Shanghai High Court Issues Local Judicial Opinions on Labor Disputes
Published 25 February 2025
Xia Yu
The Excerpts of Discussion Views on Difficult Issues on Labor Disputes in the Application of Law (“Excerpts”) issued by the Civil Tribunal of the Shanghai High People’s Court has been officially implemented since 1 January 2025. The Excerpts were formulated based on the views of all parties in a debate organized by the Civil Tribunal in response to the difficult issues involving labor dispute cases that lack clear legal provisions. It provides detailed majority opinions on 10 employment issues to guide Shanghai courts while listing minority opinions to bring out controversial points.
Issue 1: If an employer illegally subcontracts, sub-contracts, or lends its qualifications to other organizations, enterprises, or individuals to operate under the name of the employer, and employees employed by others are injured or killed in the course of work, and if the employer is identified as the party responsible for work-related injury insurance, how should it be handled if the injured or dead employees or their families claim work-related injury insurance benefits from the employer in labor dispute cases such as disputes over work-related injury insurance benefits?
The employer shall bear joint and several liability for the work-related injuries of employees employed by the affiliated party. The minority opinion believes that the employer only needs to pay the work-related injury insurance benefits of the compensation part of the work-related injury insurance fund. Article 3 (1) (iv) and (v) of the Provisions of the Supreme People’s Court on Several Issues Concerning the Trial of Administrative Cases of Work-Related Injury Insurance (“Provisions”) stipulates the specific circumstances in which an employer is identified as a work-related injury insurance liability party. From the perspective of regulating illegal subcontracting, sub-contracting, and lending of qualifications, and providing timely relief to employees, the majority of opinions believe that the employer should pay all work-related injury insurance benefits, including the compensation part of the work-related injury insurance fund and the compensation part paid by the employer. After the employer pays the compensation, it is entitled to claim rights from relevant organizations, companies, or individuals by the second paragraph of Article 3 of the Provisions.
Issue 2: What should be done if an employee claims from the employer for medical expenses that the work-related injury insurance fund did not compensate?
The employer may not claim it from the employer. The minority opinion believes that the employer should bear the cost. Article 1 of the Regulation on Work-Related Injury Insurance (“Regulation”) stipulates that the purpose of establishing the work injury insurance system is to disperse the risk of work-related accidents of employers, rather than completely replace the employer’s compensation liability. Article 30 (1) and (3) of the Regulation stipulate that employees who receive treatment for work-related injuries or occupational diseases shall enjoy work-related medical treatment; if the cost of treating work-related injuries meets the list of work-related injury insurance diagnosis and treatment items, the list of work-related injury insurance drugs, and the standards for work-related injury insurance hospitalization services, the work-related injury insurance fund shall pay the cost. Based on this, the majority opinion believes that, under the condition that the employer has paid the work-related injury insurance premium for the employee following the law, the medical expenses incurred by the employee for the treatment of work-related injuries should be paid by the work-related injury insurance fund, and should not be borne by the employer.
Issue 3: When renewing a labor contract, if the employer claims that it still has a one-month grace period to sign a labor contract and should not pay the double wage difference for the one month in which the labor contract was not signed, how should this be handled?
The Employer can have a one-month grace period to avoid paying the double wage difference. Article 82 (1) of the Labor Contract Law stipulates that “if an employer fails to conclude a written labor contract with an employee within one month but less than one year from the date of employment, the employer shall pay the employee double wages every month”. The minority opinion believes that it is not appropriate to give the employer another one-month grace period to renew the labor contract. However, the majority opinion believes that the employer can be given a one-month grace period. The given reasons include that after the expiration of the labor contract, both parties still need to renegotiate on matters such as position, salary, and term; and if the grace period is completely deprived, it may lead to the payment period of the double wage difference exceeding the statutory maximum period of 11 months, which violates the principle of balancing interests.
Issue 4: If an employer illegally terminates the labor contract of an employee who is in the medical period or has completed the medical period, and the employee claims compensation for the illegal termination of the labor contract, he also requires the employer to pay medical assistance equal to six months’ salary. How should this be handled?
