The Supreme People's Court released typical cases on labor disputes

Glory belongs to the laborers, and happiness belongs to the laborers. The report of the 20th National Congress of the Communist Party of China called for improving labor laws and regulations, improving the consultation and coordination mechanism for labor relations, improving the system for protecting the rights and interests of workers, and strengthening the protection of the rights and interests of workers in flexible employment and new forms of employment. General Secretary Xi Jinping pointed out that employment is the largest people's livelihood project, people's support project, and foundation project, and an important guarantee for social stability.

In the face of the increasingly diverse judicial needs of workers, the Supreme People's Court adheres to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully implements the spirit of the 20th National Congress of the Communist Party of China, thoroughly implements Xi Jinping Thought on the Rule of Law, bases itself on and extends judicial functions, strengthens trial guidance, and formulates and issues judicial interpretations, judicial recommendations, Normative documents, the release of typical cases, support and standardize new forms of employment, strengthen the protection of the rights and interests of over-age workers, consolidate and expand the achievements of the eradication of wage arrears, take multiple measures to implement the mainland's labor employment and social security system, and promote the trial work and the management of litigation sources to continuously achieve new results.

The proper resolution of labor disputes by the people's courts is not only related to the protection of the legitimate rights and interests of workers, but also closely related to the overall situation of economic and social development. In order to further give full play to the functional role of judicial services in promoting the construction of harmonious labor relations and the leading and exemplary value of typical cases, the Supreme People's Court released six typical cases of labor disputes. The main characteristics of this batch of cases are as follows:

The first is to implement the people-centered development concept to better meet the workers' yearning for a better life. Employment is the most basic livelihood of the people. The CPC Central Committee and the State Council have given priority to employment in economic and social development, and have raised the stability of employment to a strategic level for overall consideration. The people's courts protect the basic needs of workers, such as wages and income, and continue to meet the higher requirements of workers in terms of confirmation of labor relations, equal employment, rest and vacation, etc., promote high-quality and full employment, achieve decent work, and build a solid foundation for happiness by striving to write a stable employment "answer sheet". For example, in the labor dispute case between Li and a clothing company, Li accompanied his wife to give birth and asked the employer to pay nursing leave wages, and the people's court supported it in accordance with the law, reducing the burden of women in the child-rearing stage and promoting the employer to build a childbirth-friendly employment environment. Another example is that in the case of a non-compete dispute between a company and Li, a company and an ordinary employee named Li agreed on a non-compete clause, and after Li joined the new employer, the company required Li to bear liquidated damages, and the people's court determined in accordance with the law that the company information that Li had access to in his daily work did not belong to the core business information, and Li did not belong to other personnel with confidentiality obligations, so as to fully protect the employee's right to choose employment freely and promote the orderly social flow and rational allocation of human resources.

The second is to promote high-quality economic and social development and enhance the competitiveness of enterprises. Under the conditions of a market economy, the survival and development of market entities are closely related to the competition for labor talents, and constitute a relationship that promotes and restricts each other. The people's courts protect the legitimate rights and interests of workers and employers in an equitable manner, providing strong support for promoting high-quality economic and social development and building a fair, reasonable, and orderly environment for benign market competition. For example, in the labor dispute case between Zhang and a sports company, Zhang signed a non-compete agreement with a sports company, and the company in which his wife held 95% of the shares competed with the sports company. In the face of hidden violations of non-compete by employees through spouse investment or operation of competitive enterprises, the people's courts, on the basis of ascertaining the facts, find that the employee has violated the non-compete agreement, order the employee to return the non-compete compensation and bear the liability for breach of contract, and stop the employee's violation of the non-compete restriction, which is conducive to encouraging enterprises to obtain business advantages in accordance with the law and promoting the healthy development of the market economy. Another example is the labor dispute case between a company and Li, Li, as a R&D personnel of the company, refused to go through the work handover procedures with the company after resigning, causing the company to start a backup plan to remediate the R&D project, and assumed the liability for breach of contract due to the delay in delivering the prototype, and the people's court ordered Li to compensate for the company's losses in accordance with the law, which safeguarded the legitimate rights and interests of the employer and was conducive to promoting the technological innovation and industrial upgrading of the enterprise.

