In a recent case reported on September 17, 2013, the Chongqing Intermediate People’s Court upheld a retired employee’s claim against his former employer for compensation of pension losses resulting from unpaid pension insurance contributions. This is reportedly the first successful claim in this type of case in Chongqing.
The employee worked with a manufacturing company from January 1, 1995, until he retired on May 20, 2011, but the company only made social insurance contributions for this employee starting from January 2008. Since current social insurance laws and regulations entitle an employee to a pension only if social insurance contributions are made for a minimum of 15 years, the employee did not qualify for statutory pension benefits. Moreover, the local labor bureau decided that it could not process any back payment of the unpaid social insurance contributions now that the employee had retired. Therefore, the employee had no administrative recourse to receive his pension.
The employee then decided to sue the company for RMB 208,800 to compensate for loss of pension benefits. When deciding the case, the court was faced with the problem of how to calculate the employee’s pension losses. In the end, the court decided that the employee was entitled to the equivalent of 15 years of pension benefits based on the retirement age for male employees in the PRC being 60 years old and the local average lifespan in Chongqing being 75 years. Based on the average pension benefits in Chongqing in 2011, the court found that the employee was entitled to RMB 287,640 in compensation, but since the employee did not claim that full amount, the court only awarded him the RMB 208,800 that he claimed.
In a separate case in Foshan reported on October 8, 2013, the courts upheld an order by a local Housing Fund Center that required an employer to make back payment of unpaid housing fund contributions. In 2012, six years after her termination from the company, the employee reported to the local Housing Fund Center that the company had not made housing fund contributions for her during her employment from 1999 to 2006. The Housing Fund Center responded by ordering the company to back pay housing fund contributions for those years in an amount equal to RMB 7,280.
The Chancheng District People’s Court and the Foshan Intermediate People’s Court both upheld the local Housing Fund Center’s order. Although the company argued that the Housing Fund Center should be time-barred from ordering back payment based on the two-year statute of limitations for civil proceedings, the Foshan Intermediate People’s Court ruled that the Housing Fund Regulations do not set a time limit on the ability of the housing fund authority to order back payment of unpaid housing fund contributions. It appears that neither the court nor the company raised the issue of the general statute of limitations on administrative enforcement action.
These two cases show that the courts are beginning to show more willingness to provide employees remedies in case of non-payment or underpayment of social insurance and housing fund contributions. In the past, courts oftentimes tried to avoid getting involved in such disputes and instead referred them to administrative agencies, who in turn oftentimes did not take very aggressive action.