The employer does not need to pay the medical assistance. The minority opinion holds that the employer must pay both compensation for illegal termination of the labor contract and the medical assistance. Article 23 (1) of the Social Insurance Law stipulates that employees shall participate in basic medical insurance for employees, and the employer and employees shall jointly pay basic medical insurance premiums. With the continuous improvement of the medical insurance system, the expenses incurred by employees for their disease treatment are mainly covered by the basic medical insurance system. Therefore, the majority opinion holds that the employer does not need to pay the medical assistance.
Issue 5: If an employer and an employee have signed two or more fixed-term employment contracts in succession, and after the expiration of the last employment contract, the employee requests to sign an open-ended employment contract, how should this be handled?
After signing two consecutive fixed-term labor contracts, the employee has the right to choose to sign an open-ended contract. According to Article 14 (2) (iii) of the Labor Contract Law, if the employee does not have the six serious faults or illness, injury, or incompetence the employer can terminate the labor contract stipulated in Articles 39 and 40 of the law, an open-ended labor contract should be renewed after signing two consecutive fixed-term labor contracts. The minority opinion believes that the employer has the right to choose whether to renew in this case. However, the majority opinion believes that if the employee proposes to sign an open-ended labor contract, the employer must sign an open-ended labor contract because the employer should foresee that it may need to sign an open-ended contract in the future when signing the second fixed-term labor contract. After signing two consecutive fixed-term labor contracts, the employee is entitled to choose whether to renew the open-ended labor contract. Otherwise, the employer’s unilateral termination of the contract constitutes a violation of the law and shall bear the legal consequences stipulated in Article 48 of the Labor Contract Law.
Issue 6: If a labor contract is ordered to be restored and the employee requests the employer to pay the restoration period wages, how should the starting time of the wages be determined?
The wages should be calculated from the day the employee applies for mediation or arbitration, not the day after the termination. The minority opinion believes that the recovery wages should be calculated from the day after the labor contract is terminated. The majority opinion holds that the recovery wages should be calculated from the day the employee applies for mediation or initiates arbitration to encourage him to assert his rights and interests promptly after a labor contract termination dispute occurs and to avoid the moral risk that some employees can obtain equal protection by taking advantage of the longer arbitration period and failing to exercise their rights.
Issue 7: How should the situation be handled if an employee proposes to terminate the labor contract because the employer has not paid for unpaid annual leave wages, high-temperature allowances, vehicle allowances, meal allowances, and other welfare benefits, and demands that the employer pay economic compensation?
Employees can file for termination of labor contracts and claim economic compensation because the employer has not paid unused annual leave wages and high-temperature allowances. The minority opinion believes that the employees’ request for economic compensation should not be supported. Unused annual leave wages, high-temperature allowances, etc. are statutory benefits that employees should enjoy and have the attributes of labor remuneration. If the employer fails to pay them, the employees should be able to file for termination of labor contracts and claim economic compensation by the provisions of Article 38 (1) (ii) of the Labor Contract Law. However, vehicle allowances, meal allowances, etc. generally do not fall within the scope of labor remuneration, and employees may not claim economic compensation on this basis. Therefore, the majority opinion believes that employees can be supported if they file for termination of labor contracts and claim economic compensation because the employer has not paid the wages for unused annual leave and high-temperature allowance.
Issue 8: According to relevant regulations, when an employee and an employer file a lawsuit and apply for revocation respectively against the same final arbitration award, the court of first instance generally conducts a joint hearing on the requests of both parties. At this time, should the employer's request for revocation of arbitration be subject to substantive review, or should it be subject to legal application or procedural review under legal provisions?
The minority opinion holds that the court of first instance should conduct a comprehensive substantive review and processing of the employer's request. The majority opinion holds that the court of first instance should generally review the employer's request based on the circumstances stipulated in Article 49 (1) of the Labor Dispute Mediation and Arbitration Law such as procedural violations, falsification of evidence, etc., rather than a comprehensive substantive review. If the disputes between the two parties overlap such as the dispute that the employer applies to revoke is consistent with the content of the employee's lawsuit, the court of first instance needs to adjudicate the substantive disputes together to ensure efficiency and fairness.
Issue 9: An employer pays social insurance premiums for employees at their place of registration and then sends them to work in other provinces or cities. If a worker suffers a work-related injury and the standard of compensation for work-related injuries at the place where the labor contract is performed is higher than that at the place of insurance, how should it be handled if the employee asks the employer to pay the difference in benefits between the two places?
