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Inside 10 real-life labour disputes that have been ruled illegal by China's highest court, including overtime practices,termination compensation, work injury claims, and more.
China's Supreme People's Court and the Ministry of Human Resources and Social Security have issued new guidelines last week as what would be illegal under the labour law.
The top court in China outlined 10 real-life cases of different employment practices that have been deemed illegal in China, especially relating to overtime hours and compensation, including the practice commonly known as '996' of working from 9am to 9pm, six days a week.
We outline the 10 illegal labour practices that employers need to be aware of from the new guidelines and exactly which labour laws to keep in mind.
Case 1
Employee refuses to work overtime illegally, can employer terminate the labour contract?
Employee A joined a courier company in June 2020. According to the labour contract, the probation period was three months and the monthly salary during the probation period was 8,000 yuan. The working hours were in accordance with the rules and regulations of the courier company, which runs on the 996 system. After working for two months, employee A refused to work overtime as his working hours seriously exceeded the upper limit prescribed by the law. The courier company terminated his labour contract on the ground that A didn’t meet the employment requirements during the probation period.
Ruling
The Arbitration Commission ruled that the courier company should pay 8,000 yuan as compensation for illegal termination of the labour contract. The Labor Security Supervision Agency also issued warnings to the courier company.
Labour Law of the People's Republic of China
Article 41 The employer can prolong work hours due to needs of production or businesses after consultation with its trade union and labourers. The work hours to be prolonged, in general, shall be no longer than one hour a day, or no more than three hours a day if such prolonging is called for due to special reasons and under the condition that the physical health of labourers is guaranteed. The work time to be prolonged shall not exceed, however, 36 hours a month.
Article 43 The employer shall not prolong the work hours of labourers in violation of the stipulations of this Law.
Case 2
Employee and employer have signed an agreement to waive overtime pay, can an employee claim overtime pay?
Employee B joined a technology firm in June 2020 with a monthly salary of 20,000 yuan. The employee was then requested to sign an agreement as an attachment to the labour contract, stating that he “voluntarily gave up the right to overtime pay.” Six months later, employee B resigned due to personal reasons and required payment for working overtime. The company refused to pay on the grounds that he has signed an agreement to waive overtime pay.
Ruling
The Arbitration Commission ruled that the technology firm should pay 24,000 yuan to B for overtime work from June to December 2020.
Labour Contract Law of the People's Republic of China
Article 26 The following labor contracts are invalid or are partially invalid if an employer disclaims its legal liability or denies the employee's rights:
1. a party employs the means of deception or coercion or takes advantage of the other party's difficulties to force the other party to conclude a labor contract or to make an amendment to a labor contract, which is contrary to his will;
2. an employer disclaims its legal liability or denies the employee's rights; or
3. the mandatory provisions of laws or administrative regulations are violated.
If there is any dispute over the invalidating or partially invalidating of a labour contract, the dispute shall be settled by the labor dispute arbitration institution or by the people's court.
Article 31 An employer shall strictly execute the criterion on production quota, it shall not force any of its employees to work overtime or make any of his employees to do so in a disguised form. If an employer arranges overtime work, it shall pay its employee for the overtime work according to the relevant provisions of the state.
Case 3
If an employer fails to perform overtime approval procedures in accordance with the rules and regulations, can it refuse to pay employee overtime compensation?
Employee C joined a pharmaceutical company in December 2019 with a monthly salary of 18,000 yuan. The company adopts the 996 system and employee C has submitted overtime applications during his tenure according to the regulations of the company. However, the company didn’t complete the approval procedure. Employee C resigned in November 2020 and requested the company to pay for his overtime work. The company refused to pay because the approval procedure was not completed.
Ruling
The Arbitration Commission ruled that the pharmaceutical company should pay C 50,000 yuan for overtime work from December 2019 to November 2020. The company filed a suit against the Arbitration Commission’s ruling but failed. The company did not appeal.
