Interpretation of the Supreme People's Court on Several Issues concerning the Application of Law in the Trial of Labor Dispute Cases (IV)

Fa Shi [2013] No.4

January 18, 2013

The Interpretation of the Supreme People's Court on Several Issues concerning the Application of Law in the Trial of Labor Dispute Cases (IV), adopted at the 1566th meeting of the Judicial Committee of the Supreme People's Court on December 31, 2012, is hereby promulgated and shall come into effect as of February 1, 2013.

In order to correctly try labor dispute cases, the following interpretation on several issues concerning the application of law are made in accordance with the Labor Law of the People's Republic of China, the Labor Contract Law of the People's Republic of China, the Law of the People's Republic of China on Mediation and Arbitration of Labor Disputes, the Civil Procedure Law of the People's Republic of China and the provisions of other relevant laws and regulations, and in combination with the civil trial practice:

Article 1 Where a labor and personnel dispute arbitration committee refuses to accept a labor dispute case by reason of no jurisdiction and the party in question institutes a lawsuit, the people's court shall handle the lawsuit according to the following circumstances:
1. where it is confirmed upon examination that the labor and personnel dispute arbitration committee has no jurisdiction over the case, the people's court shall inform the party to apply for arbitration to the labor and personnel dispute arbitration committee with jurisdiction; and
2. where it is confirmed upon examination that the labor and personnel dispute arbitration committee has jurisdiction, the people's court shall inform the party to apply for arbitration and circulate the opinions on examination to the labor and personnel dispute arbitration committee; where such labor and personnel dispute arbitration committee still refuses to accept the relevant cases, the people's court shall accept the lawsuit filed by the party concerning the labor dispute.


Article 2 An arbitral award shall set out the specific types of arbitral award.
Where an arbitral award fails to state whether such award is final or not, and the employer is dissatisfied with such award and institutes a lawsuit with the people's court at basic level, such court shall handle the lawsuit according to the following circumstances:
1. where the arbitral award is deemed as non-final upon examination, the people's court at basic level shall accept the lawsuit; and
2. where the arbitral award is deemed as final upon examination, the people's court at basic level shall not accept the lawsuit but shall notify the employer that it may, within 30 days upon receipt of the decision on not accepting the lawsuit, apply to the intermediate people's court at the place of the labor and personnel dispute arbitration committee for cancelling the arbitral award; in the event that the people's court has already accepted the lawsuit, such lawsuit shall be rejected.

Article 3 The intermediate people's court shall form a collegial panel to hear in court the case as applied by an employer for cancelling the final award. In the event that no new facts, evidence or reasons are found after document reference, investigation and inquiry made on the parties and the collegial panel deems that it is unnecessary to hold a hearing, the intermediate people's court may not hold such hearing.
The intermediate people's court may organize mediation for the parties concerned. In the event of reaching a mediation agreement, a mediation statement may be made. Where either party fails to perform the mediation agreement within the specified time limit, the other party may apply to the people's court for enforcement.


Article 4 The parties may, as deemed necessary by them, jointly apply to the people's court at the place of the People's Mediation Committee for judicial confirmation with respect to the mediation agreement regarding payment obligations only reached before the People's Mediation Committee.

Article 5 Where an employee is arranged to serve for a new employer instead of the former employer for non-personal reasons and the former employer fails to pay the relevant economic compensation, in case the employee rescinds the labor contract signed with the new employer pursuant to the provisions of Article 38 of the Labor Contract Law or the new employer proposes to the employee for rescission or termination of the labor contract, the people's court shall support the employee's request for combining the years of working for the former employer with the years of working for the new employer when calculating years of working in relation to the aforesaid economic compensation or damages.
Where an employer falls under one of the following circumstances, it shall be deemed as "an employee is arranged to serve for a new employer instead of the former employer for non-personal reasons":
1. the employee still works in the original work place and post but the subject to the labor contract is altered from the former employer to the new employer;
2. the employer transfer the employee to other jobs in the form of designation or appointment by the organization;
3. the employee is transferred to other jobs due to the employer's merge or separation, etc.;
4. the employer and its affiliated enterprises sign labor contracts with the employee in turn; and
5. other reasonable circumstances.


