Is the work-related injury compensation reduced if the employee is less than 5 years away from retirement when leaving the job

★Case Summary

In this case, Liu was an employee of Company Y. He suffered an injury at work on October 8, 2017, which was recognized as a work-related injury by the District Bureau of Human Resources and Social Security on June 1, 2018. On July 31, 2019, the District Labor Capacity Appraisal Committee appraised Liu’s disability level as Grade Nine due to work-related causes. However, during Liu’s employment at Company Y, the company did not contribute to the work-related injury insurance.

On December 26, 2019, Company Y applied for deregistration, and its shareholders, Fei and Tang, made a commitment in the “Deregistration Liquidation Report” stating that all company debts had been fully settled and they would take responsibility for any unresolved matters.

On November 13, 2020, Liu applied for arbitration to the District Labor and Personnel Dispute Arbitration Committee, requesting Fei and Tang to pay the corresponding work-related injury benefits. The arbitration was not accepted, so Liu filed a lawsuit. During the trial, Fei and Tang argued that Liu was less than 2 years away from the statutory retirement age, and according to the relevant provisions of the “Work-Related Injury Insurance Regulations,” if the labor relationship is terminated less than 5 years before the statutory retirement age, the one-time medical subsidy and one-time disability employment subsidy would be reduced by 20% for each year less than 5 years.

★Court Ruling

The court ruled that if an employer should participate in work-related injury insurance but fails to do so or fails to pay the insurance premiums as required, and during the period when work-related injuries occur, the employer should pay the expenses according to the work-related injury insurance benefits and standards. In this case, Company Y did not contribute to Liu’s work-related injury insurance, resulting in Liu being unable to claim compensation from the work-related injury insurance fund. Therefore, the adverse consequences arising from this should be borne by Company Y, and Fei and Tang, as the shareholders of Company Y, promised to assume the responsibility for paying Liu’s work-related injury benefits during the deregistration.

As Liu was less than 5 years away from the statutory retirement age and the labor relationship between him and Company Y could not continue due to the company’s deregistration, there was no need to reduce the one-time medical subsidy and one-time disability employment subsidy.

★Lawyer Tang Yi’s Comment

According to Article 41, Paragraph 2 of the “Implementation Measures of Shanghai Work-Related Injury Insurance,” if a work-related injury person requests to terminate the labor relationship with the employer, and the termination is less than 5 years away from the statutory retirement age, the one-time medical subsidy and one-time disability employment subsidy would be reduced by 20% for each year less than 5 years, except for the circumstances specified in Article 38 of the “Labor Contract Law.”

This case does not meet the conditions for the reduction mentioned in the above provision. Even if the employee requests the termination of the labor contract, if the employer has not contributed to the social insurance for the employee in accordance with the law or has not timely and fully paid the labor remuneration, which falls under the circumstances specified in Article 38 of the “Labor Contract Law,” the one-time medical subsidy and one-time disability employment subsidy would not be subject to reduction.