The third is to improve the adjudication rules and promote the modernization of labor relations governance. Labor laws and regulations are an important institutional arrangement for the state to implement employment policies, implement the income distribution system, and build a mechanism for consultation and coordination of labor relations, as well as an important means and guarantee for the governance of national labor relations, and an important part of promoting the modernization of the national governance system and governance capacity. The people's courts continue to improve adjudication rules in the adjudication of labor disputes, giving play to the role of the rule of law in consolidating the foundation, stabilizing expectations, and benefiting the long-term, and contributing judicial strength to the modernization of the labor relations governance system. For example, in the labor contract dispute case between a high-fiber company and Cui, a high-fiber company signed a contract with Cui and other workshop staff. After Cui was injured at work, a dispute arose with the company over whether there was an employment relationship. The people's court accurately determined the existence of an employment relationship between the two parties based on the subordinate characteristics such as personal and economic characteristics, and protected the legitimate rights and interests of the workers. Another example is the case of a labor contract dispute between Zhang and a bus company, after Zhang and a bus company entered into a second fixed-term labor contract, he had met the conditions for entering into an indefinite-term labor contract, and the bus company refused to enter into an indefinite-term labor contract with Zhang because of his complaint. The people's court has made it clear that if the employee meets the requirements to conclude an indefinite term labor contract, the employer has the obligation to compulsorily conclude the contract, and the employee has the right to unilaterally choose, which has provided a legal umbrella for the employee to protect his or her legitimate rights and interests.

In the next step, the Supreme People's Court will thoroughly study and implement Xi Jinping Thought on the Rule of Law, conscientiously implement the spirit of General Secretary Xi Jinping's important instructions on the protection of workers' rights and interests, continuously strengthen the guidance on the trial of labor dispute cases based on the advantages of adjudication functions, solidly and effectively promote the protection of workers' rights and interests, help build harmonious labor relations, and continuously promote new achievements in the adjudication of labor disputes, so as to provide a strong legal guarantee for high-quality economic development and social harmony and stability.

Typical cases of labor disputes

Case 1: An employer cannot circumvent an employment relationship by entering into a contract

-- A labor contract dispute between a high-fiber company and Cui

Case 2: The employee has a unilateral choice as to whether to enter into an indefinite-term employment contract

-- A labor contract dispute between Zhang and a bus company

Case 3: A non-compete agreement cannot restrict the right of an employee who is not obliged to maintain confidentiality to choose his or her own employment

-- A non-compete dispute between a company and Li

Case 4: The employee's spouse's investment in and operation of an enterprise that competes with the employee's original employer is a violation of the non-compete restriction

-- Labor dispute between Zhang and a sports company

Case 5: If the R&D personnel refuse to hand over the work after resignation and cause losses to the employer, they shall be liable for compensation

-- Labor dispute case between a company and Li

Case 6: A male employee is entitled to nursing leave in accordance with the law after his wife gives birth to a child

——Labor dispute case between Li and a clothing company

Case 1

An employer cannot circumvent an employment relationship by entering into a contract

-- A labor contract dispute between a high-fiber company and Cui

[Basic facts of the case]

In February 2022, Cui went to work in the workshop of a high-fiber company. In March 2022, a high-fiber company signed a workshop contracting agreement with all the personnel of the workshop (including Cui). The contract agreement stipulates that Cui and others shall abide by the safety systems of a high-fiber company, and this agreement shall be regarded as a collective labor contract signed between a high-fiber company and all personnel of the workshop (including Cui). A high-fiber company paid remuneration to Cui in March, April, and May 2022 respectively. In June 2022, Cui was injured at work. Mr. Cui applied to a labor and personnel dispute arbitration commission for arbitration, requesting confirmation of the existence of an employment relationship with a high-fiber company. A labor and personnel dispute arbitration commission supported it. Dissatisfied, a high-fiber company sued the people's court, requesting confirmation that there was no labor relationship between it and Cui.

