Brief Review of The Incident
At 3:50 am on February 15, 2023, in the sorting center of ZTO Express in Hengjie Town, Ningbo City, Zhejiang Province, a 60-year-old sorting worker Mr. Sun suddenly fell on a pile of packages. A few minutes later, he was found to be in distress by his colleagues and sent to the hospital. Unfortunately, Mr. Sun passed away at 5:20 am on the same day due to sudden cardiac arrest and respiratory failure.
On February 21, 2023, the Ningbo Municipal Bureau of Human Resources and Social Security stated in an interview that 60 years old is no longer within the scope of workers, and if work injury insurance has not been paid, it cannot be recognized as a work-related injury. Because this view is inconsistent with the public’s common sense and coincides with the hotly debated policy of delayed retirement, it has sparked widespread discussion among netizens.
Issues In This Case
It covers the following critical issues in Chinese labor law:
- After an employee reaches the statutory retirement age, does the labor relationship still exist?
- Under the current statutory retirement age, there is no dispute that men retire at 60, while women are divided into two categories: female cadres retire at 55 and female ordinary workers retire at 50. How should the identity of female cadres/ordinary workers be defined?
- If it is not recognized as a work-related injury due to the non-labor relationship, what other legal rights and remedies do employees have?
We will elaborate on the issues one by one through three articles, and this article will focus on the first question.
Analysis of The First Issue
- Regarding this issue, there are two different situations.
The first situation is that if the employee was hired after reaching the statutory retirement age, there is no labor relationship between the employee and the enterprise. There is no legal dispute in this situation.
The second situation is more complex and can easily lead to disputes. It occurs when an employee is hired before reaching the statutory retirement age, reaches the retirement age, but has not yet received their pension benefits. Regarding the issue of whether there is still a labor relationship between the employee and the enterprise and whether the enterprise can terminate the labor contract, there are three different situations in judicial practice: (1) the labor relationship cannot be terminated and still exists; (2) the labor relationship can be terminated and does not exist; and (3) the labor relationship still exists under certain restrictions.
Legal analysis
(The Employment Contract Law of the People’s Republic of China) （劳动合同法）Article 44, A labor contract may be terminated under any of the following circumstances: 2. the employee has begun to enjoy the basic benefits of his pension;
(Regulation on the Implementation of the Employment Contract Law of the People’s Republic of China)（劳动合同法实施条例） Article 21, An employment contract shall be terminated when an employee reaches the mandatory age for retirement.
After our analysis, there are three approaches in judicial practice:
- Strictly following the provisions of the Labor Contract Law: the enterprise can only terminate the labor contract with employees after they have legally received their pension benefits. This position is reflected in the reply documents issued by the Supreme People’s Court of China.
- Simultaneously applying the Labor Contract Law and the Implementing Regulations of the Labor Contract Law: when the employee legally receives their pension benefits or reaches the statutory retirement age, the labor relationship naturally terminates. If the employment continues after the termination, it becomes a labor service relationship. At this time, the employer does not need to handle termination or retirement procedures for the employee. This approach is popular in some regions, such as Beijing and Jiangsu Province.
- A compromise application of the first and second methods: If a worker legally receives pension insurance benefits, the labor relationship is terminated, and if the worker continues to work, it is regarded as a labor service relationship. If the worker reaches the statutory retirement age, the unit needs to handle termination and retirement procedures for the employee, and if they continue to work, it is a labor-service relationship. If the unit handles the procedures, the relationship between the two parties is still a labor relationship.
- Regarding the [1] approach:
Reply of the First Civil Division of the Supreme People’s Court on the issue of determining the standard for the termination of labor relations between employees (including migrant workers) and employers who have reached or exceeded the statutory retirement age ([2015]民一他字第6号)
Shandong High People’s Court: Your request for instructions on the issue of determining the standard for the termination of labor relations between employees (including migrant workers) and employers who have reached or exceeded the statutory retirement age has been received.
After studying the issue, the reply is as follows: We generally agree with the tendency of the opinion of your court’s trial committee, that is: for the termination of labor contract relations between employees (including migrant workers) who have reached or exceeded the statutory retirement age and employers, the standard should be whether the employee enjoys the pension insurance benefits or receives retirement pension.
First Civil Division of the Supreme People’s Court, September 30, 2015.
- Regarding the [2] approach:
Beijing arbitration ruling stated:
According to Article 21 of the “(Regulation on the Implementation of the Employment Contract Law of the People’s Republic of China)（劳动合同法实施条例）”, which states ” An employment contract shall be terminated when an employee reaches the mandatory age for retirement,” this commission adopts the argument that XX Company established a labor service relationship with XXX who reached the statutory retirement age on December 8, 2011.
The Jiangsu Wuxi verdict stated:
As long as the worker reaches the statutory retirement age, or although the worker has not reached the statutory retirement age, but has started to enjoy basic pension insurance benefits in accordance with the law, the labor relationship between them and the employer should be terminated in accordance with the law. The statutory retirement age is the retirement age stipulated by the state. When the worker reaches the statutory retirement age, the labor relationship should be terminated, and he/she should withdraw from the job. Otherwise, some workers may not go through the retirement procedures when they reach the statutory retirement age, which will bring some difficulties to the employer’s employment management and is also not conducive to the employment of a new labor force.
