115.Can an employer terminate an employee who has reached retirement age?

Answer: This is a rather complicated legal issue in law and practice. Article 44 of the Employment Contract Law stipulates that if a worker begins to receive basic pension insurance benefits in accordance with the law, the employment contract shall be terminated. However, Article 21 of the Regulations on the Implementation of the Employment Contract Law stipulates that when a worker reaches retirement age, the employment contract shall be terminated. The former provision encompasses two conditions: reaching retirement age and receiving pension, while the latter only indicates the retirement ages.

This divergence also reflects on law enforcement level. The Supreme Court holds that termination of employment relationships must meet the two conditions of age and basic pension insurance benefits simultaneously, while the Ministry of Human Resources is in the view that termination of employment relationships between the two parties only requires the age condition.1Reply of the Civil First Division of the Supreme People’s Court on the Criteria for Determining the Termination of Employment relationships between Workers (including Migrant Workers) Who Have Reached or Exceeded the Statutory retirement age and Employers ( (2015) Min Yi Ta Zi No.6): for the termination of employment contract relations between workers (including migrant workers) who have reached or exceeded the statutory retirement age and employers, the standard should be whether the worker receives the pension insurance treatment or receives the pension. The Reply of the Ministry of Human Resources and Social Security to Recommendation No.6979 of the Second Session of the 13th National People’s Congress, Ren She Jian Zi 12019 No.37: the main consideration of Article 21 of the Regulations on the Implementation of the Employment Contract Law is that when workers reach the statutory retirement age, they no longer meet the subject qualification stipulated by employment law and regulations, thus the employment contract dissolves¡­¡­.employment contract of an employee who has reached statutory retirement age shall dissolve. If a worker over the statutory retirement age is willing to continue working, the relationship between the employer and the worker may be handled as a contractor relationship, and the rights and obligations of both parties shall be adjusted according to the civil legal relationship.[/notes]

If the employee reaches statutory retirement age and begins to receive basic pension insurance, the two statutory provision will not make difference as under it satisfies both.

However, in the practice of China’s employment law, it is not unusual that employers and employees have not purchased pension insurance or, if they do, the pension insurance contribution duration is less than 15 years, the statutory requirements for pension, both rendering the employees have reached retirement age but cannot receive pension benefits. For them, the two provisions aforementioned will bring about distinct legal consequences. That is to say, under the former provision, which requires two conditions of reaching retirement age and receiving pension benefits, employers may not be able to terminate them, while they are under the latter provision, which requires reaching retirement age only. This obviously make huge difference.

At present, legal consequences for reaching retirement age without receiving pension are reflected in four types of court practices around the country:

The first is automatic termination of employment relationship. This practice holds that as long as employees reach retirement age, whether or not employees receive basic pension insurance benefits, the employment relationship between the two parties will automatically terminate. The provinces and cities or courts for this practice include Beijing High Court, Shanghai High Court, Jilin Provincial High Court, Chongqing High Court, Zhejiang Provincial High Court, Guangdong Provincial High Court, and Chengdu city of Sichuan province.2Civil Ruling on Retrial Review of Labor Dispute Case between Mao Yunchang and Lalin Irrigation District Management Center of Fuyu City Civil Ruling of Jilin Provincial People¡¯s High Court (2020) Ji Min Shen No.2196. Civil Ruling on Labor Dispute Appeal and Application for Retrial between Zhang Fuxiu and Chongqing Wanglong Industrial (Group) Co., Ltd. Civil Ruling of Chongqing High Court (2020) Yu Min Shen No.873. Geng Huaxian v. Jinhua SEG Dyeing and Finishing Co., Ltd. Labor Dispute Civil Ruling of Zhejiang Provincial People¡¯s High Court (2017) Zhe Min Shen No.669. Civil Ruling on Labor Dispute Retrial Review and Trial Supervision of Tang yuanzhong and Guangzhou Holly Garment Co., Ltd. Civil Ruling of Guangdong Provincial People¡¯s High Court (2020) Yue Min Shen No.1061 (The court held that the employment relationship was terminated if the worker had reached the statutory retirement age or had enjoyed the basic pension insurance benefits). Beijing High Court (2023) Jing Min Shen No.94, Civil Ruling on Labor Dispute Retrial Review and Trial Supervision between Tian Xinjian and Beijing Sunshine Jinyu Pension Service Co., Ltd. ¡°The employment contract is terminated when the worker reaches the statutory retirement age. According to the above provisions and the original court investigation, Tian Xinjian reached the age of 60, the statutory retirement age, on November 11, 2018. The court of second instance confirmed that Tian Xinjian and Sunshine Jinyu Company had employment relationships from February 10, 2017 to November 11, 2018, and that it was correct for both parties to have contractor relationship thereafter. Tian Xinjian¡¯s claim that he did not receive pension insurance benefits, believing that there was still a special employment relationship between the two parties lacks legal basis, and it was not improper for the court of first instance rejected it.¡± The sixth of the ten typical cases of labor disputes in Chengdu Court in 2015: the case of labor disputes between Wang Mou and a company-the post-retirement-age work injury entitlements for workers who have been working until the statutory retirement age does not include one-off employment subsidy for disability. Civil Ruling on Trial and Supervision of Other Labor Disputes between Wang Jianning and Shanghai Jahwa United Co., Ltd. Civil Ruling of Shanghai High Court (2019) Hu Min Shen No.1311 (the employment relationship will be terminated naturally after the employee reaches the statutory retirement age). Article 16 of the Opinions of the Guangdong Provincial Labor and Personnel Dispute Arbitration Commission of the Guangdong Provincial People¡¯s High Court on the Connection between Labor and Personnel Dispute Arbitration and Litigation stipulates that if a worker reaches the statutory retirement age or has already enjoyed the basic pension insurance benefits, the employment relationship shall be terminated naturally.