【Judgment Result】

The trial court held that Cui had the qualifications of a labor entity, and a certain high-fiber company had the qualifications of an employment entity. Cui has been working in the production line of a high-fiber company from February to June 2022, and the work he is engaged in is an integral part of the company's business, and he receives labor remuneration on a monthly basis. The contracting agreement signed by the two parties stated that the agreement was regarded as a collective labor contract signed between a high-fiber company and Cui and others, and that Cui was required to abide by the company's various safety systems and other agreements, which also confirmed that the relevant rules and regulations of a high-fiber company were applicable to Cui, and Cui accepted the company's labor management. The trial court ordered that there was an employment relationship between Cui and a high-fiber company.

【Typical Significance】

With the transformation and development of the market economy, labor-intensive enterprises have adopted a variety of business models in order to reduce costs and improve efficiency. In practice, some enterprises abuse the contract management method and circumvent the conclusion of labor contracts by signing internal contracts with employees. The employer denies the employment relationship with the employee on the grounds that the contract has already been signed, and transfers the employment risk. When judging whether there is an employment relationship between the employer and the employee, the people's court should not only examine the name of the contract signed by the two parties, but also substantively examine whether the legal relationship between the two parties has the subordinate characteristics of the labor relationship through the content of the contract and the actual performance of the contract, accurately determine the legal relationship between the two parties, correct the illegal employment behavior of evading the employer's obligations by signing the contract, etc., and effectively protect the legitimate rights and interests of the employee.

Case 2

Employees have a unilateral choice as to whether or not to conclude an indefinite employment contract

-- A labor contract dispute between Zhang and a bus company

[Basic facts of the case]

Mr. Zhang and a bus company entered into two fixed-term labor contracts in succession, of which the term of the second labor contract was until July 31, 2020. On June 10, 2020, a bus company notified Zhang and others to renew their labor contracts. On June 12, 2020, Zhang complained in real name on a platform that the company did not distribute masks in accordance with regulations. On the same day, a bus company notified Zhang that the labor contract was terminated when it expired, and he went through the resignation procedures and handed over the work. Since then, Zhang has repeatedly asked a bus company to enter into an indefinite labor contract with him. In July 2020, a bus company notified Zhang that the two parties terminated the labor contract on July 31, 2020, and paid Zhang economic compensation for the termination of the labor contract by transfer. Zhang worked at a bus company until July 31, 2020. Zhang applied to a labor and personnel dispute arbitration commission for arbitration, requesting a bus company to enter into an indefinite labor contract with him in accordance with the law from August 1, 2020. A labor and personnel dispute arbitration commission ruled to reject Zhang's arbitration claim. Zhang was dissatisfied and sued to the people's court.

【Judgment Result】

The trial court held that Zhang and a bus company had entered into two fixed-term labor contracts in succession, and that Zhang did not have the negligent dismissal provided for in Article 39 of the Labor Contract Law, nor did he have the provisions of Article 40, Paragraph 1 that "due to illness or non-work-related injury, the employee cannot engage in the original job after the expiration of the prescribed medical treatment period, nor can he engage in the work arranged by the employer" and the second paragraph stipulates that "the employee is incompetent for the job, and is still incompetent for the job after training or job adjustment" as stipulated in Paragraph 2 In this case, Zhang proposed that the indefinite-term labor contract with a bus company meet the statutory conditions, and the bus company should enter into an indefinite-term labor contract with Zhang in accordance with the law. A bus company's unilateral notice of termination of the labor contract did not comply with the law. The trial court ordered a bus company to enter into an indefinite labor contract with Zhang.

