Six Employment Risk Areas under the Second Labor Disputes Interpretation
Don’t think this is just a “minor fix” to the legal provisions! The "the Supreme People's Court Interpretation on Applicable Legal Issues in the Trial of Labor Dispute Cases (II)" that is about to take effect is a "system reinstallation" of labor relations rules. He targeted several of the most troublesome problems in the current employment field: "outsourcing" that is difficult to distinguish between true and false, "labor contracts" that are full of loopholes, and "legal circumvention" that is difficult to prevent...
Whether you are a manager or an ordinary employee, these changes will profoundly affect your decisions and rights. Today, we have highlighted the 6 most core disruptive impacts for you to help you understand the subtext behind the new regulations.
Core signal: Under the new regulations, the era of "taking advantage of loopholes" is over. Both companies and employees must re-examine their legal risks and rights boundaries.
Impact 1: Outsourcing and subcontracting will no longer work! Whoever benefits must bear the responsibility
[Explanation of the original text]
Article 1 If a contractor with legal business qualifications subcontracts or subcontracts the contracting business to an organization or individual that does not have legal business qualifications, and the workers recruited by the organization or individual request to confirm that the contractor is the entity responsible for the employment and assumes responsibilities such as payment of labor remuneration, work-related injury insurance benefits after identification of work-related injuries, etc., the People's Court shall support it in accordance with the law.
Article 2 If an organization or individual without legal business qualifications affiliates itself with a unit with legal business qualifications to operate externally, and the workers recruited by the organization or individual request to confirm that the affiliated unit is the employer responsible for the employment and assumes responsibilities such as payment of labor remuneration, work-related injury insurance benefits after identification of work-related injuries, etc., the People's Court shall support it in accordance with the law.
[Typical Case] Company A subcontracted a business to the unqualified Team B. An employee of Team B, Xiao Wang, was owed wages or suffered a work-related injury. Team B could not afford to pay compensation. Company A said: "I did not hire the person and it has nothing to do with me."
[Subtext of the new regulations] This "blaming away" rhetoric will no longer work in the future!
To put it simply, the logic of the law has changed: in the future, don’t ask “Do I have a contract with him?”, but ask “Is he working for my business?” As long as you are the ultimate beneficiary and risk controller (such as the head office that outsources the project), you may have to "pay" for the back wages and work-related injuries of downstream partners (such as non-compliant foreman contractors). This is tantamount to putting a "joint and several liability" curse on all companies.
【Reminder to you】
For businesses: Vet your suppliers and partners now! Whether their employment is compliant or not is directly related to your pocketbook.
To employees: If you are in a complex employment chain, now you have a sharp sword that can trace upwards to find the "big boss" who is truly capable of taking responsibility.
Impact 2: "Double salary" without signing a labor contract, the boss has a "gold medal to avoid death"?
[Explanation of the original text]
Article 7 If an employee requests the employer to pay double wages on the grounds that the employer has not concluded a written labor contract, the people's court shall support it in accordance with the law, except where the employer provides evidence to prove that one of the following circumstances exists:
(1) Failure to conclude due to force majeure;
(2) Failure to enter into a contract due to intentional or gross negligence of the employee;
(3) Other situations stipulated by laws and administrative regulations.
[Typical Case] After an employee joined the company, HR repeatedly urged him to sign a contract, but the employee himself delayed or refused for various reasons. In the end, the employees sued the company, demanding "double wages" for which they had not signed a contract.
[Subtext of the new rules] The boss may not have to pay compensation, but the threshold is extremely high!
The new regulations give bosses a right to defend themselves: if they can produce irrefutable evidence that the responsibility for not signing the contract lies entirely with the employees (for example, the employees themselves have repeatedly refused to sign), then the company can be exempted from the penalty of paying double wages.
But please note: the threshold for this “death-free gold medal” is extremely high! Companies must provide a chain of conclusive evidence such as emails, stamped reminder letters, meeting minutes, etc. Simple verbal reminders are useless.
【Reminder to you】
For enterprises: quickly establish a standardized written reminder process and stop relying on oral communication.
To employees: The law protects people with integrity, and the road to deliberate "contradiction" is blocked.
Impact three: Signed a "voluntary surrender of social security" agreement? Congratulations, you signed in vain!
[Explanation of the original text]
Article 19 If the employer and the employee agree or the employee promises to the employer that they do not need to pay social insurance premiums, the people's court shall determine that the agreement or commitment is invalid. If the employer fails to pay social insurance premiums in accordance with the law, and the employee requests to terminate the labor contract and have the employer pay economic compensation in accordance with Article 38, Paragraph 1, Item 3 of the Labor Contract Law, the People's Court shall support the request in accordance with the law.
Under the circumstances specified in the preceding paragraph, if the employer, after paying back the social insurance premiums in accordance with the law, requests the employee to return the paid social insurance premiums as compensation, the people's court will support it in accordance with the law.
[Typical Case] In order to pay less or get more cash, the company signed an agreement with employee Xiao Li, stipulating that the company would not pay social security to Xiao Li, but would instead pay him a "social security subsidy" every month.
[Subtext of the new regulations] This kind of "under-the-table agreement" is sentenced to death, and the consequences are very serious.
The new regulations make it clear: any agreement not to pay social security will be invalid! Employees can renege at any time and terminate the contract on this basis and require the company to pay financial compensation.
What's even more bizarre is that the new regulations have designed a "return" clause: after the company pays you social security in accordance with the regulations, it has the right to let you return the "social security subsidy" you received before. This move completely dispelled the idea of "spending money to save trouble", and also caused those employees who wanted to "take advantage of both ends" to make the wrong calculation.
【Reminder to you】
To businesses: Stop this illegal operation immediately! Paying social security in accordance with the law is the only right way.
