Court Rules Employer Failed to Prove Work Duration, Awards Employee 53,418.90 Yuan in Economic Compensation

Court Rules Employer Failed to Prove Work Duration, Awards Employee 53,418.90 Yuan in Economic Compensation

Case Overview
A chemical company in Eastern China challenged a labor arbitration award that ordered it to pay an employee over 53,000 yuan in economic compensation. The employer claimed the employee had worked only seven years, but failed to provide sufficient evidence. The court upheld the arbitration award, finding the employee had worked for nearly 15 years and was entitled to compensation based on that longer period.

Case Background and Facts
Mr. Luo began working for Ningbo Hualisi Chemical Industry Company in Eastern China on March 1, 1996. The parties signed intermittent labor contracts over the years. In 2003, Mr. Luo took an approved leave of three to four months to return to his hometown. The company later claimed this leave constituted a resignation and re-hiring in December 2003, making his actual continuous service only seven years.

On November 3, 2010, the company and Mr. Luo signed an agreement stating that if the company did not decide whether to continue operations by November 22, 2010, it would be considered closed. In that event, employees would receive economic compensation for termination of labor relations and health examinations before leaving. The company did not make a decision by the deadline, effectively closing operations.

Mr. Luo filed for labor arbitration on November 10, 2010, seeking unpaid wages, economic compensation for termination, and a pre-departure health examination. The arbitration commission ruled in his favor on December 10, 2010, ordering the company to pay wages of 733.33 yuan, economic compensation of 53,418.90 yuan, and arrange a health examination. The company disagreed and filed a lawsuit.

Court Proceedings and Evidence
The company provided wage slips from May 2007, July 2009, and April 2010, along with 2010 attendance records, to support its claim that Mr. Luo had worked only seven years. The company also relied on statements from its supervisory personnel. Mr. Luo acknowledged the authenticity of the wage slips but argued they did not prove his total work duration. He maintained that he started working in March 1996 and never resigned.

The court obtained the complete arbitration file from the labor arbitration commission, which included the arbitration application, hearing records, evidence, and the award. Both parties accepted these documents without objection.

During trial, the company conceded to paying the 733.33 yuan in wages and arranging the health examination. The company also accepted that Mr. Luo’s average monthly wage for the twelve months before termination was 3,561.26 yuan.

Court Findings and Judgment
The court applied the principle that employers bear the burden of proof in disputes over calculating an employee’s work duration. The company failed to provide evidence that Mr. Luo resigned in 2003 and was rehired in December 2003. Without such proof, the court accepted Mr. Luo’s claim that he started on March 1, 1996 and worked continuously until November 22, 2010.

The court calculated Mr. Luo’s actual work duration as 14 years, 8 months, and 21 days. Under Chinese labor law, this entitled him to 15 months of economic compensation. Using the agreed average monthly wage of 3,561.26 yuan, the court calculated the total compensation as 53,418.90 yuan.

The court ordered the company to pay the 733.33 yuan in wages, 53,418.90 yuan in economic compensation, and arrange a pre-departure health examination at its own cost. The court dismissed all of the company’s claims.

Key Legal Principles
The case established that employers bear the burden of proof when disputing an employee’s work duration. When an employer claims an employee resigned and was rehired, the employer must provide clear evidence such as resignation letters, termination notices, or personnel records. Without such evidence, the court will accept the employee’s account of continuous service.

Economic compensation for termination of labor relations is calculated based on the employee’s actual work duration. Periods of approved leave do not break continuity of service. The compensation equals one month’s average wage for each full year of service, with partial years of six months or more counting as a full year.

Practical Insights
Employers must maintain accurate and complete personnel records for each employee from the date of hire. Incomplete records, such as only three years of wage slips for a 15-year employee, will not satisfy the employer’s burden of proof in a dispute. Courts will draw adverse inferences against employers who fail to produce necessary documentation.

Employees should keep their own records of employment, including contracts, pay stubs, and any correspondence with management. Approved leaves, even lengthy ones, do not terminate the employment relationship unless the employer provides formal termination documents.

Legal References
Labor Contract Law of the People’s Republic of China, Article 46 (circumstances requiring economic compensation), Article 47 (calculation of economic compensation)
Supreme People’s Court Interpretation on Issues Concerning Application of Law in Labor Dispute Cases, Article 13 (burden of proof on employer)

Disclaimer
This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for specific legal matters.