【Typical Significance】

The original legislative intention of the compulsory contract system for indefinite-term labor contracts is to solve the problem of short-term labor contracts, so as to protect the employment rights of employees. Article 14, Paragraph 2, Item 3 of the Labor Contract Law stipulates the mandatory obligation to conclude a fixed-term labor contract after two consecutive periods. Although there are restrictions on the freedom of contract and autonomy of will of the employer to enter into a contract, the fundamental purpose of such restriction is to achieve substantive equality between the disadvantaged worker and the employer. In this case, the employee complained that the employer did not fall under the circumstances of negligent dismissal, nor did it meet the circumstances in which the employer could not renew the indefinite-term employment contract due to the employee's own reasons in the case of no-fault dismissal, as long as the employee met the conditions for renewing the indefinite-term employment contract, he had the right to unilaterally choose, and the employer had no right to refuse to renew the contract. The people's court orders the employer to conclude an indefinite-term labor contract with the employee in accordance with the law, which is not only in line with the legislative purpose, but also conducive to the construction of a harmonious and stable labor relationship.

Case 3

A non-compete agreement cannot restrict the right of an employee who is not obliged to maintain confidentiality from choosing his or her own employment

-- A non-compete dispute between a company and Li

[Basic facts of the case]

On January 10, 2017, Mr. Li joined a company to work as a massage therapist, and the two parties signed an employee confidentiality agreement, stipulating that Mr. Li would not engage in similar products or related services of similar enterprises within two years after his resignation, otherwise he should pay a one-time liquidated damages of not less than 50,000 yuan to the company. In November 2017, Mr. Li obtained the certificate of senior pediatric massage vocational trainer. In May 2021, Mr. Li resigned from the company and joined a community health service center in July to work in a Chinese medicine pharmacy. A company claimed that Li had the company's customer information, product quotation plans, training courses and other information, and belonged to other personnel with confidentiality obligations, and applied to a labor and personnel dispute arbitration commission for arbitration, requiring Li to pay 50,000 yuan in liquidated damages for violating the non-compete obligation, but the labor and personnel dispute arbitration commission did not support it. A company was dissatisfied and sued to the people's court.

【Judgment Result】

The trial court held that Li was a massage instructor and trainer of a certain company, and did not belong to the company's senior management personnel and senior technical personnel. The customer information mastered by Li is the basic information that must be accessed in the process of providing services, such as customer name, contact information, etc.; the product quotation plan that Li has access to is open to the customers of the service, and the potential customers can obtain it after consultation; although the training course provided by a company is a courseware made for itself, the knowledge in the courseware is mostly the common sense content of traditional Chinese medicine pediatric massage in the industry. In addition, the massage and massage knowledge and skills that Li acquired through training during his work in the company are also common professional knowledge and skills in the industry. The evidence provided by a company can only prove that Li was exposed to the company's general business information in his daily work, but not the core business information. Employees who only have access to the general business information of the employer during the normal performance of their duties are not other persons who have the obligation of confidentiality as stipulated in Paragraph 1 of Article 24 of the Labor Contract Law. A company asserted that Mr. Li was a non-compete person with a confidentiality obligation, and the evidence was insufficient. The trial court ordered the rejection of a company's claim for Li to pay liquidated damages for non-competition.

【Typical Significance】

The main purpose of the non-compete system stipulated in the Employment Contract Law is to protect the employer's trade secrets and confidential matters related to intellectual property rights, and to regulate unfair competition, rather than to restrict the normal flow of talents between enterprises. In practice, non-compete clauses are abused by the generalization of applicable entities. Some employers do not distinguish whether the employee is a person who is in possession of the company's trade secrets and confidential matters related to intellectual property rights, and indiscriminately sign a non-compete agreement with the employee, and stipulate high liquidated damages. Employees are often confined to the dominant position of the employer and cannot refuse to enter into a non-compete agreement. If an employee who does not have the obligation of confidentiality leaves the job and joins a new employer with a competitive relationship, the original employer requires the employee to bear a high amount of liquidated damages, which infringes on the legitimate rights and interests of the employee. In this case, the People's Court held that an employee who did not have a confidentiality obligation was not required to bear a non-compete obligation even if he had signed a non-compete agreement. In adjudication practice, the people's court should not only hear whether there is a competitive relationship between the new employer and the original employer, but also whether the employee is a person who should bear the obligation of non-competition, take a clear stand and deny the illegal non-competition behavior that infringes on the employee's right to choose his or her own employment, and smooth the channels for the social flow of labor resources.

