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Ten Typical Cases of Labor Disputes With Senior Executives Ⅱ

2021-03-03

On December 4, 2020, the Beijing Intermediate People’s Court No. 1 held a press conference to inform of labor disputes involving senior executives in recent years and issued the "Beijing’s Ten typical labor dispute cases." River Delta Law Firm conducted a comprehensive interpretation of the ten major cases and put forward corresponding management suggestions for employers.

Case 2: Senior Executive in Charge of Labor Contracts Claims Lack of Own Written Labor Contract
 
If the company's senior executive is responsible for the management of the labor contract, the employer does not need to pay twice the salary for not having a written labor contract.
 
Introduction
Wen joined a company as deputy general manager on August 1, 2010. On October 15, 2011, the two parties signed an open-term labor contract. On January 11, 2012, the company issued a "Notice of Personnel Change" and the two parties terminated the labor relationship. Later, Wen went to the court and demanded the company to pay twice the wages for the period of 2010 to 2011 due to the absence of written labor contract. The company submitted evidence such as interview evaluation form, insurance application form, employee resignation application form, and employee resignation handover form to prove that Wen was responsible of personnel work as the deputy general manager, including signing labor contracts with employees. After the trial, the court held that Wen, as the deputy general manager in charge of personnel management, should be aware of the legal consequences of not signing the labor contract, and therefore did not support Wen's claim.
 
Judge Interpretation
If the company’s senior management has not entered into a written labor contract with the employer and claims double wages to the employer in accordance with Article 82 of the Labor Contract Law, this may be supported; unless the employer can prove that the scope of responsibility of the senior management includes the management of the labor contract. However, if there is evidence that the company’s executives have submitted a labor contract to the employer and were rejected, the company’s executives’ request for double wages for not signing a written labor contract can still be supported.
 
Lawyer's suggestions
The Labor Contract Law has clearly stipulated that if the employer fails to sign a written labor contract with the employee within one month after the employee enters the job, it shall pay twice the salary. However, due to the special status of the company’s executives, the judges are more cautious when dealing with the double wage disputes. Judges will consider the impact on the unsigned written labor contract from the perspective of actual duties.
This case reaffirms Beijing High People's Court and Beijing Arbitration Commission for Employment Disputes, Minutes of Symposium on Issues concerning Application of Laws to Employment Dispute Cases (II) on the adjudication standards of companies where executives and others claimed that they had not signed written labor contracts. The details stated in Article 31 are as follows:
If the legal representative, senior executive, HR principal or HR executive of an employer fails to conclude a written employment contract with the employer and claims double pay from the employer in accordance with Article 82 of the "Employment Contract Law", will such claim be upheld?
If the legal representative of an employer claims "double pay" from the employer in accordance with Article 82 of the "Labor Contract Law", such claim is generally not supported.
If a senior executive of an employer claims double pay from the employer in accordance with Article 82 of the "Labor Contract Law", such claim may be supported, unless the employer can prove that the scope of duties of the senior executive includes management of concluding employment contracts. If there is evidence proving that the senior executive proposed to the employer to conclude an employment contract but was refused, the court may still support the senior executive's request for double pay.
If the principal or executive of an employer's HR department claims double pay from the employer in accordance with Article 82 of the "Labor Contract Law", and the employer can prove that the conclusion of the contract falls within the responsibility of the said HR principal, such claim shall not be supported, unless there is evidence proving that the principal or executive of the HR department proposed to conclude an employment contract with the employer but the employer refused to do so.
 
Employers should consider
1. Clarify with the senior executive whether their job responsibilities include the content of the labor contract. If the executive’s job responsibilities include signing labor contracts, it is recommended that someone else is appointed to handle the labor contract of the senior executive and keep the contract to prevent problems, such as the concealment of the written labor contract by the senior executive;
2. Inform the senior executive in writing to sign a written labor contract, and fix evidence that the employer fulfills its obligation of negotiation;
3. If a senior executive delays the signature of a written labor contract, the employer should notify in writing and urge them to sign a written labor contract as soon as possible. If the senior executive refuses to sign a written labor contract, the employer may consider notifying them in writing to terminate the labor relationship, thereby avoiding the risk of double wages, or even, an open-term labor contract.

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