Dispute Over Social Insurance in Eastern China City
The Eastern China City People’s Court ruled on a social insurance dispute between a die-casting mold company and a former employee. The company sought a declaration that it was not required to pay social insurance contributions for the employee, claiming no employment relationship existed. The court rejected the company’s argument and ordered it to pay the overdue contributions.
Hongxiang Die Casting Mold Co., Ltd. (Hongxiang Mold Company) filed the lawsuit in early 2012. The company claimed that in March 2010, a third-party factory owner asked it to sign a blank labor contract for Mr. Shen, the defendant, to help his child attend school. Hongxiang Mold Company alleged it only stamped the contract as a favor and that Mr. Shen never actually worked for it. Mr. Shen countered that he had worked for the company from March 2007 to March 2011, but the company never paid social insurance. He asked the court to order contributions for the entire period.
During the hearing, Hongxiang Mold Company submitted a mold subcontract agreement and settlement slips to show Mr. Shen had a contractual relationship with a separate factory. Mr. Shen submitted a signed labor contract, corporate rules, a wage card, wage slips, an attendance record, and a uniform. The company challenged the wage and attendance documents, arguing they did not prove employer-employee ties. Both sides agreed the labor contract bore the company’s genuine seal, but the company insisted the contract was never performed.
The court examined the evidence and found that the subcontract agreement and settlement slips did not prove Mr. Shen had a subcontracting relationship with the other factory from 2008 to 2011. The court noted that the agreement was for a specific short-term mold project, not an ongoing business arrangement. The court also accepted the labor contract as authentic, since the company admitted its seal was genuine. The wage and attendance records were not linked to the company and were rejected, but the uniform was acknowledged as company property.
The court held that Hongxiang Mold Company had the burden to prove its claim that the labor contract was not actually performed. The company failed to provide sufficient evidence to rebut the signed contract. The court stated that a validly executed labor contract creates a presumption of employment unless clearly contradicted. Under the Labor Law and the Labor Contract Law, an employer must pay social insurance contributions for its employees. Since the company did not pay, it was obligated to make up the missed payments.
The court ordered Hongxiang Mold Company to pay the basic pension insurance and basic medical insurance premiums for Mr. Shen from March 1, 2010, to March 31, 2011, with Mr. Shen to pay his personal share as calculated by the social insurance authority. The company must complete the payment within 10 days of receiving Mr. Shen’s contribution. This case underscores that employers cannot avoid social insurance obligations simply by claiming a contract was not performed. Courts will enforce the plain terms of a signed agreement unless clear evidence of fraud or non-employment is presented. Businesses in Eastern China City and elsewhere should ensure they properly register and pay social insurance for all employees under written contracts.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.