In May 2014 the Beijing Municipal High People's Court and
Beijing Municipal Labour Dispute Arbitration Committee jointly
issued the second Beijing opinion concerning labour disputes (the
"Second Opinion"). Please refer to our previous August
2014 newsletter for the key issues contained within the Second
To clarify understanding of the Second Opinion, the Beijing
Municipal High People's Court issued further meeting minutes
(the "Clarification") on 5 January 2015. This
Clarification mainly concerned issues surrounding employees'
entitlement to double salary.
Entitlement to double salary
Chinese labour law requires an employer to conclude an
employment contract in written form with a new employee within one
month of work commencing. In cases of non-compliance, as of the
second month of work commencing, an employee will be entitled to
double salary for 11 months, and as of the 13th month of work
commencement, an open-term contract will be deemed to be concluded
between both parties. (This rule is also extended to contract
renewal where the double salary entitlement will instead arise as
of the very first month following the expiration of the previous
Double salary entitlement may also arise from an employer's
failure to conclude an open-term contract despite being entitled to
do so. (The situations where an employee may be entitled to an
open-term contract include following two consecutive fixed-term
contracts or long term service of 10 years, etc.)
No dual entitlement
When applying the above two rules for double salary, previously
an employee could argue that he/she is entitled to double salary as
of the 13th month of their work commencing as the deeming clause
could be construed as that he/she is entitled to an open-term
contract in written form.
The Clarification denies such an argument and prevents the
double salary entitlement being claimed under the rationale that
"deemed to be concluded" deems a written form open-term
contract to exist.
No cap in certain situations
The Clarification confirms that, if an open-term contract
entitlement arises from other situations (e.g., long term service),
the double salary is not capped and the amount is accrued as of the
first day when the entitlement arises until the day before the
written form open-term contract is finally concluded.
Statute of limitation
The Second Opinion holds that, when applying the one year of
statute of limitation to the double salary claims, the one year
period is measured backwards from the date on which the claim is
raised. The Clarification confirms that this period is counted per
day instead of any other period. Moreover, it is the employer's
burden of proving whether the period of limitation has expired or
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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