Defining employment relationships based on attribute criteria

        In recent years, there has been an aging population phenomenon, and how to encourage workers who have reached retirement age to re employment has become a hot topic of concern from all walks of life. However, in actual judgments, there are still some differences in the determination of employment relationships for elderly workers in their reemployment. This article will guide everyone to understand relevant legal knowledge through the trial of the labor contract dispute between Zhou and Shanghai A Pharmaceutical Company by the Shanghai High Court.

        1、 Basic case details

                In March 2019, Zhou, who was working at A Pharmaceutical Company, had reached retirement age. However, due to his social insurance payment period being less than 15 years, he was unable to enjoy pension insurance benefits. Therefore, he applied to continue working and voluntarily submitted to the company's management. A Pharmaceutical Company agrees to this application and continues to pay its social security fees. Both parties shall sign a labor contract with a term from March 11, 2019 to December 31, 2020.

        In July 2020, Zhou accidentally fell and got injured while cleaning at work. The work-related injury assessment concluded that the degree of disability caused by work was level 10.

        On September 7, 2020, Zhou signed a confirmation letter provided by A Pharmaceutical Company, which stated that due to a non employment relationship between Zhou and the company, and considering his years of good work performance, A Pharmaceutical Company decided to compensate him with two months' salary of CNY 9234. As Zhou is still in the period of work-related injury recognition, the company will pay social insurance for him from October to December on his behalf until the end of work-related injury recognition. Both parties have reached an agreement through consultation that there are no other labor disputes and have fulfilled their obligations in accordance with the contents of the confirmation letter.

        On January 15, 2021, Zhou obtained medical expenses of CNY 3333.21, one-time disability allowance of CNY 40628.7, and labor capacity appraisal fee of CNY 350 from the work-related injury insurance fund. Later, he filed a lawsuit demanding that A Pharmaceutical Company pay wages during the shutdown period; A Pharmaceutical Company believes that after consultation with Zhou, a confirmation letter has been signed and there is no need to pay this amount.

        2、 Judgment result

        The People's Court of Jiading District, Shanghai ruled that A Pharmaceutical Company should pay Zhou a salary of CNY 11843.6 during the period of work stoppage with salary from October 1 to December 22, 2020.

        3、 Judgment reasons

        According to Article 1 of the Notice on Matters Related to Establishing Labor Relations, if an employer fails to sign a written labor contract when recruiting a worker, but also meets the following conditions, the labor relationship shall be established:

        1 Employers and workers meet the subject qualifications stipulated by laws and regulations.

        2 The various labor rules and regulations formulated by the employer in accordance with the law are applicable to workers. Workers are subject to the labor management of the employer and engage in paid labor arranged by the employer.

        3 The labor provided by workers is an integral part of the employer's business.

        Zhou abides by the rules and regulations of A Pharmaceutical Company and engages in work arranged by the company. The company pays social insurance for him, and this work is an integral part of A Pharmaceutical Company's business. After Zhou was injured, A Pharmaceutical Company applied for work-related injury recognition and paid his work-related injury insurance benefits from the work-related injury insurance fund. It can be inferred that A Pharmaceutical Company does not assume employer responsibility based on labor relations, but rather assumes unit responsibility based on labor relations. Therefore, both parties should recognize it as a labor relationship.

        In summary, the court ruled that A Pharmaceutical Company should pay Zhou's salary during the suspension period and sick leave.

        4、 Case analysis

        At present, courts in different regions have different approaches to determining employment relationships. This article mainly introduces the attitudes of past cases in Shanghai and Jiangsu towards this issue. In the case of Su 0684 Min Chu 5170 (2021), the court held that although the employee did not sign a labor contract with the company, they complied with the company's rules and regulations in practice, were managed by the employer, and relied mainly on the labor remuneration issued by the company economically, which fully met the characteristics of the labor relationship. Therefore, it was determined that there was a labor relationship between the two parties.

        In addition, according to the release of the Shanghai High Court, the determination path of employment relations should follow the following logic: 1. Reaching the statutory retirement age does not necessarily mean losing the qualification of the labor subject; 2. Enjoying pension insurance benefits does not necessarily affect the confirmation of labor relations; 3. The determination of labor relations should comply with the standard of subordination.

        In other words, labor relations have economic subordinate characteristics. Workers provide labor for others and use the labor remuneration and other benefits paid by others as their main source of livelihood. Employers provide the necessary means of production and conditions for labor, pay the "consideration" for labor, bear labor risks and legal "employer responsibilities". Therefore, for the determination of labor relations for individuals who enjoy pension insurance benefits, The economic subordination of labor relations cannot be ignored.

        Article 1 of the Notice on Establishing Labor Relations stipulates that if both the employee and the employer have subject qualifications, the employee provides labor to the company, and meets the characteristics of subordination, regardless of whether there is a labor contract, it constitutes a labor relationship. When workers who have reached the statutory retirement age choose to continue employment due to insufficient years of social security contributions, due to the greater difficulty of job selection and stronger dependence on employers, and in order for employers to pay social insurance premiums on their behalf, most are willing to sign labor contracts and actually engage in labor according to the requirements of the employer and accept management. Therefore, when there is a factual labor relationship between management and being managed, supervision and being supervised, it should be recognized as a labor relationship and should not be judged by a written agreement.

        5、 Case inspiration

        The focus of controversy in this case lies in whether the determination of labor relations is influenced by the statutory retirement age, the enjoyment of pension insurance benefits, and the written employment agreement. Starting from the principle of fairness and voluntariness, defining employment relationships based on attribute standards has reasonable grounds that are widely accepted by the court. Therefore, the statutory retirement age should not be used as the age limit for termination of contractual relationships. For employees who choose to continue employment due to insufficient years of social security contributions after reaching the statutory retirement age and sign a labor contract with the employer, if the employee complies with the employer's rules and regulations, accepts the employer's management, pays their labor remuneration, and pays social insurance on their behalf, a factual labor relationship is formed between the two parties. As an enterprise, we should pay more attention to the substantive work content and management standards of rehiring retired employees, and not handle them solely based on labor relations.

        * Image source: Freepik

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