Labour Law of the People's Republic of China
Article 44 The employer shall pay labourers more wage remunerations than those for normal work according to the following standards in any one of the following cases:
(1) Wage payments to labourers no less than 150% of their wages if the labourers are asked to work longer hours;
(2) Wage payments to labourers no less than 200% of their wages if no rest can be arranged afterwards for the labourers asked to work on days of rest;
Case 4
Does an employer need to pay employee overtime compensation if both agreed to a salary package?
Employee D joined an automobile service company in July 2020 with a monthly salary of 4,000 yuan (overtime pay included). Employee D resigned in February 2021 and believed that the company didn’t pay him enough overtime compensation according to the standards of minimum wages. The company refused to pay on the grounds that the monthly salary agreed in the labour contract already included overtime pay.
Ruling
The Arbitration Commission ruled that the automobile service company should pay the difference of 17,000 yuan for employee D’s overtime work.
Provisions on Minimum Wages
Article 3 The term "the standards on minimum wages" as mentioned in the present provisions refers to the minimum labour remuneration that shall be paid by the employing entities in accordance with the law under the precondition that the labourers have provided normal labour within the statutory working hours or within the working hours as stipulated in the labour contracts concluded in accordance with the law.
According to employee D’s actual working hours they should be paid more than 4,000 yuan in accordance with the standards on minimum wages.
Case 5
Does an employee have the right to refuse increased workload without negotiations?
Employee E joined a newspaper company in September 2018 as a courier, working six hours a day, six days a week, with a monthly salary of 3,500 yuan. Another courier in the same area resigned in June 2020 and the company arranged for him to undertake the work in the third quarter without consulting with employee E. Employee E rejected the above arrangement since he had to work overtime of at least four extra hours per day to complete the double workload. The company terminated his labour contract on the grounds that he didn’t obey the work arrangement.
Ruling
The Arbitration Commission ruled that the newspaper company should pay 14,000 yuan as compensation for illegal termination of employee E’s labour contract.
Labour Contract Law of the People's Republic of China
Article 31 An employer shall strictly execute the criterion on production quota, it shall not force any of its employees to work overtime or make any of its employees do so in a disguised form. If an employer arranges overtime work, it shall pay its employee for the overtime work according to the relevant provisions of the state.
Article 35 An employer and an employee may modify the contents stipulated in the labour contract if they so agree upon negotiations. The modifications to the labour contract shall be made in writing. The employer and the employee shall each hold one copy of the modified labour contract.
Case 6
Regarding overtime pay disputes, who should bear the burden of proof?
Employee H joined an education consulting company in January 2020 with a monthly salary of 6,000 yuan and resigned in July 2020. H submitted the check-in records and payslip copies to prove that he worked six days a week during his tenure, while the company claimed that employee H worked five days a week without providing any attendance records and payment records.
Ruling
The Arbitration Commission ruled that the education consulting company should pay H 10,000 yuan for overtime work.
Labour Dispute Mediation and Arbitration Law of the People's Republic of China
Article 6 Where a labour dispute arises, a party shall be responsible for adducing evidence to back up its claims. Where the evidence related to the disputed matter is controlled by an employer, the employer shall provide it; and the employer who fails to provide the evidence shall bear the adverse consequences.
ALSO READ: The role of people managers in ending the ‘always-on’ culture
Case 7
If an employee gets injured during overtime work, should the employer or hiring service provider bear joint and several liability?
A hiring service provider helped recruit employee K for a media company in September 2017 and didn’t buy work-related injury insurance for K. Employee K had less than three rest days a month and worked over 11 hours a day. Employee K was found in coma in the bathroom of the media company and died on the same day in November 2018 due to a heart attack. The media company signed an agreement with K’s family and paid over 420,000 yuan for compensation, under the condition that the family does not request any compensation in any form in the future.
K’s death was then recognised as a work injury by the Ministry of Human Resources and Social Security. Employee K’s family filed a lawsuit to request the service provider and the media company to jointly pay the medical attendance expenses, one-off compensation for death, funeral grant, and consolation money, totaling 1,193,821 yuan.
