Answer: Both the Employment Contract Law and the judicial interpretation of the Supreme People’s Court stipulate that if an employee is forced to resign for a specific statutory reason, the employer is liable to economic compensation. Therefore, under what circumstances the employees is forced to resign is the key issue. Legally established forced resignations include the following situations:
The first situation is unjustified wage deduction and unjustified wage arrear, which also include overtime wages deduction or arrear. Unjustified wage deduction refers to employer deducting employee’s wage without justified cause, and both parties dispute the amount of the payable wages; while unjustified wage arrear refers to employer’s delaying payment of wages without justified cause against the company rules or the employment contract, and both parities dispute the payment time rather than the amount of the wages. 1Yu Yiqing, Xuzhou Runze Electric Co., Ltd. Civil Judgment of Second Instance of Labor Dispute Civil Judgment of Xuzhou Intermediate People’s Court of Jiangsu Province (2018) Su 03 Min Zhong No.4191.According to the judicial interpretation of the Supreme Court, employers’ paying wages below the local minimum wage standard is also a legitimate reason for forced resignation, as it can also be regarded as a broad type of employer’s unjustified wage deduction.
If the employer does an unjustified wage deduction, explicitly for which the employee resigns, the employer is liable for economic compensation to the employee. However, it is important to note that legitimate wage cuts, such as deductions for poor performance under the company rules or employment contract, do not constitute unjustified wage deduction. 2Civil Ruling on Labor Dispute Retrial Review and Trial Supervision of Xie Jiahan and Guangzhou Nanlian Air Catering Co., Ltd. Civil Ruling of Guangdong Provincial People¡¯s High Court (2019) Yue Min Shen No.9323. Guangzhou Nanlian Air Catering Co., Ltd. and Xie Jiahan Labor Dispute Second Instance Civil Judgment Guangzhou Intermediate People’s Court of Guangdong Province Civil Judgment (2019) Yue 01 Min Zhong No.986. The court held that the employer deducting the reward part of the wages according to the company rules does not constitute an unjustified wage deduction. If the employer can give a reasonable explanation for the wage arrears (for example, because of the COVID-19 epidemic), it does not constitute unjustified wage arrear and therefore does not constitute a legitimate ground for the employee to resign.3The labor dispute case between Li Shaohua and the respondent Xinxiang Ruifeng Chemical Industry Co., Ltd., Henan High Court Civil Ruling (2009) Yu Fa Min Shen Zi No.3080. The court held that if the employer has a reasonable explanation for the wage arrears, it does not constitute unjustified wage arrear, and the resignation of employee does not constitute forced resignation. Labor Dispute Case of Zheng Shikai v. Yada Technology Group Co., Ltd. Civil Ruling of Zhejiang High Court (2014) ZMSZ No.1132.Or, if the employer does have a genuine, reasonable different understanding of the wage standard, it does not constitute a legitimate reason for the employee’s forced resignation.4Fu Fengzhu, Jiangsu Hongbo Glass Products Co., Ltd. and Taixing Aibo Glass Products Co., Ltd. in the civil judgment of the second instance of labor disputes, the civil judgment of the Intermediate People’s Court of Taizhou City, Jiangsu Province (2019) Su 12 Min Zhong 741. The court held that ¡°employer¡¯s failure to pay labor remuneration in time and in full that due to disputed calculation standard for genuine, objective reasons shall not constitute the legitimate ground for employee’s termination.¡±
The second situation is where social insurance has not been purchased legally. Due to the objective reality of insufficient social insurance contributions in China, it appears that courts all over the country use non-contribution, rather than insufficient contribution, to social insurance as the legitimate reason for employees¡¯ forced resignation.5Chen Ru and Taizhou Hengyuan New Building Material Machinery Co., Ltd. Labor Dispute Appeal and Application Civil Ruling Jiangsu Provincial People’s High Court Civil Ruling (2019) Sumin Shen No.4318. The court held that as long as the social insurance is paid, even if the amount is insufficient, it does not constitute a reason for forced resignation. Cao Hongjun and Liaoning Jindiyang Ceramics Co., Ltd. Labor Dispute Judgment of Second Instance Civil Judgment of Shenyang Intermediate People’s Court of Liaoning Province (2023) Liao 01 Min Zhong No.5861. The court held that the employer was in arrears of wages due to economic hardship and agreed to pay the top up the insufficient social insurance, so it did not constitute forced resignation. Li Chuangao and Enshi Longfeng Investment and Development Co., Ltd. Labor Dispute Retrial Review and Trial Supervision Civil Ruling Hubei Provincial People¡¯s High Court Civil Ruling (2018) E Min Shen No.1571. The court held that failure to pay social insurance in full does not constitute the reason under Article 38 of the Employment Contract Law. Moreover, court decisions and local regulations in Guangdong Province, Shenzhen City and