The work-related injury insurance benefits of the employees should be determined by the relevant provisions of the place where the workers participate in the work-related injury insurance. The minority opinion believes that the insurance benefits should be determined by the standards of the place where the labor contract is performed, and the difference should be made up based on the benefits already obtained in the place of participation. Article 7 (3) of the Opinions on Several Issues concerning the Implementation of the Regulation on Work-Related Injury Insurance (II) stipulates that if the employer has participated in and paid work-related injury insurance premiums for employees at the place of registration, and the employees have also undergone work-related injury identification and labor capacity assessment at the place, their work-related injury insurance benefits should be determined by the provisions of the place of participation. Based on this, the majority opinion believes that the work-related injury insurance benefits of workers should be determined by the relevant provisions of the place where the workers participate in the work-related injury insurance, and their request to make up the difference following the high standards of the place where the labor contract is performed should not be supported.
Issue 10: An employee claims that his actual workplace and job position have not changed and that he has worked for a total of ten years. During this period, the labor relationship has not changed due to any reason of his own. He demands to enter into an open-ended labor contract with the current employer. How should this be handled?
The employee’s claim does not meet the statutory circumstances under which an open-ended contract should be signed in the Labor Contract Law. Article 14 (2) (i) of the Labor Contract Law stipulates that “the employee has worked continuously for the employer for ten years” is a statutory circumstance under which an open-ended labor contract should be signed. The “ten years” here should be ten years of continuous work in the same employer, which emphasizes the time of continuous labor relations with the same employer. Article 46 of the Interpretation (I) of the Supreme People’s Court of Issues Concerning the Application of Law in the Trial of Labor Dispute Cases details the specific circumstances of “the employee is arranged to work in a new employer from the original employer for reasons other than his own”, and clarifies that the employee’s relevant years of work can be combined when calculating economic compensation or compensation. The continuous calculation of years of work here only applies to rights such as economic compensation and paid vacations and does not directly trigger the obligation of an open-ended contract. The “years of work can be calculated continuously” and “continuous work in the same company” between the two provisions are two different concepts. Based on this, the majority opinion believes that the employee’s claim does not meet the provisions of the Labor Contract Law.
In conclusion, the Excerpts show that Shanghai courts are more inclined to protect the rights and interests of employees in the review of labor disputes, such as strengthening the employer's obligation to renew open-ended contracts, and further improving the efficiency of dispute resolution through consolidated trials.
Issue 1: If an employer illegally subcontracts, sub-contracts, or lends its qualifications to other organizations, enterprises, or individuals to operate under the name of the employer, and employees employed by others are injured or killed in the course of work, and if the employer is identified as the party responsible for work-related injury insurance, how should it be handled if the injured or dead employees or their families claim work-related injury insurance benefits from the employer in labor dispute cases such as disputes over work-related injury insurance benefits?
The employer shall bear joint and several liability for the work-related injuries of employees employed by the affiliated party. The minority opinion believes that the employer only needs to pay the work-related injury insurance benefits of the compensation part of the work-related injury insurance fund. Article 3 (1) (iv) and (v) of the Provisions of the Supreme People’s Court on Several Issues Concerning the Trial of Administrative Cases of Work-Related Injury Insurance (“Provisions”) stipulates the specific circumstances in which an employer is identified as a work-related injury insurance liability party. From the perspective of regulating illegal subcontracting, sub-contracting, and lending of qualifications, and providing timely relief to employees, the majority of opinions believe that the employer should pay all work-related injury insurance benefits, including the compensation part of the work-related injury insurance fund and the compensation part paid by the employer. After the employer pays the compensation, it is entitled to claim rights from relevant organizations, companies, or individuals by the second paragraph of Article 3 of the Provisions.
Issue 2: What should be done if an employee claims from the employer for medical expenses that the work-related injury insurance fund did not compensate?
