On May 26th, 2014, Guangzhou Labor Disputes Arbitration Tribunal and the Civil Division of Guangzhou Intermediate People’s Court jointly discussed several issues concerning labor and employment disputed cases, with the conference minutes (“Minutes”) formed. Main contents of the Minutes are as follows:

  1. Retired Employees Entitled to Non-competition Compensation: Article 15 ofthe Minutes provides that when an employee reaches the statutory retirement age and the contract is ended thereby, the non-competition clause contained in the employment contract still has its binding force to the retired employee. Employees who perform the non-competition obligation are entitled to non-competition compensation;
  2. Compensation of Unused Annual Leave Taken Account in Calculation Base of Severance Pay: Article 19 of the Minutes stipulates that the compensation of the unused annual leave shall be included into the calculation base of the severance pay. However, if the corresponding period of employee’s salary of annual leave steps over the twelve months before his/her dismissal, the salary shall be included into the average salary on pro rata basis instead of including all the salary into the average salary of the twelve months before dismissal;
  3. Overtime Pay of Statutory Holidays is in Addition to Regular Salary: Article 26 of the Minutes reiterates the calculation method of overtime pays and particularly clarifies that statutory holiday is leave with pay and the overtime pay during that period does not include the regular salary;
  4. Relevant Provisions on Non-fixed Term Employment Contract Apply to Dispatched Employees: Article 28 of the Minutes clarifies the standard of arbitration and judgment in Guangzhou. The dispatched employees are subject to the provisions on conclusion, performance, amendment, termination and ending in the Employment contract Law, and also subject to stipulations of Article 14 of the Employment contract Law concerning unfix employment contract;
  5. Nature of the Employment Relationship of Retired Foreigners: Article 30 of the Minutes clarifies that a foreigner with the Foreign Expert Certificate and Work Permission of Foreign Expert in China are employees reaching statutory retirement age if they have reached the retirement age or have got pension in his/her host country. And the employment relationship with an employer within the territory of China is not an employment relationship.

KWM Comments: Minutes of Guangzhou unified the judgment standard for some labor dispute issues. Apart from emphasis on the consistent interpretation of the Employment Contract Law, the Minutes throw its light on other issues such as whether dispatched employees are subject to non-fixed term employment contract, and provide some distinctive local interpretation.