Maanshan City in Anhui Province show that employees are obligated to request their employers to purchase social insurances in advance, and only if the employers still fail to do so, they are entitled to forced resignation.6The second paragraph of Article 15 of the Regulations on the Promotion of Harmonious Employment relationships in Shenzhen Special Economic Zone stipulates that if an employer fails to pay social insurance premiums for a worker in accordance with the law, the worker shall require the employer to pay them; if the employer fails to pay them within one month, the worker may terminate the employment contract and require the employer to pay economic compensation. Civil Ruling on Labor Dispute Retrial Review and Trial Supervision of Jiayida Electric Industry (Shenzhen) Co., Ltd. and Jiang Xiaoju Civil Ruling of Guangdong Provincial People¡¯s High Court (2020) Yue Min Shen No.10635. The court held that both parties agreed that the social insurance premium be paid to the employee instead of to the social insurance authority, but the employee requested the employer to purchase the social insurance in multiple occasions, while the employer failed to do so, and that the employee was forced to resign. Labor Dispute between yuan Zuoqin and Maanshan Huada Metallurgical Machinery Co., Ltd. Civil Judgment of Maanshan Intermediate People’s Court of Anhui Province (2016) Wan 05 Min Zhong No.730. The court held that in the case that both parties agreed not to pay social insurance, the employee should first ask the employer to buy social insurance, and if the employer refused, it would constitute a legitimate reason for forced resignation.
China’s social insurance system also includes housing provident fund, but in the judicial practice, employers¡¯ failing to pay housing provident fund generally does not constitute a legitimate ground for forced resignation.7Civil Judgment of the Second Instance of Labor Dispute between Zhu Xiaodong and Suzhou Huisi Human Resources Co., Ltd. and Jinlong United Automobile Industry (Suzhou) Co., Ltd. Civil Judgment of the Intermediate People’s Court of Suzhou City, Jiangsu Province (2019) Su 05 Min Zhong No.4047. The court held that the failure of the employer to pay the housing provident fund was not a legitimate cause of forced resignation. Judgment of Second Instance of Labor Dispute between Miao Liang and Xuzhou Tianyu Gas Power Generation Co., Ltd. Civil Judgment of Intermediate People’s Court of Xuzhou City, Jiangsu Province (2021) Su 03 Min Zhong No.2546.
The third situation involves labor protection, labor conditions, illegal company rules, and invalid employment contracts. If an employer fails to provide labor protection or working conditions to the employee as agreed, the employee shall be responsible for proving the working conditions falling below the agreed or statutory standards in order to establish a legitimate forced resignation.8Civil Judgment of the Second Instance of the Labor Dispute between Liu Kun and Beijing Minrui Human Resources Management Co., Ltd. Civil Judgment of the Third Intermediate People’s Court of Beijing (2014) No.3 Zhong Min Zhong Zi No.05578. The employee resigned on the ground that the allergy caused by the decoration odor of the employer office constituted the failure to provide appropriate working conditions, and the court held that the employee failed to prove that the decoration odor caused the allergic reaction. Therefore, the claim was rejected. Cai Xueping v. Dalian Hongyou Auto Parts Co., Ltd. Labor Dispute Retrial Case Dalian Intermediate People’s Court of Liaoning Province Civil Judgment (2015) D.S.M.Z.Z.Z. No.13. The court held that the employee did not prove the substation¡¯s labor protection fall under the legal requirements and that it did not find forced resignation.As for the situation where employer¡¯s company rules detriment to the rights and interests of employees, the court cases appear to consider that, while examining the tenability of a claimed forced resignation due to unlawful company rules, the court should review whether the unlawful company rules have direct, actual impact on the employee, and the employee is responsible for proving the causal relationship between the rules and the impact.9Wen Ninghua, Dongguan Hengxing Electronic Hardware Co., Ltd. Labor Dispute Civil Judgment of Second Instance Civil Judgment of Dongguan Intermediate People’s Court of Guangdong Province (2021) Yue 19 Minzhong No.10904. The employee resigned because he was dissatisfied with the position transfer, and later claimed that the company rules violated the law, leading to his forced resignation. The court found that the real reason for the resignation of the employee was that he was dissatisfied with the position transfer, not the company rules.In the case of an invalid employment contract, the employee is obligated to prove that the employer has entered into an employment contract against the employee¡¯s true intention by means of fraud.10Article 26 of the Employment Contract Law, in which the act of the employer excluding the rights of workers and exempting itself from responsibility can be classified as the illegal part of the company rules.The above situations are rare successful paths for employees in the judicial practice.
