Welcome to Shanghai Founder Law Firm!   Email:info@gcls.cn  Tel:0086-021-62996116-0

News

Location:Home - News - News

When foreigners are dispatched to Chinese subsidiaries, what is the recognition of labor relations?

Update time:2021/4/21 10:52:23 Browse times:660

Preface

    Employment of foreigners in China requires administrative approval. Even after administrative approval, the establishment of labor relations should be judged separately by the substantial conditions of labor relations, not simply by the conclusion of labor contracts. The ruling of this case shows that the confirmation of labor relations is not based on the "principle of appearance" of civil and commercial law, but by the substantial determination.

Introduction: If foreigners are dispatched by foreign parent companies to work in Chinese subsidiaries, do they establish labor relations with the subsidiaries? After the termination of labor relations between the parent company and its subsidiaries, will the labor relations between the parent company and its subsidiaries be terminated?

Facts: Dispute over termination of labor relations by parent company

    Yoshihide Komatsu signed an employment contract with Yoneyama Chemical Industry, Ltd. (hereinafter referred to as "Yoneyama Japan"), which paid wages to Yoshihide Komatsu every month and paid health insurance, social insurance, etc.; when the two parties rescinded the employment contract, Yoneyama Japan also paid the corresponding dismissal pre-warning subsidies in accordance with Japanese laws.

As Komatsu Yoshihide was transferred by Yoneyama of Japan to its Chinese subsidiary, Changshu Yoneyama, as the deputy general manager, his position was determined by the Transfer Entrustment Contract signed between Yoneyama of Japan and Changshu Yoneyama, it was specified that during his employment in Changshu Yoneyama, Changshu Yoneyama would pay local allowances on his behalf.

After being dismissed by Japanese parent company, how does Yoshihide Komatsu work relations with its subsidiary, Changshu? Komatsu Liangying applied for retrial, claiming that he signed the Labor Contract with Changshu Yoneyama, and that the labor relations between the two parties were established, the Labor Contract Law of the People's Republic of China shall be applied in the settlement of disputes.

Court: no labor relations are established for the secondment to subsidiaries

    Jiangsu Provincial High Court held after trial that Yoshihide Komatsu was transferred by Yoshihide Yoneyama of Japan to his Changshu Yoneyama as deputy General Manager, his position was confirmed by the Letter of Commission for Transfer signed between the parent company and its subsidiaries, and was eventually dismissed due to the termination of the labor relations between Yoshihide Komatsu and Yoneyama. The Letter of Commission for Transfer specified that during the period when he worked for Changshu Yoneyama, Changshu Yoneyama was entrusted with local allowances. The allowances were enjoyed by Yoshihide Komatsu when he was employed by the Japanese parent company and dispatched to an overseas subsidiary under its control, and were not labor remunerations paid by Changshu Yoneyama. Therefore, regardless of the appointment or dismissal of his position or the receipt of his salary, the characteristics of work and service between Yoshihide Komatsu and Changshu Yoneyama did not have the constitutive elements of labor relations, so there was no labor relationship between the two parties.

Lawyer review: different circumstances shall be distinguished for the labor relations between foreigners working in China

    First, no labor relations shall be established without administrative approval. The Chinese government implements a licensing system for the employment of foreigners in China. To be specific, an employer that intends to employ a foreigner must apply for an employment permit and may employ a foreigner only after obtaining approval. The unauthorized employment of foreigners in China shall not be identified as having established labor relations with Chinese employers, nor shall they be protected by the Labor Law of China.

    Second, if a contract is concluded for the sole purpose of going through administrative approval, it shall be treated differently. If a superior company dispatched to a Chinese company is still under the management of the foreign parent company and its labor remunerations and social insurance are assumed by the foreign parent company, and the Chinese subsidiary does not pay labor remunerations or only pays subsidies to overseas, even if a labor contract is concluded between the superior company and the Chinese subsidiary, it shall not be identified as having labor relations in substance. This case is a routine example. However, if, after being dispatched to China, the foreign parent company no longer performs the management duties and its labor remunerations and social insurance are assumed by the Chinese subsidiary, it shall be identified as having established labor relations with the Chinese subsidiary.

    Third, if the labor relations between the foreign parent company are dissolved, it shall be treated differently whether the labor relations between the subsidiaries are dissolved together. If a foreigner does not establish labor relations with the Chinese subsidiary and is only dispatched to work in China, the labor relations shall be dissolved together. If the labor relationship is established with the Chinese subsidiary at the same time, the labor relationship of the Chinese subsidiary cannot be considered to be dissolved regardless of whether the foreign parent company has dissolved the labor relationship.