Eastern China Court Orders Company to Pay 19,965 RMB in Double Wage Damages for Delayed Employment Contract Signing

Eastern China Court Orders Company to Pay 19,965 RMB in Double Wage Damages for Delayed Employment Contract Signing

CASE OVERVIEW

A civil court in Eastern China has ruled against a company in a labor dispute, ordering it to pay 19,965.01 RMB in double wage compensation to a former employee. The court found that the employer failed to sign a written employment contract with the worker within the legally required timeframe and could not prove the delay was the employee’s fault. The case highlights strict application of Article 82 of the Chinese Labor Contract Law regarding penalties for unsigned contracts.

CASE BACKGROUND AND FACTS

The employee, Mr. Yu, began working for Ningbo XX New District XX Company on August 8, 2009. His position was workshop director with an annual salary of 55,000 RMB. The company paid him a monthly salary of 3,000 RMB, with the remaining portion of the annual salary to be paid after one year of service.

The parties did not sign a written labor contract until January 23, 2010, more than five months after the employment relationship began. The contract was backdated to cover the period from August 8, 2009 to August 8, 2011. During his employment, Mr. Yu received monthly wages and a bonus payment of 9,499 RMB. He resigned on May 30, 2010.

After leaving, Mr. Yu sought double wage compensation for the period when no written contract existed. The company refused, arguing that the delay in signing was entirely Mr. Yu’s fault because he allegedly avoided signing despite repeated notices. The case proceeded through labor arbitration and then to civil court.

COURT PROCEEDINGS AND EVIDENCE

The company presented several pieces of evidence to support its claim. It provided a probation agreement showing the January 23, 2010 contract signing. It also submitted three notices it claimed were posted on company bulletin boards on August 17, 2009, January 29, 2010, and March 9, 2010, urging employees to sign contracts. However, the court noted that photographs of these notices were all taken on September 18, 2010, contradicting the company’s claim that they were photographed on the original posting dates. The court rejected this evidence.

The company also presented a resignation letter from Mr. Yu, but the court found this did not prove that Mr. Yu had refused to sign the contract earlier. Two company employees testified as witnesses, but their statements about the location of the bulletin board where notices were posted were contradictory. The court found the witnesses had an interest in the case and declined to rely on their testimony.

Mr. Yu provided a social insurance termination notice to prove the existence of the employment relationship and the lack of a timely signed contract. The court accepted this evidence.

COURT FINDINGS AND JUDGMENT

The court determined that Mr. Yu started work on August 8, 2009, but the written contract was not signed until January 23, 2010. Under Chinese labor law, an employer must sign a written contract within one month of an employee’s start date. Failure to do so triggers liability for double wages.

The company argued that Mr. Yu was responsible for the delay, but the court found the company failed to prove this claim. The notices presented were not credible, and the witness testimony was unreliable. The burden of proof fell on the employer, and it did not meet it.

The court also addressed a dispute over whether the 9,499 RMB bonus payment should count as part of the wage base for calculating double wages. The court held that since the total compensation Mr. Yu received did not exceed the contracted annual salary of 55,000 RMB, the bonus was part of his wages and must be included in the calculation.

The court calculated the double wage period from September 8, 2009 (one month after employment began) to January 22, 2010 (the day before the contract was signed). The total double wage differential was 19,965.01 RMB. The court dismissed the company’s lawsuit and ordered payment of this amount plus court costs.

KEY LEGAL PRINCIPLES

Under Article 82 of the Chinese Labor Contract Law, an employer that fails to sign a written labor contract with an employee within one month of the start of employment must pay the employee double wages for each month the contract is delayed. The double wage is calculated as the employee’s regular monthly wage multiplied by the number of months without a contract, up to a maximum of 11 months.

The burden of proof regarding the reason for the delay falls on the employer. If the employer claims the employee refused to sign, the employer must provide clear evidence. Self-created notices or testimony from interested witnesses may not be sufficient.

Bonuses and other regular compensation paid under the annual salary arrangement are considered part of wages and must be included in the double wage calculation base.

PRACTICAL INSIGHTS

Employers in China must ensure that written labor contracts are signed within 30 days of an employee’s start date. Delays create significant financial liability. If an employee refuses to sign, the employer should document the refusal in writing and retain independent evidence. Relying on internal notices or employee witnesses may not satisfy the court’s evidentiary standards.

For employees, this case confirms that courts will strictly enforce the double wage penalty when employers cannot prove the delay was the employee’s fault. Keeping records of employment dates, salary payments, and any communications about contract signing can help protect legal rights.

LEGAL REFERENCES

Labor Contract Law of the People’s Republic of China, Article 82, Paragraph 1: Where an employer fails to conclude a written labor contract with an employee for more than one month but less than one year from the date of employment, it shall pay the employee double wages each month.

DISCLAIMER

This article is for informational purposes only and does not constitute legal advice. Laws and court interpretations may vary by jurisdiction and change over time. Readers should consult a qualified legal professional for advice specific to their situation.