Court Orders Payment of CNY 284,234 in Construction Wage Dispute
The Court of Appeal in Eastern China City upheld a lower court ruling requiring a general contractor to pay outstanding wages of CNY 284,234 to a bricklaying team leader. The case arose from a subcontracting arrangement in a residential project where the contractor failed to ensure full payment to workers. The appellate court rejected the contractor’s arguments that it had already settled all due amounts and that the subcontractor bore sole responsibility.
The dispute involved three parties: Tongcheng Construction Co., Ltd. (the appellant), Zhongda Labor Services Co., Ltd. (the subcontractor), and Ms. Chen, who led a bricklaying team on the project. Tongcheng had engaged Zhongda to provide labor for construction work in 2007 and 2008. Ms. Chen’s team completed work valued at 494,234 yuan. By 2009, Tongcheng and Zhongda signed multiple settlement agreements, including a calculation showing Ms. Chen’s team was owed 284,234 yuan after partial payments. Tongcheng later paid some amounts directly to workers but Ms. Chen refused to accept a further payment of 68,260 yuan, claiming the overall calculation was incorrect and that Tongcheng and Zhongda remained jointly liable.
During the hearing, both sides presented financial records. The evidence included two distribution tables signed by Ms. Chen and a representative of Zhongda. The first distribution showed a balance of 394,234 yuan after an advance, and Ms. Chen received 111,000 yuan. The second distribution showed a revised balance of 283,234 yuan, with a proposed payment of 68,260 yuan. Ms. Chen did not collect that amount. Tongcheng argued that it had already paid the vast majority of the total contract sum of 21,774,729.02 yuan, retaining only 941,918.23 yuan for all outstanding wages. Of that retained amount, only 68,260 yuan pertained to Ms. Chen’s team. The court also heard that Zhongda had become unreachable and did not appear at the trial.
The court found that Ms. Chen’s claim of 284,234 yuan was supported by the distribution tables. It noted that Tongcheng had failed to provide sufficient proof that it had actually paid 19,792,810.79 yuan in labor costs, deduction for unfinished work, and taxes. Under applicable law, a general contractor remains liable for unpaid subcontractor wages when it cannot show full discharge of its payment obligations. The court therefore concluded that Tongcheng must pay the full amount claimed, not just the portion allocated in the second distribution.
On the legal analysis, the court examined the principle that a contractor cannot avoid liability by delegating payment to a subcontractor if the contractor has not proved settlement of all sums due. The court also rejected Tongcheng’s argument that the retained tax amount should be treated as payment to Ms. Chen. Interest was awarded from the date Ms. Chen filed the lawsuit, as no payment deadline had been agreed. The court further dismissed claims that Mr. Zhang, who was not a team leader, was entitled to any wages.
This case reinforces that general contractors in construction projects must maintain clear and verifiable records of all payments made to subcontractors and their workers. Where a subcontractor is insolvent or absent, the contractor may be held directly accountable for wage arrears. The ruling serves as a reminder that contractual arrangements between a contractor and a subcontractor do not automatically shield the contractor from liability to individual workers.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.