The employer may not claim it from the employer. The minority opinion believes that the employer should bear the cost. Article 1 of the Regulation on Work-Related Injury Insurance (“Regulation”) stipulates that the purpose of establishing the work injury insurance system is to disperse the risk of work-related accidents of employers, rather than completely replace the employer’s compensation liability. Article 30 (1) and (3) of the Regulation stipulate that employees who receive treatment for work-related injuries or occupational diseases shall enjoy work-related medical treatment; if the cost of treating work-related injuries meets the list of work-related injury insurance diagnosis and treatment items, the list of work-related injury insurance drugs, and the standards for work-related injury insurance hospitalization services, the work-related injury insurance fund shall pay the cost. Based on this, the majority opinion believes that, under the condition that the employer has paid the work-related injury insurance premium for the employee following the law, the medical expenses incurred by the employee for the treatment of work-related injuries should be paid by the work-related injury insurance fund, and should not be borne by the employer.
Issue 3: When renewing a labor contract, if the employer claims that it still has a one-month grace period to sign a labor contract and should not pay the double wage difference for the one month in which the labor contract was not signed, how should this be handled?
The Employer can have a one-month grace period to avoid paying the double wage difference. Article 82 (1) of the Labor Contract Law stipulates that “if an employer fails to conclude a written labor contract with an employee within one month but less than one year from the date of employment, the employer shall pay the employee double wages every month”. The minority opinion believes that it is not appropriate to give the employer another one-month grace period to renew the labor contract. However, the majority opinion believes that the employer can be given a one-month grace period. The given reasons include that after the expiration of the labor contract, both parties still need to renegotiate on matters such as position, salary, and term; and if the grace period is completely deprived, it may lead to the payment period of the double wage difference exceeding the statutory maximum period of 11 months, which violates the principle of balancing interests.
Issue 4: If an employer illegally terminates the labor contract of an employee who is in the medical period or has completed the medical period, and the employee claims compensation for the illegal termination of the labor contract, he also requires the employer to pay medical assistance equal to six months’ salary. How should this be handled?
The employer does not need to pay the medical assistance. The minority opinion holds that the employer must pay both compensation for illegal termination of the labor contract and the medical assistance. Article 23 (1) of the Social Insurance Law stipulates that employees shall participate in basic medical insurance for employees, and the employer and employees shall jointly pay basic medical insurance premiums. With the continuous improvement of the medical insurance system, the expenses incurred by employees for their disease treatment are mainly covered by the basic medical insurance system. Therefore, the majority opinion holds that the employer does not need to pay the medical assistance.
Issue 5: If an employer and an employee have signed two or more fixed-term employment contracts in succession, and after the expiration of the last employment contract, the employee requests to sign an open-ended employment contract, how should this be handled?
After signing two consecutive fixed-term labor contracts, the employee has the right to choose to sign an open-ended contract. According to Article 14 (2) (iii) of the Labor Contract Law, if the employee does not have the six serious faults or illness, injury, or incompetence the employer can terminate the labor contract stipulated in Articles 39 and 40 of the law, an open-ended labor contract should be renewed after signing two consecutive fixed-term labor contracts. The minority opinion believes that the employer has the right to choose whether to renew in this case. However, the majority opinion believes that if the employee proposes to sign an open-ended labor contract, the employer must sign an open-ended labor contract because the employer should foresee that it may need to sign an open-ended contract in the future when signing the second fixed-term labor contract. After signing two consecutive fixed-term labor contracts, the employee is entitled to choose whether to renew the open-ended labor contract. Otherwise, the employer’s unilateral termination of the contract constitutes a violation of the law and shall bear the legal consequences stipulated in Article 48 of the Labor Contract Law.
Issue 6: If a labor contract is ordered to be restored and the employee requests the employer to pay the restoration period wages, how should the starting time of the wages be determined?
The wages should be calculated from the day the employee applies for mediation or arbitration, not the day after the termination. The minority opinion believes that the recovery wages should be calculated from the day after the labor contract is terminated. The majority opinion holds that the recovery wages should be calculated from the day the employee applies for mediation or initiates arbitration to encourage him to assert his rights and interests promptly after a labor contract termination dispute occurs and to avoid the moral risk that some employees can obtain equal protection by taking advantage of the longer arbitration period and failing to exercise their rights.
Issue 7: How should the situation be handled if an employee proposes to terminate the labor contract because the employer has not paid for unpaid annual leave wages, high-temperature allowances, vehicle allowances, meal allowances, and other welfare benefits, and demands that the employer pay economic compensation?
