22 March 2021
On December 29, 2020, the Supreme People’s Court Decision on the Abolition of Some Judicial Interpretations and Related Normative Documents abolished the Interpretations (I through IV) of the Supreme People’s Court on the Application of Law in Labor Dispute Trials (the “Old Interpretations”), which are replaced with the new Interpretation (I) of the Supreme People’s Court on the Application of Law in the Labor Dispute Trials (the “New Interpretation”). Consisting of 54 articles, the New Interpretation is a “four-in-one” integrated compilation of the Old Interpretations with no significant change save for some amendments and deletions. This article will briefly explain some of the new rules of the New Interpretation.
The opening section of the New Interpretation provides that in order to properly adjudicate labor disputes, the Interpretation is formulated pursuant to the Civil Code of the People’s Republic of China, the Labor Law of the People’s Republic of China, the Labor Contract Law of the People’s Republic of China, the Labor Dispute Mediation and Arbitration Law of the People’s Republic of China, the Civil Procedure Law of the People’s Republic of China, and other relevant laws as well as trial practices. The clearly new addition of the Civil Code as a source of law for labor dispute trials signifies that the Civil Code will be directly cited in such trials in the future. Here, employers are reminded to pay more attention to the impact of the Civil Code on employment of workers.
Article 24 of the New Interpretation updates the circumstances where arbitration awards and mediation agreements are not enforceable in accordance with Article 237 of the Civil Procedure Law of the People’s Republic of China. Article 237 of the Civil Procedure Law of the People’s Republic of China stipulates that if the respondent produces evidence to prove that the arbitration award is subject to any of the following circumstances that is verified pursuant to a panel established by the people’s court, the award shall not be enforced: (1) if the parties did not have an arbitration clause in the contract or did not reach a written arbitration agreement afterwards; (2) if the matters decided in the award do not fall within the scope of the arbitration agreement or if the arbitration institution does not have the power to arbitrate such matters; (3) the composition of the arbitration tribunal or the procedure of arbitration violates the stipulated procedures in law; (4) the evidence relied on by the award is falsified; (5) the opposing party concealed from the arbitration institution evidence sufficient to affect the fairness of the award; (6) the arbitrator was corrupt, accepted bribes, practiced favoritism and bent the law in the arbitration of the case. Based on the above provisions, Article 24 of the New Interpretation has more new circumstances for a court to deny enforcement compared to the Old Interpretations, including violation of procedure, forgery of evidence relied on by the arbitration award, and concealment of evidence by the opposing party that is sufficient to affect the fairness of the award.
Article 33 of the New Interpretation eliminates the provision in the Old Interpretations regarding residents of Hong Kong, Macau and Taiwan not obtaining employment certificates for their employment in the Mainland. This was primarily due to the State Council’s Decision on Cancelling Certain Administrative License Matters (Guo Fa [2018] No. 28) dated July 28, 2018 in which the employment permit for people from Taiwan, Hong Kong and Macau working in the Mainland was formally cancelled.
Article 41 of the New Interpretation adds that if an employment contract is confirmed to be invalid, the employer shall still pay compensation in accordance with the relevant provisions of the Labor Contract Law. The invalidity of the labor contract does not mean that the labor relationship does not exist, and this New Interpretation provision is more leaning towards the protection of workers’ rights and interests. In addition, the second paragraph of this article stipulates that if an invalid labor contract is concluded for reasons attributable to the employer and causes damage to the worker, the employer shall compensate the worker for the economic loss caused by the invalid labor contract.
The New Interpretation came into effect on January 1, 2021 and has since become the “new standard” for the people’s court in adjudicating labor dispute cases.
For further information, please contact:
Joyce Wen, Lee Tsai & Partners
lawtec@leetsai.com
