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POLICY: Clarified Labour Laws Aim to Protect Employers and Employees
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For the correct trial of labour dispute cases, the “Interpretation (IV) of the Supreme People’s Court of Several Issues on the Application of Law in the Trial of Labour Dispute Cases” (hereinafter referred to as “Interpretation (IV)”) is made in accordance with the Labour law of the People’s Republic of China, the Labour Contract Law of the People’s Republic of China, the Labour Dispute Mediation and Arbitration Law of the People’s Republic of China, the Civil Procedure Law of the People’s Republic of China, and other relevant laws and in consideration of civil trial practice. Interpretation (IV) came into force on 1 February 2013. 
 
In this particular article, the writer would like to introduce you to a few provisions under Interpretation (IV), together with brief explanations as well as various perspectives. 
 
I. Article 2 The type of an arbitral award shall be determined according to the written arbitration award.
 
Where an arbitral award is not clearly stated as a final or interlocutory award in the written arbitral award, and the employer files a lawsuit in a basic people’s court against the arbitral award. The basic people’s court shall handle the case according to the following provisions: 
 
(1) Deeming that the arbitral award is an interlocutory award upon examination, the basic people’s court shall accept the case.
 
(2) Deeming that the arbitral award is a final award upon examination, the basic people’s court shall not accept the case but shall notify the employer that they may apply for revocation of the arbitral award to the intermediate people’s court at the place where the labour and personnel dispute arbitration committee is located within 30 days after receiving the non-acceptance ruling; or if the case has been accepted, shall make a ruling to dismiss the lawsuit.
 
This is a provision regarding cases with a final arbitral award. Whether an arbitral award is final or not, the arbitration committee should clearly identify in the written arbitration award, yet in practice. Some arbitration committees do not clearly express the type of an arbitral award. Therefore, some employers would file a lawsuit to the basic people’s court whereby the cases are with final arbitral award, and the handling of such issues varies according to different regions. Interpretation (IV) does provide a unified set of regulations regarding the solution of such problems, i.e. it is necessary for the basic people’s court to examine the arbitral award in the first place, then handle the cases based on such examinations. 
 
II. Article 4 Where the parties conclude a mediation agreement merely regarding the obligation to pay under the presence of the people’s mediation committee, if both parties deem it necessary, they may apply together for judicial confirmation to the basic people’s court of where the people’s mediation committee is located. 
 
This is a provision regarding the procedure of judicial confirmation of mediation agreement. Mediation documents from non-judicial institutions are not generally enforceable, when one party reneges, the mediation will become void, and this is not desired by a dispute resolution. In order to settle disputes in a timely manner, and to consolidate mediation results, this provision offers the procedure of judicial confirmation, with the purpose of establishing and refining the mechanism of dispute settling measures, existing somewhere between litigation and non-litigation proceedings. In accordance with the law, where the people’s court considers a mediation agreement satisfying the conditions for a judicial confirmation upon examination, a confirmation letter should be issued. Where it is decided not to confirm the force of a mediation agreement, a decision letter declining the confirmation should be issued. Where one party refuses or fails to perform the mediation agreement being confirmed by the people’s court, the other party shall be entitled to apply for specific performance of the agreement to the people’s court who offered the confirmation in the first place. 
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It is important to draw your attention to the point that, application of judicial confirmation procedure should be made promptly after the conclusion of mediation agreement, yet not all agreement are concerned by this particular procedure. Generally speaking, for a mediation agreement to be legally enforceable, the following conditions are to be satisfied: (1) proper subject matter of mediation; (2) out of the true will of both parties; (3) not violating laws and regulations; (4) mediation agreement is reached with respect to the labour dispute between the employer and the employee regarding the obligation to pay. Once the agreement is judicially confirmed by the court, it shall become a document with legal force. 
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III. Article 6 Where non-competition is stipulated in the labour contract or confidentiality agreement between the parties, yet nothing has been stipulated regarding paying the employee with economic compensation after dissolution or termination of the labour contract, and the employee has fulfilled his/her obligation of non-competition, who also requests the employer to pay economic compensation monthly at the standard of 30% of the average monthly salary of the past 12 months prior to the dissolution or termination, then the people’s courts should uphold such claim.
 
Where 30% of the average monthly salary aforementioned is lower than the minimum wage standard of the locality, the minimum wage standard shall be adopted. 
 
This is indeed a supplementary provision regarding where the standard of paying economic compensation for non-competition is not stipulated. In practice, when concluding non-competition agreement with employees, many employers who want to protect their own interests, would only stipulate the obligation of the employee regarding non-competition, yet not identifying the exact standard of economic compensation paying to such employees, or stipulating a standard that is significantly improper, causing the rise of labour dispute. 
 
This provision under Interpretation (IV) indeed clarifies how an employee should claim for economic compensation for non-competition under the circumstance whereby no relevant standard or rate has been settled. The provision has also identified the lowest rate for such compensation, with the purpose to protect employees’ legitimate rights and interests. The “average monthly salary of the 12 months prior to the dissolution or termination of the labour contract” under Interpretation (IV) should be concerning the monthly salary earned when the employee is offering regular work and labour.  
 
It is impossible to offer a full explanation on every single article under the Interpretation (IV) in this short article. However, with the aforesaid three examples, it should not be hard for you to recognise the fact that Interpretation (IV) does bring considerable clarifications, as well as refinements, to the labour laws and regulations presently in force; which to an extent, expanded the scope of protection to employers and employees regarding labour disputes by providing clearer procedural and substantive further interpretations, and particularly reaffirming to preserve employees’ legitimate rights and interests by offering them comparatively determined remedial measures together with identifiable standard of compensation concerned in a labour dispute. Other articles that are not mentioned in this short passage are equally as important as the ones listed above, and are with the same purpose to perfect the labour law system in China.

By Simon Bai
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