Is it Legal that a Foreign Invested Enterprise Signs a Labor Contract with Employee
Case interpretation by Judge Xiao Daming, Judge of Second Civil Division of Beijing Second Intermediate Court, translated by Sun Jin (Marlow), China attorney at law
On June 15th, 2006, Zhang Yue was hurt at work which was assessed as work-Related injury. But the employer a trading company had never paid the work-related injury insurance and other insurances. After the labor dispute arbitration commissions handled this case, Zhang Yue brought the suit to the People’s Court claiming the trading company for the compensation of the lost 15460rmb which is supposed to be paid in the way of work-related injury insurance. The trading company admitted Zhang Yue’s description on working time, work-related injury, and work-related injury insurance. The trading company expressed this company is a foreign invested enterprise, which should not sign contract with employee, except for labor export. Zhang Yue was exported by the technical co-operation company, and the labor relationship is between Zhang Yue and the technical co-operation company, so trading company disagreed with the compensation of 15460 rmb. The technical co-operation company agreed with the trading company’s statement, but only to pay 5000 rmb for Zhang Yue’s loss. Basing on the statement above, all the parties didn’t provide the labor contract and other evidences. In accordance with this case, the labor dispute arbitration commission and the court judged and ordered the trading company to pay Zhang Yue’s loss 15460 rmb.
First, a foreign invested enterprise is Chinese legal person. According to law, a Chinese legal person which is foreign invested, may establish the labor relationship with employee, sign a labor contract, and be an employer. In this case, both of the trading company and the technical co-operation company agreed that when Zhang Yue established labor relationship with technical co-operation company, the co-operation company exported labor to the trading company. Zhang Yue and trading company formed labor relationship. But the evidence is not insufficient to prove the opinion above, it was denies. In fact, Zhang is working in the trading company, and the acts formed the factual labor relations.
Second, according to the Chinese labor law, a labor contract is the agreement reached between an employee and an employing unit for the establishment of the labor relationship and the definition of rights, interests and obligation of each party. A labor contract shall be concluded where a labor relationship is to be established. Therefore, a trading company not only may establish a labor relationship, but also may sign a labor contract when the labor relation established. The trading company didn’t sign labor contract with Zhang, neither pay for the work-related injury insurance. When Zhang Yue can’t enjoy the insurance of work-related injury, the trading company shall bear the compensation of Zhang Yue’s loss.
Third, if trading company need to employ Zhang Yue, there are two methods. 1, technical co-operation company signs contract with Zhang Yue, and then Zhang Yue is exported to trading; 2, the trading company sign labor contract with Zhang Yue directly. Practically the seconds is well applied.