Case 4

The employee's spouse's investment in or operation of an enterprise that competes with the employee's original employer is a violation of the non-compete restriction

-- Labor dispute between Zhang and a sports company

[Basic facts of the case]

On July 31, 2018, Zhang joined a sports company as the general manager of the teaching R&D center, responsible for teaching and research management. The two parties signed a non-compete agreement, stipulating that Zhang shall not carry out relevant acts in violation of the non-compete restriction during the existence of the labor relationship and the two-year non-compete period, and at the same time stipulating that a sports company shall pay economic compensation to Zhang during the non-compete period, and Zhang shall pay liquidated damages for breach of contract, and the amount of liquidated damages shall be 10 times the income obtained by Zhang from a sports company and its affiliates in the 12 months before the termination or dissolution of the labor relationship between the two parties. Zhang resigned on July 31, 2021, and his average salary in the 12 months before his departure was 34,097.44 yuan. A sports company paid Zhang 5 months of non-compete economic compensation. Zhang's wife changed to an investor of a company (holding 95% of the shares) in December 2021, and her business was in competition with a sports company. An affiliated company of a company established by Zhang's wife paid social insurance for Zhang. A sports company believed that Zhang had violated the non-compete agreement and should return the non-compete compensation and bear the liability for breach of contract, and applied to a labor and personnel dispute arbitration commission for arbitration. A labor and personnel dispute arbitration commission ruled that Zhang should return the non-compete economic compensation and pay liquidated damages to a sports company. Dissatisfied, Zhang sued the people's court, requesting that there was no need to return the non-compete economic compensation and pay liquidated damages.

【Judgment Result】

The trial court held that Zhang, as the general manager of the teaching and R&D center, was responsible for management and had decision-making power over the operation and management of a sports company, and should perform the non-compete obligation in accordance with the non-compete agreement and other agreements. Zhang's wife, as an investor, competed with a sports company in its business, and was a non-compete unit. Considering that Zhang and his spouse had a close personal and property relationship, their economic interests were consistent, and that his spouse's investment behavior basically occurred after Zhang left a sports company, it was determined that Zhang violated the non-compete agreement. Taking into account factors such as the damage caused by the employee to the employer, the degree of the employee's subjective fault, the level of wage income, the position, the length of employment, the period of breach of contract, the amount of economic compensation payable by the employer, and the local economic level, the trial court decided that Zhang should pay a sports company the amount of liquidated damages for breach of the non-compete and ordered the return of the non-compete economic compensation.

【Typical Significance】

Under the conditions of a market economy, the survival and development of market entities are closely related to the competition for labor talents, and constitute a relationship that promotes and restricts each other. The employer restricts the employee's work unit and employment direction in advance through non-compete agreements and other forms to protect the economic interests and competitive advantages of the enterprise. In this case, the employee, as a senior manager, committed the non-compete act by actually operating the competing enterprise through his spouse, and the way of violating the non-compete agreement was more hidden. On the basis of ascertaining the facts, the people's court accurately determined that the employee had violated the non-compete agreement, ordered him to bear liability for breach of contract, reasonably determined the amount of liquidated damages in accordance with the standards of appropriate punishment and maintenance of the employee's survival, maximized the advantages of the system, and balanced the relationship between the employee's independent choice of employment and fair market competition, providing strong support for the construction of a fair, reasonable and orderly benign market competition environment.

Case five

If the R&D personnel refuse to hand over the work after resignation and cause losses to the employer, they shall be liable for compensation

-- Labor dispute case between a company and Li

[Basic facts of the case]

On December 1, 2020, a company entered into a labor contract with Mr. Li, stipulating that Mr. Li would work in a R&D position for a period of 3 years. On February 15, 2022, Li submitted his resignation to a company, then left and refused to go through the work handover procedures. A company remedied the R&D project by initiating a backup plan, recruiting personnel, entrusting design, etc., and assumed liability for breach of contract due to the delay in the progress of R&D and design and the delay in delivering the prototype. A company applied to a labor and personnel dispute arbitration commission for arbitration, and put forward a request for compensation for losses. A labor and personnel dispute arbitration commission rejected the application. A company sued the people's court.

