China: How To Determine The Nature Of Part-Time Employment In Judicial Practice

Last Updated: 2 January 2018
Article by River Delta Law Firm

Part-time employment as a new employment pattern is booming currently which has been a trend in recent years, however as it rises, more problems, risks and contradictions are revealed. Cases show that employers are more likely to inadvertently cross the red line between full-time and part-time employment, resulting in penalty ranging from paying off the benefits to double pay and even economic compensation by reason of wrongful termination of the labor contract.

  Judicial authority, on account of the definition of part-time employment stipulated in Labor Contract Law of PRC and local regulations, usually identify the case of part-time employment from the following aspects: 1) whether the working hours exceed the legitimate requirement; 2) whether the salary is paid within legitimate period; 3) whether parties reach agreement on part-time employment, etc. Since the focus of judicial authority varies from case to case on the issue of part-time employment, this article will provide professional legal advice and aims to guide employers to avoid legal risks to the utmost extent by concretely analyzing the factors considered by judicial authority based on practical cases.

I. The Necessity of Working Hours Management

  On cases deciding the nature of part-time employment, judicial authority will first and foremost focus on the working hours. As Article 68 of Labor Contract Law of PRC stipulates that the term "part-time labor" means a form of labor for which the compensation is chiefly calculated by the hour and where the Employee generally works not more than 4 hours per day and not more than an aggregated 24 hours per week for the same Employer. It can be concluded that this article is an employee-protected rule, and the purpose of this rule, by restricting the working hours, is to fully guarantee the freedom of employees to work and flexibility of employment for employers.

  By the legal definition prescribed above, the working hour is an essential factor for identifying part-time employment. However, in practice, this factor is interpreted in a different way from the theory, the practice reveals a gap laid down on the circumstance that employee generally averages from 4 hours but not more than 8 hours of work per day or more than an aggregate 24 hours but not exceeding 40 hours of work per week, which are not defined by law clearly, so how to define this in judicial practice?

  Sun is an employee of Company A, she entered into labor contract with Company A in 2012 as a cleaner. Sun works 2 hours per day, 5 days a week. At the beginning of 2013, Sun was arranged to work for Company B for the same job as cleaner for working 3 hours per day, 5 days a week. In August, 2015, Sun was terminated by Company A and quickly initiated a labor arbitration. During the arbitration process, Sun claimed that he was arranged by Company A to work for Company B, therefore, it demonstrated he worked for the same company indeed, so that his working hours shall be calculated as a total based upon working for Company A and Company B, which apparently exceeded 4 hours per day, 24 hours per week. According to the relevant laws and regulations, he shall be regarded as a full-time employee of Company A. The arbitration tribunal, found out that Company A and Company B are independent legal entities, and Sun only entered into written labor contract with Company A, not Company B. Moreover, Sun's salary was paid by the same external labor service company.

  This case was heard through the first instance and second instance, with the decision that Sun was not a full-time employee. The court ruled that, on the ground of independent legal entity for both Company A and Company B, the working hours shall be calculated separately. Even if the calculation is made altogether, the working time of 5 hours per day and 25 hours per week, still does not meet the requirement of full-time employment.

  To summarize, judges of this case made a reasonable justification over the issue of "working overtime". In practice, the specific method of dealing with "overtime problems" raised from part-time employment is controversial: when the theory and judicial practice is different, the judicial authority has the ultimate power of clarifying the facts and making final decisions. The employee can provide evidence which proves that his working hours are apparent, there is extreme overtime and this situation has lasted for a long time. Under these circumstances it will be more likely to be held by judicial authority that a full-time employment relationship is established because the employer's behavior impairs the fundamental interest of the employee, results in crossing the red line of part-time employment and jeopardizes the purpose of labor law legislations. However, if the "work overtime" situation happens randomly, or if the employee fails to raise the evidences, it is more likely to be held by judicial authority that there is no full-time labor relationship established, or the authority will make verdicts in favor of the employer based on lack of evidences.

  In practice, even though the judicial authority has discretion over the recognition of "working overtime", legal advice is provided by us that, employers shall strictly control the working hours of part-time employment, and if sometimes the situation of working overtime appears, or other circumstances which might result in working overtime, the employers shall pay the overtime salary on account of the agreed wage per hour to fully protect the interest of their employees.

II.   The Importance of Salary Management

  a.   Payment cycle

  According to the requirement stipulated in the Labor Contract Law of the PRC, the maximum remuneration settlement and payment cycle for part-time employment shall not exceed 15 days. Therefore, the payment cycle is another vital factor in distinguishing full-time and part-time employment. Will paying exceeding 15 days be ruled as full-time employment? Cases reveal that the judicial authority remains controversial over this issue. The majority of the authority will firstly examine and analyze the basic factors such as working hours and if these factors meet the formality requirement of part-time employment the verdict is more likely to be judged as part-time employment regardless of the payment cycle exceeding the statutory 15 days. However, some cases with the conclusion that are identified as full-time employment by reason of remuneration payment over 15 days exist.