The fourth situation is that employer restricts the personal freedom of employee or endangers their personal safety by means of violence or violation of regulations. In this case, the employee can terminate the employment contract immediately without notifying the employer in advance. In practice, this kind of employer’s violation certainly exists, but it is rare in judicial decisions, probably because of employees’ insufficient ability in proving the existence of these violations.
It should be noted that a legitimate forced resignation normally requires that the employee has clearly indicated the specific reason for the forced resignation at the time of resignation. Most court decisions hold that if resignation does not specify the reason for the claimed forced resignation or claims that the resignation is due to personal reasons, but later the employee does so claiming for economic compensation, courts usually does not find forced resignation and uphold economic compensation; 11Li Hui, Shenzhen Chuanyi Interactive Technology Co., Ltd. Labor Dispute Retrial Review and Trial Supervision Civil Ruling Guangdong Provincial People¡¯s High Court Civil Ruling (2017) Yue Minshen No.10038. The court held that the employee¡¯s claim of forced resignation was based on employer not signing an employment contract with him, failure of purchase of social insurance and provident fund, and arrears of wages; however, he did not provide evidence to prove that he had indicated the reasons in his resignation. Therefore, the request for economic compensation is not supported. Civil Ruling on Labor Dispute Retrial Review and Trial Supervision of Zhang Hongzhu and Jining Zhongxin Taxi Co., Ltd. Civil Ruling of Shandong Provincial People¡¯s High Court (2018) Lu Min Shen No.5285. The court held that the employee resigned for personal reasons and later claimed forced resignation on the grounds of unjustified wage deduction and social insurance issues, and that the claim of forced resignation was not established. Civil Ruling on Labor Dispute Retrial Review and Trial Supervision of Wang Chengwei and Sichuan Electric Appliance Group Co., Ltd. Civil Ruling of Sichuan High Court (2019) Chuan Min Shen No.2277. The the employee’s resignation report stated that “he had to leave the company for some reason”, and the court found that he was not forced to resign. However, a few courts, including the Shaanxi Provincial High Court and the Inner Mongolia Autonomous Region High Court, have rejected the prerequisite, holding that as long as there is legitimate reason(s) forcing employees to resign, employees are not obligated to specify the reason(s) for resignation.12Xi’an Jindun Escort Co., Ltd. and Liu Pengfei Labor Dispute Appeal and Application for Retrial Civil Ruling Shaanxi Provincial People¡¯s High Court Civil Ruling (2021) Shan Min Shen No.153. The court held that the employer did not pay social insurance to employees, even if the employee did not explicitly put forward at the time of resignation, it constituted a reason for forced resignation. Huolinguole Baisheng Commerce and Trade Co., Ltd. and Wang Xiaoai Labor Dispute Retrial Review and Trial Supervision Civil Ruling Inner Mongolia Autonomous Region High Court Civil Ruling (2020) No.2166. The court held that although the employee did not explicitly indicate the employer’s failure to pay social insurance as the reason for his resignation in his resignation letter, objectively, it was a fact that the employer did not pay social insurance¡¡. it can be concluded that the employer has not paid social insurance according to law, and the employee has unilaterally terminated the employment contract according to law.
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- 1Yu Yiqing, Xuzhou Runze Electric Co., Ltd. Civil Judgment of Second Instance of Labor Dispute Civil Judgment of Xuzhou Intermediate People’s Court of Jiangsu Province (2018) Su 03 Min Zhong No.4191.