Article 6 Where the parties stipulate the non-compete clause in the labor contract or confidentiality agreement without stipulating the payment of economic compensation to the employee after such labor contract is rescinded or terminated and the employee has fulfilled his/her non-competition obligations, the people's court shall support the employee's request for payment of economic compensation at the rate of 30% of the average monthly wages for the 12 months before such labor contract is rescinded or terminated on a monthly basis by the employer.
Where 30% of the average monthly wages as specified in the preceding paragraph is lower than the minimum wage standard at the place where the labor contract is performed, the economic compensation shall be paid according to the latter.

Article 7 Where the parties stipulate non-compete and economic compensation clauses in the labor contract or confidentiality agreement, unless otherwise stipulated, the people's court shall support the employer's request for requiring the employee to fulfill the non-competition obligations or the employee's request for payment of economic compensation by the employer upon fulfillment of his/her non-competition obligations.


Article 8 Where the parties stipulate non-compete and economic compensation clauses in the labor contract or confidentiality agreement and the employer fails to pay the economic compensation due to its own reasons within three months after such labor contract is rescinded or terminated, the people's court shall support the employee's request for rescinding the aforesaid non-compete clause.

Article 9 The people's court shall support the employer's request for rescinding the non-compete agreement within the period of non-competition.
In the event of rescinding the non-compete agreement, the people's court shall support the employee's request for payment of a three-month additional economic compensation regarding non-competition by the employer.

Article 10 Where the employee violates the non-compete agreement and thus pays the relevant liquidated damages to the employer, the people's court shall support the employer's request for requiring the employee to continue to fulfill the non-competition obligations according to stipulations.

Article 11 Where the labor contract fails to be altered in written form but the orally altered contract has been performed for more than one month and such altered contract complies with laws, administrative regulations, national policies and public order and good customs, the people's court shall not support the either party's claim that the aforesaid altered contract is null and void by reason that it does not adopt the written form.

Article 12 Where an employer with the trade union organization rescinds the labor contract in accordance with the provisions of Articles 39 and 40 of the Labor Contract Law but fails to inform the trade union of such rescission in advance in accordance with the provisions of Article 43 of the Labor Contract Law, the people's court shall support the employee's request for payment of damages by the employer by reason that the employer illegally rescinds the labor contract, except that such employer has make remedies or corrections concerning the relevant procedures prior to the lawsuit.

Article 13 Upon the effectiveness of the Labor Contract Law, where the labor contract cannot be performed any longer as a result of the expiration of the operation period of the employer, the people's court shall support the employee's request for payment of economic compensation by the employer.


Article 14 Where a foreigner or stateless person enters into a labor contract with an employer within the territory of China without obtaining the relevant employment certificate in accordance with the law, and a resident of the Hong Kong Special Administrative Region, the Macao Special Administrative Region or Taiwan Region enters into a labor contract with an employer in the mainland of China without obtaining the relevant employment certificates in accordance with the law, the people's court shall not support either party's request for confirming his/her labor relationship with the employer.
Where a foreigner who has the Foreign Expert Certificate and obtains the Work Permit for Foreign Experts in China establishes an employment relationship with an employer within the territory of China, such employment relationship may be confirmed as labor relationship.

Article 15 The relevant judicial interpretations promulgated by the Supreme People's Court prior to the effectiveness of the Interpretation of the Supreme People's Court on Several Issues concerning the Application of Law in the Trial of Labor Dispute Cases (IV) (hereinafter referred to as the "Interpretation") which are in conflict with the Interpretation shall not apply as of the date of effectiveness of the Interpretation.
For the labor dispute cases which have not entered the last instance yet after the effectiveness of the Interpretation, the Interpretation shall apply; for the labor dispute cases which have gone through the last instance prior to the effectiveness of the Interpretation, where either party concerned applies for retrial or the retrial is decided to be conducted subject to the trial supervision procedure, the Interpretation shall not apply.