  To summarize, it is suggested for the employers to pay the employees on time within 15-day period. However, attention shall be paid that this article is one of the normative provisions of Labor Contract Law of PRC, with the legislative intent to encourage the employer to pay the salary on time. For this reason, even if the employer has some defects in practice, that neither influence the establishment of part-time employment nor affect the practical benefits of the employees. It will severely jeopardize the flexibility of employment under this employment pattern, if the judicial authority negates the nature of labor relationship for the sole reason of payment cycle.

  b.   Payment Structure

  According to Art.72 of the Labor Contract Law of the PRC, the hourly wage of part-time employment shall be not less than the minimum hourly salary as regulated by the local government. However, this article does not refer to the standard of wage structure. Based upon this, does the employee under part-time employment have the right to be paid for bonus and subsidiary? It can be found out, there are cases that are judged as full-time employment because the wage structure meets the requirements of full-time employment.

  Su was employed by an engineering factory in 2008 and left on February 2016, for the reason of no written labor contract and no payment for overtime since he entered into the company. He then filed the application to the arbitration tribunal with the request of confirming the labor nature of full-time employment rather than part-time employment. In this case the bank account statement provided by Su revealed the items of his salary including one-time bonus, quarterly bonus, and any other subsidiaries. During the hearing, the court insisted, the company paid the salary every 15 days as the payment cycle which strictly met the legal requirements. However, his salary included additional items such as bonus and subsidiary, which is one of decisive factors for full-time employment. In the end, the court supported Su's claim and judged the legal relation as full-time employment.

  The above case demonstrated adequately that the court has the right to exercise discretion on deciding the nature of legal relationship between the employee and the employer. In principle, the part-time employee with legitimate labor relation shall be entitled to the same rights and responsibilities as the full-time employee, which accords with the essence of theory of law, and is in line with the principle of the Labor Law and the Labor Contract law. Otherwise, from the perspective of rights' protection for the employee, the bonus and subsidiary are a type of additional benefits beyond the law's boundary. Thus, in our opinion, using the characteristic of full-time employment to measure the part-time employment in reverse is inconsistent with the legislation intent of part-time employment. In virtue of the existence of such cases, the employer should firstly pay for salary on time as required, it is highly suggested to make it written in form of agreement or internal policies for payment of bonus and subsidiary. The most important is to separate them from the bi-monthly salary. At the same time, the employer shall maintain all related written evidence, in order to have the capability to explain during the cross examination.

  III.  A Key Factor of Mutual Agreement

  In legal practice, the question arising more attention from the employer is whether it is needed to sign a written agreement with the part-time employee. Though in the respect of laws and regulations, it is not statutory to sign a written contract with a part-time employee. However, in considering the essence of its flexibility and of the loose daily management aimed at part-time employees, it is getting difficult to collect written evidence accordingly. Thus, if both parties can specify the working time and payment cycle in form of written agreement, it can reduce the difficulty in producing evidence to utmost extent.

  Jiang worked as a salesperson in a hospital since 2010, with 6 working days every week and 4 hours per working day. On November 2014, Jiang resigned then he filed an application to arbitration tribunal on June 2015, and claimed for identification of full-time employment. The hospital provided written labor contract as the main evidence to prove a mutual consensus between both parties. Jiang argued, the hospital enforced him to sign the contract, upon his misunderstanding on the contents, which should be regarded as fraud. During the hearing, Jiang did not present any evidence to prove the fact of fraud, therefore, it is him to take the adverse result because of lack of proof. Therefore, the court takes the written evidence as the base of judgment for this case, and consider the paper is a representation for mutual agreement if it cannot be proved that have any flaws thereof.

  Mutual agreement is not a factor for part-time employment as stipulated in laws, but it is one of key points for investigation by the court. In these cases, if both parties can sign a labor contract, or provide any other supplementary evidence that can prove the employee has known the form of employment without objections. The court may strongly believe both parties reached a consensus upon establishment of part-time employment, and performed the rights and responsibilities as agreed. No disagreements proposed by the employee during the employment indicates an acknowledgement of the employment pattern. Thus, a written labor contract is a powerful weapon to defense the argument from the employee.

  【Hints】

  For the employer, the part-time employment is helpful in respect of cost saving and efficiency improvement, but this pattern does not fit for all job positions. In order to lower the legal risks for part-time employment to the greatest extent, the employer shall keep the three factors in mind and remain prudent on working time and salary management, as well as sign a written agreement. In the meanwhile, the employer should pay more attention on evidence collection and preservation for every respect of personnel management, and strengthen the awareness to tackle such cases proactively.

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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