- 2Civil Ruling on Labor Dispute Retrial Review and Trial Supervision of Xie Jiahan and Guangzhou Nanlian Air Catering Co., Ltd. Civil Ruling of Guangdong Provincial People¡¯s High Court (2019) Yue Min Shen No.9323. Guangzhou Nanlian Air Catering Co., Ltd. and Xie Jiahan Labor Dispute Second Instance Civil Judgment Guangzhou Intermediate People’s Court of Guangdong Province Civil Judgment (2019) Yue 01 Min Zhong No.986. The court held that the employer deducting the reward part of the wages according to the company rules does not constitute an unjustified wage deduction.
- 3The labor dispute case between Li Shaohua and the respondent Xinxiang Ruifeng Chemical Industry Co., Ltd., Henan High Court Civil Ruling (2009) Yu Fa Min Shen Zi No.3080. The court held that if the employer has a reasonable explanation for the wage arrears, it does not constitute unjustified wage arrear, and the resignation of employee does not constitute forced resignation. Labor Dispute Case of Zheng Shikai v. Yada Technology Group Co., Ltd. Civil Ruling of Zhejiang High Court (2014) ZMSZ No.1132.
- 4Fu Fengzhu, Jiangsu Hongbo Glass Products Co., Ltd. and Taixing Aibo Glass Products Co., Ltd. in the civil judgment of the second instance of labor disputes, the civil judgment of the Intermediate People’s Court of Taizhou City, Jiangsu Province (2019) Su 12 Min Zhong 741. The court held that ¡°employer¡¯s failure to pay labor remuneration in time and in full that due to disputed calculation standard for genuine, objective reasons shall not constitute the legitimate ground for employee’s termination.¡±
- 5Chen Ru and Taizhou Hengyuan New Building Material Machinery Co., Ltd. Labor Dispute Appeal and Application Civil Ruling Jiangsu Provincial People’s High Court Civil Ruling (2019) Sumin Shen No.4318. The court held that as long as the social insurance is paid, even if the amount is insufficient, it does not constitute a reason for forced resignation. Cao Hongjun and Liaoning Jindiyang Ceramics Co., Ltd. Labor Dispute Judgment of Second Instance Civil Judgment of Shenyang Intermediate People’s Court of Liaoning Province (2023) Liao 01 Min Zhong No.5861. The court held that the employer was in arrears of wages due to economic hardship and agreed to pay the top up the insufficient social insurance, so it did not constitute forced resignation. Li Chuangao and Enshi Longfeng Investment and Development Co., Ltd. Labor Dispute Retrial Review and Trial Supervision Civil Ruling Hubei Provincial People¡¯s High Court Civil Ruling (2018) E Min Shen No.1571. The court held that failure to pay social insurance in full does not constitute the reason under Article 38 of the Employment Contract Law.
- 6The second paragraph of Article 15 of the Regulations on the Promotion of Harmonious Employment relationships in Shenzhen Special Economic Zone stipulates that if an employer fails to pay social insurance premiums for a worker in accordance with the law, the worker shall require the employer to pay them; if the employer fails to pay them within one month, the worker may terminate the employment contract and require the employer to pay economic compensation. Civil Ruling on Labor Dispute Retrial Review and Trial Supervision of Jiayida Electric Industry (Shenzhen) Co., Ltd. and Jiang Xiaoju Civil Ruling of Guangdong Provincial People¡¯s High Court (2020) Yue Min Shen No.10635. The court held that both parties agreed that the social insurance premium be paid to the employee instead of to the social insurance authority, but the employee requested the employer to purchase the social insurance in multiple occasions, while the employer failed to do so, and that the employee was forced to resign. Labor Dispute between yuan Zuoqin and Maanshan Huada Metallurgical Machinery Co., Ltd. Civil Judgment of Maanshan Intermediate People’s Court of Anhui Province (2016) Wan 05 Min Zhong No.730. The court held that in the case that both parties agreed not to pay social insurance, the employee should first ask the employer to buy social insurance, and if the employer refused, it would constitute a legitimate reason for forced resignation.