The second approach is that employment relationship automatically continues. This approach considers that according to the opinion of the Civil First Division of the Supreme People’s Court, the employment relationship between an employer and the employee who have reached retirement age but have not received basic pension insurance benefits will not automatically terminate but continue. The representative case is the case of Li Xiuyu before Fujian Nanping Intermediate Court in 2018, which is one of the exemplary cases issued by the Supreme Court in 2019. In addition, Zhengzhou City of Henan Province, Jiangxi Provincial High Court, Shandong Provincial High Court, and Inner Mongolia Autonomous Region High Court also implement this practice.3The Supreme People’s Court issued an excellent case of the national court system in 2019, the Intermediate People’s Court of Nanping City, Fujian Province (2018) Min 07 Min Zhong 562, the Center for Disease Control and Prevention of Nanping City and Li Xiuyu’s labor dispute appeal case. “but for those who have reached the statutory retirement age and have not received pension insurance benefits or pensions in accordance with the law, the formation of employment relationships is not prohibited. Laws and regulations do not prohibit the use of employees over the statutory retirement age. Li Xiuyu reached the statutory retirement age during the employment tenure (November 2010), but did not receive pension insurance benefits or receive pension according to law, so it should be recognized that there is an employment relationship between Li Xiuyu and Nanping CDC.” Henan Zhengzhou Intermediate People’s Court (2014) Zheng Min Yi Zhong Zi No.219, Labor dispute Sun Changsheng v. Zhengzhou Xinxicheng Property Service Co., Ltd. ¡°In the case, Sun Changsheng was over 60 years old when he worked in Zhengzhou Xinxicheng Property Service Co., Ltd., but he was a peasant who did not enjoy the pension insurance for employees and did not receive pension. The new-style rural social pension insurance received monthly has the nature of social welfare, which is different from the employee pension insurance. This case does not meet the conditions for handling contractor relationships stipulated in Article 7 of the 2010 Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Labor Dispute Cases (III), and the formation of factual employment relationships between the two parties should not be handled as contractor relationships.¡± In 2019, the High Court of Jiangxi Province and the Department of Human Resources and Social Security of Jiangxi Province jointly released the fifth of ten typical cases of labor and personnel disputes: the case of labor disputes between Huang and a company in Shun’an (when an employee reaches retirement age, the employment relationship is not automatically terminated). In 2019, the High Court of Jiangxi Province and the Department of Human Resources and Social Security of Jiangxi Province jointly released the fifth of ten typical cases of labor and personnel disputes: the labor dispute case between Huang and a company in Shun’an. Zhong Quanxiu, Civil Ruling of Labor Dispute Retrial of Xingguo County Urban Environmental Sanitation Management Institute, Civil Ruling of Jiangxi Provincial People¡¯s High Court (2019) Gan Min Zai No.144. Tai’an Xiaotianting Hotel Management Co., Ltd. and Yang Wenxin Labor Dispute Civil Application for Retrial Review Civil Ruling Shandong High Court Civil Ruling (2021) Lu Min Shen No.6928. Inner Mongolia Morning News Agency and Ding Xueyun Labor Dispute Retrial Review and Trial Supervision Civil Ruling Inner Mongolia Autonomous Region High Court Civil Ruling (2020) No.2849.

