When the Employee Raise Arbitration for Different Reason from Resignation

Nutshell

Mr Sun was employed in a Shanghai clothing company in May, 2015, as an operator on assembly line. Both parties entered in a labour contract dated from May, 2015, to April, 2017. In the contract, it is agreed upon that the company shall pay the social insurance and housing accumulative fund according to the law and related Shanghai regulations, and Mr Sun’s salary before tax is 5000RMB per month.

On January 10^th, 2017, Mr Sun informed in written form that he resigned because his mother was sick at hometown, he needed to take care of her. The company got and approved his resignation and handled his resignation process before January 18^th, 2017.

On May 2017, Mr Sun discovered that the company didn’t pay his social insurance during June 2016 to Jan 2017, therefore he asked the company to make a supplementary payment and pay him the severance. The company agreed to make a supplementary payment of the social insurance from June 2016 to Jan 2017 but denied the severance. Mr Sun submitted an arbitration for 10000RMB severance from the company.

 

Issue

The issue in this case is whether Mr Sun can claim severance from the company due to the situation in Art 38 in Labour Contract Law after resignation due to his own reason.

The company thinks Mr Sun submitted resignation due to his own reason, therefore there is no base for the company to pay severance

Mr Sun this as long as there is situation in line with Art 38 in Labour Contract Law, the company shall pay severance no matter what reason the employ resigned for.

 

Judgment

The arbitration committee thinks according to Art 38 in Labour Contract Law, the employee can terminate the labour contract if the company doesn’t pay his social insurance according to the law. But in this case, Mr Sun terminated the contract because he needed to take care of his sick mother in hometown, not for the reason in Art 38 in Labour Contract Law. Therefore his claim is rejected because it is not the situation where the company shall pay severance.

 

Comment by Lawyer Tang

This is a dispute arisen from employee resignation.

Article 38 in Labour Contract Law provides that an Employee may terminate his employment contract if his Employer: (1) Fails to provide the labor protection or working conditions specified in the employment contract; (2) Fails to pay labor compensation in full and on time; (3) Fails to pay the social insurance premiums for the Employee in accordance with the law; (4) Has rules and regulations that violate laws or regulations, thereby harming the Employee’s rights and interests; (5) causes the employment contract to be invalid due to a circumstance specified in the first paragraph of Article 26 hereof; (6) Gives rise to another circumstance in which laws or administrative statutes permit a Employee to terminate his employment contract. If an Employer uses violence, threats or unlawful restriction of personal freedom to compel an Employee to work, or if an Employee is instructed in violation of rules and regulations or peremptorily ordered by his Employer to perform dangerous operations which threaten his personal safety, the Employee may terminate his employment contract forthwith without giving prior notice to the Employer.

This article is aiming to protect employee’s right to termination during the employment if there is the above mentioned situation on the employer’s part. But the claim for severance won’t be supported if the employee submitted resignation by other reason such as personal reason, even if there are situations in line with Art 38 in the Labour Contract Law discovered later.

Is it in practice that employee can claim for severance as long as the employer doesn’t pay social insurance according the legal standard? According to Art 9 in the Opinion on the Execution of Labour Contract Law issued by Shanghai High Court, it is the basic duty for the employer to pay social insurance for the employees. The calculation standard is complicated in practice. The regulation is aiming at urge performance on good faith of both parties of the labour contract, therefore no matter the employer or the employee shall fulfill his duty complying with the principle of good faith. If the employer disobeys the principle by default or denying payment, it will be punished by law.

Therefore the employee can only terminate when the employee didn’t pay social insurance by intent. But if the calculation standard is vague or disputable due to objective reason leading to the employer didn’t pay social insurance or didn’t pay according to standard, it cannot become the base for the employee to terminate. Also when the employee raises termination according to other situation in Art 38 in Labour Contract Law, the principle of lawfulness, fairness, equality shall apply.

Therefore we shall remind all the employee to check whether there is situation in line with Art 38 in Labour Contract Law that endanger the employee’s legal rights instead of regret after resignation.