Effective Date: September 1, 2025
Adopted: February 17, 2025 (1942nd SPC Judicial Committee Meeting)
Document No.: Fa Shi [2025] No. 12
To unify the application of law in labor dispute cases in light of new issues like non-compete clauses, social insurance disputes, and labor relations involving foreign employees, following the Civil Code and recent labor practice developments.
Employer Liability in Irregular Employment
Employers who illegally subcontract or allow unlicensed affiliates to hire workers are still responsible for wages and work injury benefits.
Host units of “attached” businesses (挂靠经营) may be liable as the actual employer.
Labor Relationship Determination
Workers employed by affiliated entities can request confirmation of labor relations with the actual employer(s).
For foreign employees, labor relations are recognized if they hold:
Permanent residency;
Valid work permit and lawful stay; or
Relevant approvals under national regulations.
Foreign representative offices can be parties to labor disputes.
Written Labor Contracts & Wages
Employers who fail to sign written contracts must pay double wages until the contract is signed.
Automatic extension of labor contracts occurs under certain conditions (e.g., during statutory protection periods).
No double wage liability if delays are caused by force majeure or the employee’s own fault.
Fixed-Term & Open-Ended Contracts
Clarifies when repeated fixed-term contracts or automatic extensions trigger open-ended contracts.
Workers can request signing an open-ended contract once legal conditions are met.
Non-Compete Clauses & Service Periods
Non-compete clauses must be reasonable in scope, territory, and duration.
Employees unaware of trade secrets can challenge non-compete validity.
Violations allow employers to claim return of compensation and liquidated damages.
Illegal Termination & Remedies
Defines circumstances where labor contracts are “unable to continue”, including employer bankruptcy, employee’s new employment, or objective impossibility.
Employees can claim wages for the period from illegal termination to reinstatement.
Courts may apportion liability if both parties are at fault.
Social Insurance Obligations
Agreements waiving social insurance are void.
Employees can resign and claim severance if the employer fails to pay social insurance.
Employers can seek return of social insurance compensation if they later make full back payments.
Arbitration Limitation Period
Time-bar objections must be raised during arbitration; raising them later in litigation is not supported.
Expired claims cannot be revived in retrial unless supported by new evidence.
Effect & Repeal
Effective September 1, 2025.
Article 32(1) of Interpretation (I) is repealed; this Interpretation prevails over any prior conflicting provisions.