- 7Civil Judgment of the Second Instance of Labor Dispute between Zhu Xiaodong and Suzhou Huisi Human Resources Co., Ltd. and Jinlong United Automobile Industry (Suzhou) Co., Ltd. Civil Judgment of the Intermediate People’s Court of Suzhou City, Jiangsu Province (2019) Su 05 Min Zhong No.4047. The court held that the failure of the employer to pay the housing provident fund was not a legitimate cause of forced resignation. Judgment of Second Instance of Labor Dispute between Miao Liang and Xuzhou Tianyu Gas Power Generation Co., Ltd. Civil Judgment of Intermediate People’s Court of Xuzhou City, Jiangsu Province (2021) Su 03 Min Zhong No.2546.
- 8Civil Judgment of the Second Instance of the Labor Dispute between Liu Kun and Beijing Minrui Human Resources Management Co., Ltd. Civil Judgment of the Third Intermediate People’s Court of Beijing (2014) No.3 Zhong Min Zhong Zi No.05578. The employee resigned on the ground that the allergy caused by the decoration odor of the employer office constituted the failure to provide appropriate working conditions, and the court held that the employee failed to prove that the decoration odor caused the allergic reaction. Therefore, the claim was rejected. Cai Xueping v. Dalian Hongyou Auto Parts Co., Ltd. Labor Dispute Retrial Case Dalian Intermediate People’s Court of Liaoning Province Civil Judgment (2015) D.S.M.Z.Z.Z. No.13. The court held that the employee did not prove the substation¡¯s labor protection fall under the legal requirements and that it did not find forced resignation.
- 9Wen Ninghua, Dongguan Hengxing Electronic Hardware Co., Ltd. Labor Dispute Civil Judgment of Second Instance Civil Judgment of Dongguan Intermediate People’s Court of Guangdong Province (2021) Yue 19 Minzhong No.10904. The employee resigned because he was dissatisfied with the position transfer, and later claimed that the company rules violated the law, leading to his forced resignation. The court found that the real reason for the resignation of the employee was that he was dissatisfied with the position transfer, not the company rules.
- 10Article 26 of the Employment Contract Law, in which the act of the employer excluding the rights of workers and exempting itself from responsibility can be classified as the illegal part of the company rules.
- 11Li Hui, Shenzhen Chuanyi Interactive Technology Co., Ltd. Labor Dispute Retrial Review and Trial Supervision Civil Ruling Guangdong Provincial People¡¯s High Court Civil Ruling (2017) Yue Minshen No.10038. The court held that the employee¡¯s claim of forced resignation was based on employer not signing an employment contract with him, failure of purchase of social insurance and provident fund, and arrears of wages; however, he did not provide evidence to prove that he had indicated the reasons in his resignation. Therefore, the request for economic compensation is not supported. Civil Ruling on Labor Dispute Retrial Review and Trial Supervision of Zhang Hongzhu and Jining Zhongxin Taxi Co., Ltd. Civil Ruling of Shandong Provincial People¡¯s High Court (2018) Lu Min Shen No.5285. The court held that the employee resigned for personal reasons and later claimed forced resignation on the grounds of unjustified wage deduction and social insurance issues, and that the claim of forced resignation was not established. Civil Ruling on Labor Dispute Retrial Review and Trial Supervision of Wang Chengwei and Sichuan Electric Appliance Group Co., Ltd. Civil Ruling of Sichuan High Court (2019) Chuan Min Shen No.2277. The the employee’s resignation report stated that “he had to leave the company for some reason”, and the court found that he was not forced to resign.
- 12Xi’an Jindun Escort Co., Ltd. and Liu Pengfei Labor Dispute Appeal and Application for Retrial Civil Ruling Shaanxi Provincial People¡¯s High Court Civil Ruling (2021) Shan Min Shen No.153. The court held that the employer did not pay social insurance to employees, even if the employee did not explicitly put forward at the time of resignation, it constituted a reason for forced resignation. Huolinguole Baisheng Commerce and Trade Co., Ltd. and Wang Xiaoai Labor Dispute Retrial Review and Trial Supervision Civil Ruling Inner Mongolia Autonomous Region High Court Civil Ruling (2020) No.2166. The court held that although the employee did not explicitly indicate the employer’s failure to pay social insurance as the reason for his resignation in his resignation letter, objectively, it was a fact that the employer did not pay social insurance¡¡. it can be concluded that the employer has not paid social insurance according to law, and the employee has unilaterally terminated the employment contract according to law.