Employees can file for termination of labor contracts and claim economic compensation because the employer has not paid unused annual leave wages and high-temperature allowances. The minority opinion believes that the employees’ request for economic compensation should not be supported. Unused annual leave wages, high-temperature allowances, etc. are statutory benefits that employees should enjoy and have the attributes of labor remuneration. If the employer fails to pay them, the employees should be able to file for termination of labor contracts and claim economic compensation by the provisions of Article 38 (1) (ii) of the Labor Contract Law. However, vehicle allowances, meal allowances, etc. generally do not fall within the scope of labor remuneration, and employees may not claim economic compensation on this basis. Therefore, the majority opinion believes that employees can be supported if they file for termination of labor contracts and claim economic compensation because the employer has not paid the wages for unused annual leave and high-temperature allowance.
Issue 8: According to relevant regulations, when an employee and an employer file a lawsuit and apply for revocation respectively against the same final arbitration award, the court of first instance generally conducts a joint hearing on the requests of both parties. At this time, should the employer's request for revocation of arbitration be subject to substantive review, or should it be subject to legal application or procedural review under legal provisions?
The minority opinion holds that the court of first instance should conduct a comprehensive substantive review and processing of the employer's request. The majority opinion holds that the court of first instance should generally review the employer's request based on the circumstances stipulated in Article 49 (1) of the Labor Dispute Mediation and Arbitration Law such as procedural violations, falsification of evidence, etc., rather than a comprehensive substantive review. If the disputes between the two parties overlap such as the dispute that the employer applies to revoke is consistent with the content of the employee's lawsuit, the court of first instance needs to adjudicate the substantive disputes together to ensure efficiency and fairness.
Issue 9: An employer pays social insurance premiums for employees at their place of registration and then sends them to work in other provinces or cities. If a worker suffers a work-related injury and the standard of compensation for work-related injuries at the place where the labor contract is performed is higher than that at the place of insurance, how should it be handled if the employee asks the employer to pay the difference in benefits between the two places?
The work-related injury insurance benefits of the employees should be determined by the relevant provisions of the place where the workers participate in the work-related injury insurance. The minority opinion believes that the insurance benefits should be determined by the standards of the place where the labor contract is performed, and the difference should be made up based on the benefits already obtained in the place of participation. Article 7 (3) of the Opinions on Several Issues concerning the Implementation of the Regulation on Work-Related Injury Insurance (II) stipulates that if the employer has participated in and paid work-related injury insurance premiums for employees at the place of registration, and the employees have also undergone work-related injury identification and labor capacity assessment at the place, their work-related injury insurance benefits should be determined by the provisions of the place of participation. Based on this, the majority opinion believes that the work-related injury insurance benefits of workers should be determined by the relevant provisions of the place where the workers participate in the work-related injury insurance, and their request to make up the difference following the high standards of the place where the labor contract is performed should not be supported.
Issue 10: An employee claims that his actual workplace and job position have not changed and that he has worked for a total of ten years. During this period, the labor relationship has not changed due to any reason of his own. He demands to enter into an open-ended labor contract with the current employer. How should this be handled?
The employee’s claim does not meet the statutory circumstances under which an open-ended contract should be signed in the Labor Contract Law. Article 14 (2) (i) of the Labor Contract Law stipulates that “the employee has worked continuously for the employer for ten years” is a statutory circumstance under which an open-ended labor contract should be signed. The “ten years” here should be ten years of continuous work in the same employer, which emphasizes the time of continuous labor relations with the same employer. Article 46 of the Interpretation (I) of the Supreme People’s Court of Issues Concerning the Application of Law in the Trial of Labor Dispute Cases details the specific circumstances of “the employee is arranged to work in a new employer from the original employer for reasons other than his own”, and clarifies that the employee’s relevant years of work can be combined when calculating economic compensation or compensation. The continuous calculation of years of work here only applies to rights such as economic compensation and paid vacations and does not directly trigger the obligation of an open-ended contract. The “years of work can be calculated continuously” and “continuous work in the same company” between the two provisions are two different concepts. Based on this, the majority opinion believes that the employee’s claim does not meet the provisions of the Labor Contract Law.
In conclusion, the Excerpts show that Shanghai courts are more inclined to protect the rights and interests of employees in the review of labor disputes, such as strengthening the employer's obligation to renew open-ended contracts, and further improving the efficiency of dispute resolution through consolidated trials.