The service provider also filed a lawsuit to request not to pay consolation money, that the amount paid by the media company should be deducted from various payable compensations, and that the media company should bear joint and several liability.
Ruling
Since the hiring service provider and the media company didn’t buy work-related injury insurance for employee K, the compensation for K’s death should be fully paid by the employers. The hiring service provider and the media company jointly paid the medical attendance expenses, one-off compensation for death, funeral grant, and consolation money, totaling 766,911.55 yuan. The media company filed an appeal but failed.
Labour Law of the People's Republic of China
Article 41 The employer can prolong work hours due to needs of production or businesses after consultation with its trade union and labourers. The work hours to be prolonged, in general, shall be no longer than one hour a day, or no more than three hours a day if such prolonging is called for due to special reasons, and under the condition that the physical health of labourers is guaranteed. The work time to be prolonged shall not exceed, however, 36 hours a month.
Labour Contract Law of the People's Republic of China
Article 92 If any damage is caused to the workers dispatched, the worker dispatch service provider and the accepting entity shall bear joint and several liability of compensation.
Case 8
Can an employer deny the fact that an employee is working overtime based on the company’s rules and regulations?
Employee M joined an online company in April 2016. The company adopted a fingerprint based attendance system and stated that “overtime is only counted after 21:00, must be applied by the employee and approved by the department head.” Employee M applied for a total of 126 hours of overtime through the work system from May 2016 to January 2017. But the company refused to pay the overtime wages before 21:00.
Ruling
The court of first instance ruled that the online company should pay the difference of 32,000 yuan overtime wage to employee M.
The online company’s has clear regulations about overtime application approval system, which does not violate the law and is reasonable. On the other hand, the online company stated that overtime is only counted after 21:00 and claimed that from 18:00 to 21:00 is dinner and rest time. Given that the time is as long as 3 hours, which far exceeds the reasonable meal time, and it is unreasonable to work overtime after 3 hours off work, so the the People's Courts denied its validity in accordance with the law.
Case 9
Employee has signed the resignation document to confirm that the overtime payment has been settled. Does he/she have the right to request the owed overtime payment?
Employee R was hired by a technology company to work as a courier for a courier company since July 2017. The company arranged him to work overtime on weekends and statutory holidays. However, employee R only received attendance compensation or holiday subsidies ranging from 46.15 yuan to 115.40 yuan. Employee R resigned in November 2019 and indicated that the company didn’t pay him overtime wages as a reason of resignation. He was then forced to sign the resignation document to confirm that the overtime payment has been settled.
Ruling
The court of first instance rejected R’s request for overtime payment. The court of second instance changed its judgment and ruled that the technology company and the courier company should pay 24,404.89 yuan for R’s overtime work.
Labor Contract Law of the People's Republic of China
Article 26 The following labor contracts are invalid or are partially invalid if:
- a party employs the means of deception or coercion or takes advantage of the other party's difficulties to force the other party to conclude a labour contract or to make an amendment to a labour contract, which is contrary to his will.
Case 10
How to determine the time limitation period for arbitration of overtime pay?
Employee X joined a construction company in July 2016 and resigned in February 2019. He worked overtime during his tenure but the company didn’t pay him compensation. X filed a request to the Arbitration Commission in December 2019. The construction company defended on the grounds that X’s request has exceeded the time limitation period for arbitration.
Ruling
The court of first instance ruled that the construction company should pay 18,120 yuan for X’s overtime work.
Labor Dispute Mediation and Arbitration Law of the People's Republic of China
Article 27 The time limitation period for application for arbitration of a labor dispute shall be one year. The time limitation period for arbitration shall be counted as of the date when a party knows or should know that its right has been violated.
Where a dispute arises from the delayed payment of labor remunerations during the period of existence of a labor relationship, an employee's application for arbitration shall not be subject to the time limitation period for arbitration prescribed in the first paragraph hereof; but if a labor relationship is terminated, an employee shall apply for arbitration within one year as of the date of termination of the labor relationship.
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