The third approach is that the employment relationship will terminate or continue conditionally. Under this practice, courts examine the causes of employees’ failure to receive pension insurance benefits. If the employer is at fault, the employment relationship between the two parties will continue. Otherwise, the employment relationship between the two parties will be terminated and converted into a contractor relationship. This approach is adopted by Tianjin High Court, Liaoning Provincial High Court, Xinjiang Uygur Autonomous Region High Court, and Hunan Provincial High Court.4The second paragraph of Article 10 of the Guidelines for the Trial of Labor Dispute Cases in Tianjin Court stipulates that if a worker who has reached the statutory retirement age has not yet enjoyed the basic pension insurance benefits or has not yet received the pension due to the employer’s reasons, the actual employment relationship between the worker and the former employer shall be handled in accordance with the employment relationship. Zhou Huachun and Tianjin Chengtong Decoration Engineering Co., Ltd. Other labor disputes and personnel disputes retrial Tianjin High Court Civil Ruling (2020) Jin Min Shen No.703. Wang Huailin, Liaoning yuanshenglong Machinery Co., Ltd. Civil Ruling on Labor Dispute Civil Application for Retrial Review, Liaoning Provincial People¡¯s High Court Civil Ruling (2021) Liao Min Shen No.6807. Xinjiang High Court (2022) Xinmin Zai No.229, Urumqi Meixinyuan Property Service Co., Ltd. and Ma Donghua Labor Dispute Civil Judgment of Civil Retrial. ¡°In this case, Ma Donghua did not enjoy the basic pension insurance benefits, so the provisions of Article 44 (2) of the Employment Contract Law of the People’s Republic of China could not be directly applied. Article 21 of the Regulations on the Implementation of the Employment Contract Law of the People’s Republic of China, which stipulates that “when a worker reaches the statutory retirement age, the employment contract shall be terminated”, should be applied in this case. Of course, from the original intention of this article, if the employer is directly granted the right to terminate the employment contract because the worker reaches the statutory retirement age, it will also cause damage to the legitimate rights and interests of workers to a certain extent. Therefore, the examination of the application of Article 21 of the Regulations on the Implementation of the Employment Contract Law of the People’s Republic of China should also specifically examine whether the reasons the workers can not enjoy basic pension insurance benefits are related to employers.¡± The High Court of Hunan Province issued the fourth “100 Excellent Judgment Documents” and “100 Excellent Court Trials”, the Civil Judgment of Changsha Intermediate People’s Court of Hunan Province (2021) Xiang 01 Min Zhong 452 in the labor dispute appeal case between Hunan Louyuan Hotel Co., Ltd. and Zhang Mou; Liaoning Provincial People¡¯s High Court (2021) Liao Min Shen No.8056, Li Guangli, Gaizhou Environmental Health Service Center Labor Dispute Civil Application for Retrial Review Civil Ruling.

The fourth approach is that when employees reach retirement age, employment relationships will not automatically terminate, but the employer has the option to terminate; the employment relationship shall terminate if the employer inform the same to the employee. Otherwise, the relationship continues. This practice is adopted in the Hubei Provincial High Court, the Gansu Provincial High Court, the Henan Provincial High Court and the Shanxi Provincial High Court.5Xiangyang Hongri Wanli Dregs Transportation Co., Ltd., Bu Haibo Labor Dispute Retrial Review and Trial Supervision Civil Ruling Hubei Provincial People’s High Court Civil Ruling (2020) E Min Shen No.2293. Zhang Caihe, Weiyuan County Maikang Security Co., Ltd. Civil Ruling of Second Instance of Labor Dispute Civil Ruling of Gansu Provincial People¡¯s High Court (2022) Gan Min Shen No.740. Application for retrial of labor dispute between Xinzheng Tiansu Building Materials Co., Ltd. and Gu Jinqin, etc. Civil Ruling of Henan High Court (2022) Yu Min Shen No.3817. Wheat Research Institute of Shanxi Agricultural University, Zhang Genlin Labor Dispute Civil Trial Supervision Civil Ruling Shanxi High Court Civil Ruling (2022) Jin Min Shen No.1014.