According to the relevant regulations of the State Council on the retirement age of enterprise employees, the retirement age of enterprise employees in China is men at the age of 60, women workers at the age of 50, and female cadres at the age of 55. Therefore, when female workers reach the age of 50, their labor contracts with employers are terminated, and the labor relationship is legally terminated.
In this case, since Wu Jianying had reached the statutory retirement age on August 15, 2012, and met the conditions for the termination of labor relations under the law, the labor relationship between her and Shengjie Company naturally ended, and the two parties thereafter were in a labor service relationship. [Case No.（2015）锡法民初字第00418号]
- Regarding the [3] approach:
The Shanghai High People’s Court issued the Guidelines for Adjudicating Labor Dispute Cases (I) (2013) （上海市高级人民法院发布的劳动争议案件审理要件指南（一）(2013)）, Article 8 of which states:
If an employer claims that there is no labor relationship between them and the retired person they hired, the employer should provide evidence to prove that the retired person has reached the legal retirement age, has terminated their labor relationship with their original employer, and has completed retirement procedures according to regulations.
[Explanation] Before the promulgation of the Labor Contract Law（劳动合同法）, in accordance with the guiding principle of the Notice on Issues Concerning Special Labor Relationships for Retirees（关于特殊劳动关系有关问题的通知） issued by the Shanghai Labor and Social Security Bureau on April 25, 2003, the legal relationship between retirees who have reached the statutory retirement age and new employers was characterized as a SPECIAL labor relationship. This means that the three aspects of working hours, labor protection, and minimum wage were subject to labor law provisions, and other labor rights and obligations were subject to the agreement of both parties. After the promulgation of the Labor Contract Law（劳动合同法）, Article 44 of the law stipulates that “A labor contract may be terminated under any of the following circumstances: 2. the employee has begun to enjoy the basic benefits of his pension;”. At the same time, Article 21 of the Regulation on the Labor Contract Law of the People’s Republic of China（劳动合同法实施条例） stipulates that “An employment contract shall be terminated when an employee reaches the mandatory age for retirement.” Subsequently, Interpretation of The Supreme People’s Court (III) Article 7 stipulates that “If a dispute arises between an employer and a person who is already receiving pension benefits or retirement pay in accordance with the law, the dispute should be handled as a labor service relationship when brought before the court.”
Due to the lack of clear regulations in laws, administrative regulations, and Interpretation of The Supreme People’s Court on whether “people who have reached the statutory retirement age but cannot enjoy pension benefits should be classified as labor relations or labor service relations,” there is considerable controversy in judicial practice.
In this regard, we believe that different situations should be handled differently. （1）. For those workers who have already started to enjoy basic pension benefits in accordance with the law, the dispute between the worker and the employer should be handled strictly in accordance with Interpretation of The Supreme People’s Court (III), and it should be treated as a labor service relationship;（2）for those who have reached the statutory retirement age, but the employer has not terminated their labor relationship and continues to employ them without completing retirement procedures, it should be treated as a labor relationship; （3）for those who have reached the statutory retirement age, and the employer has already terminated the labor relationship with them, but because the worker’s social insurance payment years are not enough to enjoy pension benefits, as long as the worker pays the social insurance fees according to the relevant provisions of the Social Insurance Law, they can enjoy pension benefits. In case of disputes between the worker and the employer due to re-employment, it should be treated as a labor service relationship.
The Opinions of the Ministry of Human Resources and Social Security on the Implementation of the Regulation on Work-Related Injury Insurance (II)（人力资源社会保障部关于执行《工伤保险条例》若干问题的意见（二）） (人社部发〔2016〕29号) states that
“If an employee has reached or exceeded the statutory retirement age but has not completed retirement procedures or has not lawfully enjoyed the basic pension insurance benefits for urban employees, and continues to work in the original employing unit, the employing unit shall bear the work-related injury insurance liability in accordance with the law if the employee suffers work-related injuries or occupational diseases during the employment period. If the employing unit hires personnel who have reached or received basic pension insurance benefits for urban employees and who have reached or exceeded the statutory retirement age, and the employee suffers work-related injuries or occupational diseases due to work reasons during the employment period, if the recruiting unit has paid work injury insurance premiums for them through participation in the program, the work injury insurance liability shall be applied in accordance with the Work Injury Insurance Regulations（工伤保险条例）.”
Practical suggestion
In the context of complex judicial practice, how can companies avoid legal risks arising from terminating labor contracts with employees who have reached the statutory retirement age but cannot yet receive pension benefits?
We recommend the following:
First, when signing labor contracts with employees nearing retirement age, set the termination date for the day the employee reaches the statutory retirement age. This is to ensure that even if facing judicial rulings following the approach outlined in approach [1], the company can still avoid the risk of being deemed to have illegally rescinded the contract and being forced to pay severance pay.
Second, when employees reach the statutory retirement age, companies should promptly handle the termination and retirement procedures. Otherwise, if the employee continues to work, the relationship between the two parties may be deemed to be a labor relationship under the approach outlined in the approach [3].
Third, if the labor relationship is still in effect, do not rescind （“解除”）the labor contract! The correct approach is that, regardless of the reason for ending the labor relationship, as long as the company terminates (“终止”) the labor contract on the grounds that the employee has reached the statutory retirement age, it does not need to pay severance pay. Otherwise, if the company chooses to rescind the contract, it may be forced to pay severance payment or even compensation.