Eastern China Appeals Court Upholds Ruling on Unpaid Wages and Double Pay for Unwritten Labor Contract

Eastern China Appeals Court Upholds Ruling on Unpaid Wages and Double Pay for Unwritten Labor Contract

Case Overview

An appellate court in Eastern China upheld a lower court decision ordering an employer to pay an employee back wages and double compensation for failing to sign a written labor contract. The employee, Mr. Li, worked for a textile company from July 2009 to February 2010 without a formal contract. The court confirmed the existence of a de facto employment relationship and awarded a total of 6,937.58 Chinese Yuan in wage arrears and statutory penalties.

Case Background and Facts

Mr. Li began working as a twister operator for a company in Eastern China on July 1, 2009. He stopped reporting to work on February 6, 2010. During his employment, the company paid him 1,022 Yuan for January 2010 but failed to withhold or pay his pension and medical insurance premiums. Mr. Li sought resolution through the local labor arbitration committee on May 10, 2010, but the committee declined to accept the case. He then filed a lawsuit in the district court.

The core factual dispute was whether Mr. Li had a genuine employment relationship with the company. The company denied this, claiming it had no such employee during the relevant period. Mr. Li presented witness testimony from a colleague, Mr. Zhao, who also worked at the company. The company submitted a factory lease agreement showing it rented production space from a third party from December 2008 to February 2010, which matched Mr. Li’s description of his work location.

Court Proceedings and Evidence

During the trial, Mr. Li provided witness statements and a receipt from the arbitration committee. The company offered copies of a lease agreement, payroll lists, attendance records, and pension account statements. The district court found that the company’s own documents listed Mr. Zhao as an employee, corroborating Mr. Li’s testimony. The court also noted that the company failed to produce a mandatory employee roster for 2009-2010, despite being ordered to do so. This failure shifted the burden of proof against the company.

Regarding wages, Mr. Li claimed a monthly salary of 1,067 Yuan and a total monthly pay of 1,791 Yuan. He submitted wage envelopes and a damaged, incomplete wage list. The court found these documents unreliable because they lacked the names of both parties. Since neither side could provide clear wage records, the court used the 2009 average local salary of 27,132 Yuan per year to calculate Mr. Li’s monthly wage at 1,067 Yuan. For February 2010, the court calculated 245.29 Yuan for five days of work.

Court Findings and Judgment

The district court held that a de facto labor relationship existed from July 1, 2009, to February 6, 2010. It ordered the company to pay Mr. Li a wage difference of 290.29 Yuan for January and February 2010. Because the company failed to sign a written contract, the court also awarded double wages for six months and five days, totaling 6,647.29 Yuan. The combined award was 6,937.58 Yuan. Additionally, the court required the company to arrange for pension and medical insurance contributions for the period of July 2009 through February 2010, with Mr. Li paying his personal share. Mr. Li waived his claim for severance pay.

Both parties appealed. Mr. Li argued that the court wrongly rejected his wage list and should have forced the company to produce its own payroll records. The company argued that the court had the wrong defendant and that Mr. Li was not its employee. The appellate court reviewed the evidence and found no new facts. It affirmed the lower court’s decision, holding that Mr. Li’s witness testimony and the company’s lease agreement sufficiently proved the employment relationship. The court also upheld the wage calculation, noting that neither party provided clear proof of salary.

Key Legal Principles

The court applied the principle that employers bear the burden of proving they have no employment relationship when they fail to maintain required employee records. Under relevant law, when a company does not sign a written contract, it must pay double wages for the period of non-compliance. Courts may use average local wages to determine salary when evidence is lacking. Employers are also obligated to participate in social insurance schemes for their employees.

Practical Insights

This case illustrates the importance of maintaining accurate employee records. Employers who fail to keep rosters, payroll lists, or attendance sheets risk losing legal disputes. Employees without written contracts can still prove their employment through witness testimony, work location evidence, and other indirect proof. Courts will enforce double-wage penalties and insurance obligations even when wage records are incomplete. Both parties should preserve all employment-related documents to avoid unfavorable presumptions.

Legal References

Civil Procedure Law of the People’s Republic of China (2007 Revision), Article 153, Paragraph 1, Items 1-4. Labor Law of the People’s Republic of China, Articles 50 and 72. Labor Contract Law of the People’s Republic of China, Articles 7, 10, and 82.

Disclaimer

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