A Beijing court recently found that the employment contract signed by an undergraduate university student with a company was enforceable and provided the undergraduate with employment law protection.  The undergraduate was then awarded severance pay for the termination.

The undergraduate entered into the employment contract and started work for the company prior to her graduation.  However, the company terminated her employment contract shortly prior to her graduation date.  The undergraduate claimed severance pay due to the company’s termination of her employment contract.  The company rejected this request on the grounds that undergraduates were not recognized to be employees under the Opinion on Various Issues Relating to The Implementation of the PRC Labor Lawissued by the Ministry of Labor in 1995, and therefore the employment contract entered into by the undergraduate was unenforceable. 

The undergraduate filed for labor arbitration.  The labor arbitration commission agreed with the company on the point that the undergraduate was not recognized as being able to enter into an enforceable employment contract.  However, the court overturned the labor arbitration commission’s decision upon the undergraduate’s appeal.  The court analyzed that when the undergraduate entered into the employment contract with the company, she was already above the statutory minimum age for employment, and the company was aware that she was an undergraduate when signing the employment contract. In those circumstances, the employment contract was the manifestation of the parties’ free and genuine will, and there was no reason to deny the enforceability of the employment contract.  The court then ordered severance pay for the undergraduate according to the Employment Contract Law.

Key Take-Away Points

Based on national law and guidance, most courts take the position that employment law does not apply to undergraduate students and they are thus excluded from its protection and most statutory benefits stipulated by the employment laws.  However, the above case shows that if the agreement between the parties is stated to be an “employment contract”, some courts may use this as a basis to provide employment law protection to students, particularly if they are close to graduation.  Employers should therefore be more careful in terms of how they structure their agreements with students.