【Judgment Result】

The trial court held that after the termination or termination of the labor contract, the employee should go through the work handover formalities in accordance with the agreement between the two parties. If the employee fails to perform the aforesaid obligations and causes losses to the employer, he shall be liable for compensation. Mr. Li, as a R&D personnel of a certain company, left the company without notifying the company 30 days in advance, and refused to go through the handover procedures, which violated the provisions of Article 37 of the Labor Contract Law that the employee may terminate the labor contract by notifying the employer in writing 30 days in advance, and shall be liable for the losses of the company in accordance with the provisions of Article 90 on the liability of the employee. The trial court comprehensively considered factors such as the time when Li participated in research and development, the time of resignation, and his salary level, and decided that Li should compensate the company for the loss of 50,000 yuan.

【Typical Significance】

Since the 18th National Congress of the Communist Party of China, the CPC Central Committee with Comrade Xi Jinping at the core has attached great importance to scientific and technological innovation. The report of the 20th National Congress of the Communist Party of China (CPC) put forward in the section of "improving the scientific and technological innovation system" to "adhere to the core position of innovation in the overall situation of the mainland's modernization". One of the important sources of competitiveness of innovative enterprises is R&D personnel. When R&D personnel have important information about the project and take the initiative to terminate the labor contract, they should uphold the principle of good faith, abide by the labor contract and legal provisions, notify the employer in advance, and go through the handover procedures, so as to facilitate the employer to continue to carry out research work. In this case, the people's court ordered the employee to bear the liability for compensation in accordance with the law when the employee's refusal to perform the work handover obligation caused losses to the employer, so as to provide high-quality legal protection for scientific and technological innovation.

Case 6

Male employees are entitled to nursing leave in accordance with the law after their wives give birth to children

——Labor dispute case between Li and a clothing company

[Basic facts of the case]

On May 5, 2021, Li went to a clothing company to engage in photography. Because his wife was waiting to give birth, Li went home to accompany the delivery on July 2, 2021 and did not go to work again. Li's son was born on July 3, 2021. On July 20, 2021, Li returned to a clothing company and continued to work until November 17, 2021. On November 18, 2021, there was a conflict between Li and a clothing company when settling wages. Mr. Li applied to a labor and personnel dispute arbitration commission for arbitration, and requested a clothing company to pay nursing leave wages. A labor and personnel dispute arbitration commission concluded the trial of the case. Li sued the people's court.

【Judgment Result】

The trial court held that, according to Article 24 of the Regulations of Jiangsu Province on Population and Family Planning, if a husband and wife who give birth to a child in accordance with the provisions of these Regulations, the wife shall extend the maternity leave for not less than 30 days on the basis of the maternity leave prescribed by the state, and the husband shall enjoy the nursing leave for not less than 15 days. Li is deemed to be in attendance during the nursing leave, and a clothing company should pay wages. The trial court upheld Li's claim that a clothing company should pay 15 days of nursing leave wages.

【Typical Significance】

In recent years, various localities have implemented the "Decision of the Central Committee of the Communist Party of China and the State Council on Optimizing the Fertility Policy to Promote the Long-term Balanced Development of the Population", and introduced policies and measures to support the optimization of fertility. In the family, the husband and wife share the responsibility of childbearing. Paternity leave is the right of a male employee to take care of his wife and children during the period of childbirth. In this case, the people's court ordered the employer to pay the male employee's wages during the nursing leave, which is conducive to guiding the employer to strictly implement the relevant national regulations, give full play to the indispensable role of husband and father in childbirth, strengthen the equal cooperation between the sexes in reproductive affairs, and contribute to the healthy growth of the next generation, the further improvement of the childbirth support policy system and the high-quality development of the population.

Source | Supreme People's Court