In summary, when an employee reaches statutory retirement age and receives the basic pension insurance benefits, the employer may notify the employee the termination of the employment relationship. No economic compensation is required. However, if the employee is not receiving the basic pension insurance benefits at their retirement age, the nature of the relationship between the two parties and how the employer can deal with it depend on which province or city the employer is located at. Different regions implement different practices on whether the two parties can terminate or continue the employment relationship. Please not the the aforementioned basic pension insurance limits to the pension insurance for employees, excluding the social pension insurance for urban residents and the new-style rural social pension insurance.

From the above analyses, it is obviously that the determination of the nature of employment relationships between the two parties when an employee reach statutory retirement ages is a contradictory and complex problem in judicial practice. It carries serious consequences to both employees and and employers in terms of legality of termination of employments at retirement age and potential corresponding punitive damages and other liabilities.

Fundamentally, the predicament of reaching retirement age without receiving pension benefit stems from incomplete coverage of social insurance system and flawed legal system in China. Therefore, in the near future, the Supreme Court or legislative bodies should simplify and unify rules based on the principle of balancing the interests of employees, employers, and the state. In the long run, achieving universal coverage of social insurance and unified standards for urban and rural areas should be established in labor governance.

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  • 1
    Reply of the Civil First Division of the Supreme People’s Court on the Criteria for Determining the Termination of Employment relationships between Workers (including Migrant Workers) Who Have Reached or Exceeded the Statutory retirement age and Employers ( (2015) Min Yi Ta Zi No.6): for the termination of employment contract relations between workers (including migrant workers) who have reached or exceeded the statutory retirement age and employers, the standard should be whether the worker receives the pension insurance treatment or receives the pension. The Reply of the Ministry of Human Resources and Social Security to Recommendation No.6979 of the Second Session of the 13th National People’s Congress, Ren She Jian Zi 12019
  • 2
    Civil Ruling on Retrial Review of Labor Dispute Case between Mao Yunchang and Lalin Irrigation District Management Center of Fuyu City Civil Ruling of Jilin Provincial People¡¯s High Court (2020) Ji Min Shen No.2196. Civil Ruling on Labor Dispute Appeal and Application for Retrial between Zhang Fuxiu and Chongqing Wanglong Industrial (Group) Co., Ltd. Civil Ruling of Chongqing High Court (2020) Yu Min Shen No.873. Geng Huaxian v. Jinhua SEG Dyeing and Finishing Co., Ltd. Labor Dispute Civil Ruling of Zhejiang Provincial People¡¯s High Court (2017) Zhe Min Shen No.669. Civil Ruling on Labor Dispute Retrial Review and Trial Supervision of Tang yuanzhong and Guangzhou Holly Garment Co., Ltd. Civil Ruling of Guangdong Provincial People¡¯s High Court (2020) Yue Min Shen No.1061 (The court held that the employment relationship was terminated if the worker had reached the statutory retirement age or had enjoyed the basic pension insurance benefits). Beijing High Court (2023) Jing Min Shen No.94, Civil Ruling on Labor Dispute Retrial Review and Trial Supervision between Tian Xinjian and Beijing Sunshine Jinyu Pension Service Co., Ltd. ¡°The employment contract is terminated when the worker reaches the statutory retirement age. According to the above provisions and the original court investigation, Tian Xinjian reached the age of 60, the statutory retirement age, on November 11, 2018. The court of second instance confirmed that Tian Xinjian and Sunshine Jinyu Company had employment relationships from February 10, 2017 to November 11, 2018, and that it was correct for both parties to have contractor relationship thereafter. Tian Xinjian¡¯s claim that he did not receive pension insurance benefits, believing that there was still a special employment relationship between the two parties lacks legal basis, and it was not improper for the court of first instance rejected it.¡± The sixth of the ten typical cases of labor disputes in Chengdu Court in 2015: the case of labor disputes between Wang Mou and a company-the post-retirement-age work injury entitlements for workers who have been working until the statutory retirement age does not include one-off employment subsidy for disability. Civil Ruling on Trial and Supervision of Other Labor Disputes between Wang Jianning and Shanghai Jahwa United Co., Ltd. Civil Ruling of Shanghai High Court (2019) Hu Min Shen No.1311 (the employment relationship will be terminated naturally after the employee reaches the statutory retirement age). Article 16 of the Opinions of the Guangdong Provincial Labor and Personnel Dispute Arbitration Commission of the Guangdong Provincial People¡¯s High Court on the Connection between Labor and Personnel Dispute Arbitration and Litigation stipulates that if a worker reaches the statutory retirement age or has already enjoyed the basic pension insurance benefits, the employment relationship shall be terminated naturally.
