How Can the Double Wages Payment Provision be Misused In China?

(By You Yunting) In order to protect the legitimate rights and interests of laborers and to avoid enterprises failing to conclude a labor contract with laborers, China’s Labor Contract Law stipulates that, where an employing unit fails to conclude a written labor contract with a laborer that has provided labor services for more than one month but less than one year, it shall pay double wages payment to the laborer each month.

In practice, however, many enterprises found this stipulation being misused. To achieve double wages payment, some laborers intentionally failed to conclude the written labor contract with their employing units and then brought the employing units to labor arbitrations claiming for double wages payment. In our post, we would like to introduce a typical case where a laborer in charge of human resources who deliberately did not conclude a labor contract with its enterprise is supported by the courts to receive double wages payment after their departure. Foreign investors who do business in China should be aware of this potential labor risk.


How to Infer the Trade Secret Disclosure by Original Staffs in China?


(By Albert Chen) How to demonstrate one’s original employee has presented the trade secret gained during his/her service to the new employer, who thereafter makes benefit of it? As no direct evidences are available, in the current judicial practices, the principle of “similarity, contactable and excluding lawful origin” has been adopted for the case judging.

Case Summary:

Zhao once had her employment with Jiashan Shengguang Electronics Co., Ltd. (the “Company S”) from February 20th 2002 to March 19th 2006, and was in charge of the sales of the company. During her service there, Zhao, as the representative of Company S, concluded several transactions on vehicles lighting with Mexican DDB Company.


What Information Could Be Considered as Trade Secret in Tech Product Transaction in China?


(By Albert Chen) The tech product transaction involves the information of technology and business. Among such information, to judge which part could be considered as trademark secret, it shall be based upon Article 10 of the Anti Unfair Competition Law, which regulates that to determine the trade secret, the court shall evaluate “whether it is known to the public”, “benefiting”, “practicability” and “confidentiality”.

Case Summary

In 1998, Shanghai Zhenxing Aluminum Co., Ltd. (the “Zhengxing Company”) developed a manufacturing technology, which the company used to produce articles. This technology created by Zhenxing set the standard for the production of the article. Shanghai Huikai Aluminum Co., Ltd. (the “Huikai Company”) was founded on September 10th 2003, and afterwards carried out the business in the same product manufacturing as Zhenxing. As investigated, among the 70 clients of Huikai, 68 once transacted with Zhenxing. For these clients, most products they purchased from Huikaiu were almost the same as those they bought from Zhenxing. Furthermore, Qin and Pan, who are now working in Huikai, are former employees of Zhenxing. During their employment with Zhenxing, the company signed confidential article in the labor contract and also an independent confidential agreement.


China Supreme Court Publishes New Judicial Interpretation on Competitive Restriction Clauses

(By Albert Chen) The system of competitive restriction is one of the major systems concerning the protection of trade secrets. In the beginning of 2013, the Supreme People’s Court of China (the “Supreme Court”) published its Interpretation IV on Several Issues concerning the Application of Law in Hearing Labor Disputes (the “Interpretation IV”). According to the new Interpretation, the rules related to the labor issue include: 1) a competitive restriction clause is valid when no article has been made regarding payment for the restriction; 2) removal of competitive competition due to delayed payment for the restriction compensation; 3) the employee may claim extra compensation when an employer terminates the restriction.


Should Employer Give Notice to Trade Union before Terminate Employment in China?

trade union

 (By Albert Chen) The dispute over employment termination is quite common in labor conflicts, and whether the employer shall send a notice to the trade union before the termination is commonly seen in such disputes. What then, are the regulations regarding this aspect in China?

I. What is the function of trade union in China?

The role of the trade union is specified in Article 2 of Trade Union Law of PRC (the “Trade Union Law”):

“Trade unions are mass organizations formed by the working classes of their own free will.


Solutions to Labor Dispute on the Employment of Foreigners in China

By Albert Chen

A subscriber of our website raised a question to us: what to do when countered a labor dispute for foreigners in China, who shall also be protected by local laws? To this question, you may find your answer in today’s post.

I. Are Chinese laws and regulations applying to labor disputes of foreigners?

The main existing laws regulating the employment of foreigners in China is RULES FOR THE ADMINISTRATION OF EMPLOYMENT OF FOREIGNERS IN CHINA (Rules) issued by police, labor and other two departments. According to Article 26 of the Rules:


How to Respond Employees’ Compensation Claim for Office Relocation in China?

By You Yunting

A subscriber of our website asked that what the company shall reply when the employee hand in his/her resignation for the inconvenience occurred from relocation of the office and as for the employee’s claim of compensation.

We reply as follows: Obviously, it could come to the employee’s consideration that the relocation of the office is the statutory situation of “A major change in the objective circumstances relied upon at the time of conclusion of the employment contract renders it unperformable”, and it is also resulted by the employer, and for this reason, they would claim an extra one month salary and compensation.