China: How to handle relationships with employees reaching official retirement age

Labour Law Newsletter
Last Updated: 18 February 2015

by Maggie Kong, Shane Lou, Susan Shan, Kent Xu, Grace Yang, Anderson Zhang and John Zhou

China is becoming an aging society. Gradual extension of retirement age has been set as a national policy. In this article, our team is going to discuss the practices regarding how to handle employee retirement and how to properly employ retired staff for the reference of employers.

  1. How to determine the retirement age?

Normally, the official retirement age is 60 for male, 50 for female workers and 55 for female cadres. As for workers of special types, such as those who work underground, at-height, under high temperature, whose work involves heavy manual labor and other conditions which are bad for health, if the workers meet other requirements, the retirement age is 55 for male and 45 for female. Apart from the said two scenarios, China has specific regulations for other special circumstances.

  1. Can workers of special types refuse early retirement?

The retirement age for workers of special types is statutory and these workers actually enjoy an "early retirement" compared to normal workers. The "early retirement" is both a right and an obligation. When the workers meet the conditions for "early retirement", the employer shall conduct retirement procedures for them and they cannot refuse to accept.

  1. Can the employment relationship be extended upon the retirement age?

Article 21 of the Regulations for the Implementation of the Employment Contract Law stipulates that when the laborers reach the statutory retirement age, the employment contract expires. Article 44 of the Employment Contract Law stipulates that when the laborers start to receive their pension, the employment contract expires. If there is any discrepancy between the regulations, in judicial practice, the Regulations for the Implementation shall prevail. However, the solution is also subject to interpretations from local authorities. In Shanghai, for instance, if the employer does not terminate the employment relationship and does not go through relevant retirement procedures after a worker reached the retirement age, the employment relationship is deemed to continue. In the other words, even the laborers reach their retirement age, the employment contract does not expire automatically.

  1. How to define the nature of employing retired workers?

According to Interpretation of the Supreme People's Court on Certain Issues Concerning the Application of Law in Trying Cases Involving Labor Disputes (III), where an employer files an action with the People's Court concerning labor disputes between the employer and his employee who is entitled to endowment insurance benefits or pensions in accordance with the law. The People's Court shall treat this kind of lawsuits as civil disputes.

As for cases which involve employees who have reached retirement age but are not entitled to endowment insurance benefit due to insufficient contribution years for the social insurance, if any disputes arise when the employees find a new job, we are in the opinion that the case shall be handled as a civil dispute case between the employee and the new employer.

  1. How to handle work-related injuries of retired employees?

The Supreme Court holds that if the present employer bought work-related injury insurance for the retired employees, the Regulations of the Work-related Injury Insurance shall be applicable. If not, what should employers do? In the reply from the Office of Legislative Affairs of the State Council, the employers shall compensate the retired employees who suffer work-related injury with reference to the compensation standard of work-related injury insurance. If any disputes arise regarding work-related injuries, the parties may start civil proceedings.

Case Study: Work-related Injury of Retired Employee

A laborer is employed by a company on 10 April 2013. The company did not sign a written employment contract with him and did not contribute social insurance for him. On 11 August 2013, the laborer had a traffic accident on the way to work, and the Public Security Authority confirmed that the laborer did not bear the major responsibility for the accident. Subsequence to the accident, the laborer claimed compensation for work-related injury from the company but all his attempts failed. The arbitration commission refused to hear the case. The laborer then started a lawsuit at the court to plead the employment relationship confirmation between the laborer and the company from 10 April 2013 to 11 August 2013. After the trial, the court found that the laborer has received rural pension RMB 500 per month since he reached the age of 55. The court then held that the laborer had reached the official retirement age when he was employed, so he could not be legally qualified as a laborer. The relationship between the laborer and the company was civil instead of an employment relationship.

Our team believes that the court is right, but it does not mean the laborers do not have any channels to safeguard their rights. According to the Reply from the Supreme People's Court for the High People's Court of Shandong Province regarding whether the Regulations on the Work-related Injury Insurance during the work hours are applicable to rural workers who has reached official retirement age. If the workers who reached the official retirement age get injured during work hours for work-related reasons, the Regulations on the Work-related Injury Insurance shall apply and the identification of the work-related injury shall be conducted. The laborers could ask the administrative authority to conduct work-related injury identification, and the laborers could start legal proceedings against the employer to claim compensation with reference to the compensation standard of work-related injury insurance

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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