Factory Must Pay CNY 9,758 for Unpaid Social Insurance
A labor dispute arose when an employee left his job claiming his employer failed to provide social insurance. The employer argued the employee abandoned work without authorization. The court ruled that the employee had validly terminated the contract and ordered the factory to pay economic compensation of CNY 9,758.
The plaintiff, a precision electronics factory in Southern China City, employed the defendant as a production technician starting in April 2005. Their last employment contract ran from January 1, 2010 to January 1, 2013. The factory never purchased social insurance for the employee. On May 20, 2011, the employee left work, stating the lack of insurance as his reason. He first filed for arbitration against a related company, then corrected the application to name the factory. The local labor arbitration committee ruled that the parties had terminated the contract on May 20, 2011 and ordered the factory to pay compensation. The factory challenged this award in court.
During the hearing, the factory presented a notice claiming it had dismissed the employee for unauthorized absence. The employee disputed this notice, arguing it was created unilaterally. The court found that the factory failed to prove the employee ever received or knew about the notice. Other evidence, including the arbitration award, business registration records, and service documents, was admitted without dispute. The court also heard testimony from both sides regarding the employment timeline and the employee’s average monthly wage of CNY 2,788 in the twelve months before leaving.
The court held that the employee validly terminated the contract on May 20, 2011 under Article 38 of the Labor Contract Law, which allows a worker to terminate when the employer fails to pay social insurance. This termination occurred before any dismissal by the factory. The court noted that the employee’s initial arbitration against a related company was a reasonable mistake because both entities shared the same business address and the factory had not clearly informed the employee of its identity. Under Article 46 of the same law, a worker who terminates under Article 38 is entitled to economic compensation.
The court applied a local judicial guideline that limits compensation for unpaid social insurance to the period after January 1, 2008, when the Labor Contract Law took effect. Using the employee’s average monthly wage of CNY 2,788 and a service multiplier of 3.5 months for the relevant period, the court calculated compensation at exactly CNY 9,758. The court rejected the factory’s argument that the employee had abandoned work, because the employee’s termination letter predated the factory’s dismissal notice. The court also confirmed that the employee had no further obligation to report to work after giving notice.
This case clarifies that employers cannot avoid compensation by claiming abandonment when an employee properly terminates for non-payment of social insurance. The court emphasized that the employer’s failure to inform the employee of its corporate identity did not excuse its obligation. Businesses should ensure they maintain social insurance coverage for all employees and clearly disclose their legal identity to workers. The decision reinforces that employee termination rights under the Labor Contract Law take precedence over employer disciplinary actions.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.