. Some believe that the Law, which was promulgated and took effect in 2008, imposes over-arduous obligations on enterprises, resulting in inflexible employment models and high expenditure. In February 2018, an official of the National People's Congress, China's national legislature, said in a media interview that the amendments to the Labour Contract Law had been widely debated but that the conditions for a formal amendment were not yet in place and it was not the right time to take action. Thus, the proposal for revising the Labour Contract Law has been shelved.
- In cases arising from unilateral termination by a company for an employee's breach of contract, the business entity bears a heavy burden of proof, as required by the legal provisions and in judicial practice, which puts the business entity at great risk of losing the case. For example, as well as having to prove the employee's breaches, the entity is required to have written rules and regulations which specify that the irregularity performed by the employee falls under the provisions whereby the enterprise has the right to unilaterally terminate the contract of employment. Besides, during the course of formulating their rules and regulations, business entities must follow the legal procedures for seeking advice from employees or trade unions, publicising the rules and regulations, and keeping employees informed. In recent cases, courts and arbitral tribunals have paid more attention to good faith and the professional ethics of the employees, and if employees have been found to have committed serious irregularities, the courts and arbitral tribunals have upheld the enterprise's unilateral termination. For example, in a retrial of a labour dispute case between Alibaba, a well-known internet enterprise, and Ding, the Beijing Higher People's Court, the retrial court considered the company's unilateral termination to be lawful on the ground that the employee had violated the good faith principle, although the courts of first instance and second instance had ruled that the employee was not in violation of the company's rules and regulations because they were not specific about the irregularity in question.
- Non-compete disputes are occurring more often than ever and involve many hot and complex issues. For example, in a non-compete case between Tencent Technologies (Shanghai) Limited, a well-known internet enterprise, and Xu Zhenhua, the Shanghai First Intermediate People's Court ruled that the employee was liable for 19.4 million yuan. This case involved value recognition of restricted stocks for the purposes of non-compete compensation.
- Internet platform enterprises are more frequently involved in labour disputes because of their flexible employment arrangements. In a dispute in June 2018 to confirm the labour relationship between FlashEx, an internet platform enterprise providing cargo transport services, and a deliveryman, the People's Court of Haidian District, Beijing upheld the existence of a labour relationship. This case has attracted much attention and discussion because, in most similar cases, labour relationships are not recognised.
- Personnel from Taiwan, Hong Kong and Macao no longer need to apply for an employment permit to work in mainland China. On 3 August 2018, the State Council announced its decision to abolish a batch of administrative permits, including the cancellation of employment permits for residents of Taiwan, Hong Kong and Macao working in mainland China.
- From 1 January 2019, the responsibility for collection of social insurance premiums for employees is transferred from the social security administration department to the tax authorities. This change might lead to more rigorous collection of social insurance premiums and strengthen accountability for illegal acts.
Outlook and conclusions
- The Supreme People's Court is drafting the latest Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trials of Labour Dispute Cases (V), which is expected to be introduced by the end of 2019. The judicial interpretation may provide judging standards for practical issues such as employment models for internet platform enterprises, the cohesion between labour arbitration and court adjudication, and disputes about amendment or termination of employment contracts. The judicial interpretation may also reflect the shift from 'inclining to protect employees' to 'balancing the interests between enterprises and employees', which has been evident in some labour disputes in recent years.
- With the increasingly intense competition among enterprises for talent and technology, dispute cases involving trade secrets and competition restrictions will continue to increase. These types of disputes involve many legal areas, including labour law, competition law, intellectual property law and criminal law, and the handling of related cases is relatively complex.
- With the increasing risk of economic recession, business operations are facing difficulties and a need to make adjustments, while for organisational institutions, business strategy adjustments may trigger staff redundancies or reorganisations. As a result, the number of collective dispute cases relating to staff redundancy placements is highly likely to increase.
- Employees are now paying greater attention to social security insurance, and related disputes are therefore likely to increase substantially.