To employees: Don’t throw away the fundamental protection given to you by the state just for the sake of a few hundred dollars in subsidies.
Impact 4: Want to sign an “indefinite-term contract”? These "tricks" have been blocked
[Explanation of the original text]
Article 10 If any of the following circumstances occurs, the People's Court shall determine that it is in compliance with the provisions of Item 3 of Article 14, Paragraph 2, of the Labor Contract Law, "Concluding two consecutive fixed-term labor contracts":
(1) The employer negotiates with the employee to extend the labor contract term for more than one year in total, and the extension period expires;
(2) The employer and the employee agree that the labor contract will be automatically renewed upon expiration, and the extension period expires;
(3) The employee is still working at the original workplace or job position for no reasons other than his own, and the employer changes the subject of the labor contract but continues to manage the labor of the employee until the contract period expires;
(4) The labor contract is concluded again with other evasive behaviors that violate the principle of good faith and the time limit expires.
[Typical case] In order not to sign "unfixed-term contracts" with employees, the company came up with various methods: only signing short-term contracts for one year at a time; letting employees take turns signing contracts among companies A, B, and C within the group...
[Subtext of the new regulations] The law has seen through all these "tricks".
The new regulations clearly stipulate that whether the contract is "negotiated to extend" for a cumulative period of one year, or whether the contract is signed by "changing vests" between affiliated companies (as long as the work content, location, and boss have not changed), it will be deemed as "continuous contracting", which directly triggers the conditions for signing an indefinite-term contract. If you want to avoid legal obligations through formal operations, the door has been closed.
【Reminder to you】
For enterprises: Respect the law and respect the stable expectations of employees. This is the long-term solution.
To employees: Working years can be calculated “penetratingly”. Don’t be fooled by the company’s “organizational structure adjustment”.
Impact 5: Non-competition restrictions are not “standard for all employees”! Without access to core secrets, the agreement is invalid
[Explanation of the original text]
Article 13 If the employee does not know or have access to the employer's business secrets and confidential matters related to intellectual property rights, and the employee requests confirmation that the non-compete clause is not effective, the people's court will support it in accordance with the law.
If the scope, territory, duration and other contents of the non-competition clause are inconsistent with the business secrets and confidential matters related to intellectual property rights that the employee knows and has access to, and the employee requests to confirm that the portion of the non-competition clause that exceeds a reasonable proportion is invalid, the people's court will support it in accordance with the law.
Article 14 If an employer agrees on a non-competition clause during employment with senior managers, senior technicians and other personnel with confidentiality obligations, and the employee requests confirmation of the invalidity of the non-competition clause on the grounds that the employer cannot agree on non-competition restrictions during employment or fails to pay financial compensation, the People's Court will not support it.
[Typical case] A company requires all employees, from front desk to senior executives, to sign a non-compete agreement when they join the company.
[Subtext of the new regulations] Most of these agreements will be scraps of paper.
The new regulations hit home: for a non-competition agreement to be effective, the company must be able to prove that the employee has indeed "knowledge and access" to the company's trade secrets. If a position (such as administration, general sales) does not have access to core secrets at all, then even if an agreement is signed, the law will not recognize it.
【Reminder to you】
To enterprises: quickly shrink the scope of your non-compete restrictions and stop treating them as a "universal shackle" that restricts employees from changing jobs.
For employees: If you are just an ordinary employee but are troubled by a non-compete agreement, now you have the most powerful weapon to fight back.
Impact 6: The company illegally fires people, and the compensation depends on "who made more mistakes"
[Explanation of the original text]
Article 18 If the employer illegally cancels or terminates a labor contract that can continue to be performed, and the employee requests the employer to pay wages for the above period from the day the illegal cancellation or termination decision is made to the day before the labor contract is continued to be performed, the employer shall pay the employee wages for the above period in accordance with the wage standards when the employee provides normal work.
If both the employer and the employee are at fault for the rescission or termination of the labor contract, they shall each bear corresponding responsibilities.
[Typical Case] The company illegally fired Xiao Zhang, and it took a long time for Xiao Zhang to apply for arbitration. During the lawsuit, Xiao Zhang found a new job and the income was pretty good.
[Subtext of the new regulations] The court will be more "calculated" when calculating compensation.
This may be the most profound conceptual change in this new regulation. In the past, once a company was found to have violated the law, the company usually had to bear 100% of wages during the dispute. Now, the court will introduce the principle of "contributory fault". In layman's terms, it depends on "who of the two parties made more mistakes." If the employee procrastinates in defending his or her rights, or has found a high-paying job during the dispute, the court may have the discretion to reduce the amount of wages that the company needs to pay.
【Reminder to you】
For enterprises: In litigation, you can try to collect evidence of employees’ “fault” as a bargaining chip.
For employees: After their rights and interests are damaged, they must promptly and proactively defend their rights and do not let their "procrastination" affect the final compensation results.
Summary: Suggestions for action for you
The new regulations have been implemented. The law does not look at tears, but only evidence and rules.
3 core suggestions for business managers/HR:
1. Immediate compliance self-examination: Comprehensively review the company’s contracts, agreements, and management processes against the above six points.
2. Process and document: Establish traceable management traces, especially in key links such as onboarding and resignation.
3. Mentality change: from "control thinking" to "negotiation thinking", from "risk avoidance" to "investing in people".
Two talismans for professionals:
1. Enhance evidence awareness: For important communications (such as salary negotiations, contract renewal, resignation), try to use written or recordable methods.
2. Understand the boundaries of rights: Only by knowing what is allowed by the law and what is prohibited by the law can you protect yourself at critical moments.
Labor relations are cooperative rather than confrontational. Understanding and respecting the law is a required course for every modern business manager and workplace person.