Court Awards CNY 73,878 in Labor Dispute Over Executive Pay
The case involved a labor dispute between China Life Eastern China Branch and a former executive, Mr. Xu, over unpaid wages for the 2008 fiscal year. Mr. Xu claimed that the company failed to pay him the full salary due under its internal compensation policies. The court ruled in his favor, ordering the company to pay a wage difference of CNY 73,878.60 and to transfer his personnel files. The judgment was upheld on appeal.
Mr. Xu began working for China Life Eastern China Branch in October 2007, later signing a five-year employment contract in August 2008. He held several managerial roles, including general manager of the branch’s business department and general manager of a subsidiary in Eastern China City, and later a similar position in a nearby city. His compensation followed a annual salary system: 40 percent was paid monthly as base and position salary, while 60 percent was performance-based, with half paid quarterly and the remainder at year-end. In 2008, Mr. Xu received total wages of CNY 192,787.40. The parties mutually terminated the employment contract in April 2010. Mr. Xu then filed for arbitration in August 2010, but the arbitration committee failed to conclude within the statutory period, leading to the court action.
During the trial and appeal, the court reviewed key evidence including the employment contract, payroll records, the termination agreement, and internal company policies such as the transitional compensation implementation rules for the branch’s business department. The arbitration decision to terminate proceedings was also submitted. The appellate court conducted a de novo review and confirmed that the facts found by the lower court were accurate and supported by the documentation.
The court found that an employment relationship existed between Mr. Xu and China Life Eastern China Branch from October 2007 until April 2010, despite changes in his work location. The company’s argument that the relationship ended in October 2008 after Mr. Xu transferred to a different subsidiary was rejected because the company continued to pay his social insurance and the written contract remained in effect. Regarding salary, the court applied the company’s own policy: an annual salary of CNY 280,000 for the period Mr. Xu served as branch business department general manager (January to October 2008) and CNY 200,000 for his subsequent role as subsidiary general manager (November to December 2008). This yielded a total annual salary of CNY 266,666. After subtracting the amount already paid, the court ordered the company to pay the shortfall of CNY 73,878.60.
The legal analysis centered on two key points. First, an employment relationship is not determined solely by physical work location but by the totality of circumstances, including payment of social insurance and the existence of a valid contract. Second, the statute of limitations for wage claims begins when the employer unequivocally refuses to pay, not when the work is performed. In this case, the company never communicated a refusal during Mr. Xu’s employment, so his claim filed shortly after termination was timely. The court also noted that internal company policies are binding on the employer, and the company’s attempt to reduce the salary by an additional 20 percent lacked factual support.
This case reinforces that employers cannot circumvent wage obligations by reassigning employees to different branches or subsidiaries. It also underscores that internal compensation policies must be followed, and that employees have a reasonable period after termination to assert wage claims. The ruling serves as a reminder that labor protections apply equally to executives and regular staff. Employers facing similar disputes should ensure clear documentation of salary terms and prompt communication of any adjustments to avoid prolonged litigation