Court Confirms Employment Relationship in CNY 10 Labor Dispute

In a recent decision, a court in Eastern China City ruled that a worker and a casting company had an employment relationship, rejecting the company’s claim that no such relationship existed. The company had sued to overturn an arbitration ruling that found the worker, Mr. Wang, was its employee. The court upheld the arbitration decision, ordering the company to pay the nominal case filing fee of CNY 10.

The dispute began when Mr. Wang started working for the company in January 2011, performing internal transport of factory materials. This task was a regular part of the company’s operations. However, the company had subcontracted the transport work to an individual, Mr. Zhao, who was not a licensed employer. In April 2011, after allegedly suffering a work injury, Mr. Wang filed a claim with the local labor dispute arbitration body, seeking a formal determination that he was an employee of the company. The arbitration commission ruled in his favor in June 2011, finding an employment relationship existed. The company then challenged that ruling in court.

At trial, the company presented its employee attendance records and wage payment lists, which did not contain Mr. Wang’s name. The company also denied having paid any medical expenses for Mr. Wang. Mr. Wang countered that the absence of his name from internal records did not disprove the employment relationship. He asserted that his hospital bills had been covered by the company, even though he could not confirm whether the payments came from corporate or personal accounts.

The court examined the evidence and found that Mr. Wang had worked under the company’s direction and control. His job of transporting materials was an integral component of the company’s business. The fact that the company had outsourced that work to Mr. Zhao, who lacked legal qualifications to hire employees, did not change the nature of the relationship. According to relevant law, an internal subcontracting arrangement does not break the bond between a company and its workers.

The court held that the key legal test for an employment relationship is whether the worker performs services that are part of the employer’s regular business, under the employer’s supervision. Here, Mr. Wang’s work was ongoing and directed by the company. The lack of payroll entries was not decisive, as the company had chosen to manage the work through an unqualified subcontractor. The court cited labor regulations that treat such arrangements as employment relationships to protect workers.

This case serves as a reminder that companies cannot avoid labor obligations by outsourcing core tasks to unlicensed individuals. The court’s decision aligns with long-standing principles that actual control and integration into business operations define employment, not administrative paperwork. Employers should ensure that all workers, even those assigned through subcontractors, are properly documented.

Disclaimer: This article is for informational purposes only and does not constitute legal advice.