  • 3
    The Supreme People’s Court issued an excellent case of the national court system in 2019, the Intermediate People’s Court of Nanping City, Fujian Province (2018) Min 07 Min Zhong 562, the Center for Disease Control and Prevention of Nanping City and Li Xiuyu’s labor dispute appeal case. “but for those who have reached the statutory retirement age and have not received pension insurance benefits or pensions in accordance with the law, the formation of employment relationships is not prohibited. Laws and regulations do not prohibit the use of employees over the statutory retirement age. Li Xiuyu reached the statutory retirement age during the employment tenure (November 2010), but did not receive pension insurance benefits or receive pension according to law, so it should be recognized that there is an employment relationship between Li Xiuyu and Nanping CDC.” Henan Zhengzhou Intermediate People’s Court (2014) Zheng Min Yi Zhong Zi No.219, Labor dispute Sun Changsheng v. Zhengzhou Xinxicheng Property Service Co., Ltd. ¡°In the case, Sun Changsheng was over 60 years old when he worked in Zhengzhou Xinxicheng Property Service Co., Ltd., but he was a peasant who did not enjoy the pension insurance for employees and did not receive pension. The new-style rural social pension insurance received monthly has the nature of social welfare, which is different from the employee pension insurance. This case does not meet the conditions for handling contractor relationships stipulated in Article 7 of the 2010 Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Labor Dispute Cases (III), and the formation of factual employment relationships between the two parties should not be handled as contractor relationships.¡± In 2019, the High Court of Jiangxi Province and the Department of Human Resources and Social Security of Jiangxi Province jointly released the fifth of ten typical cases of labor and personnel disputes: the case of labor disputes between Huang and a company in Shun’an (when an employee reaches retirement age, the employment relationship is not automatically terminated). In 2019, the High Court of Jiangxi Province and the Department of Human Resources and Social Security of Jiangxi Province jointly released the fifth of ten typical cases of labor and personnel disputes: the labor dispute case between Huang and a company in Shun’an. Zhong Quanxiu, Civil Ruling of Labor Dispute Retrial of Xingguo County Urban Environmental Sanitation Management Institute, Civil Ruling of Jiangxi Provincial People¡¯s High Court (2019) Gan Min Zai No.144. Tai’an Xiaotianting Hotel Management Co., Ltd. and Yang Wenxin Labor Dispute Civil Application for Retrial Review Civil Ruling Shandong High Court Civil Ruling (2021) Lu Min Shen No.6928. Inner Mongolia Morning News Agency and Ding Xueyun Labor Dispute Retrial Review and Trial Supervision Civil Ruling Inner Mongolia Autonomous Region High Court Civil Ruling (2020) No.2849.
  • 4
    The second paragraph of Article 10 of the Guidelines for the Trial of Labor Dispute Cases in Tianjin Court stipulates that if a worker who has reached the statutory retirement age has not yet enjoyed the basic pension insurance benefits or has not yet received the pension due to the employer’s reasons, the actual employment relationship between the worker and the former employer shall be handled in accordance with the employment relationship. Zhou Huachun and Tianjin Chengtong Decoration Engineering Co., Ltd. Other labor disputes and personnel disputes retrial Tianjin High Court Civil Ruling (2020) Jin Min Shen No.703. Wang Huailin, Liaoning yuanshenglong Machinery Co., Ltd. Civil Ruling on Labor Dispute Civil Application for Retrial Review, Liaoning Provincial People¡¯s High Court Civil Ruling (2021) Liao Min Shen No.6807. Xinjiang High Court (2022) Xinmin Zai No.229, Urumqi Meixinyuan Property Service Co., Ltd. and Ma Donghua Labor Dispute Civil Judgment of Civil Retrial. ¡°In this case, Ma Donghua did not enjoy the basic pension insurance benefits, so the provisions of Article 44 (2) of the Employment Contract Law of the People’s Republic of China could not be directly applied. Article 21 of the Regulations on the Implementation of the Employment Contract Law of the People’s Republic of China, which stipulates that “when a worker reaches the statutory retirement age, the employment contract shall be terminated”, should be applied in this case. Of course, from the original intention of this article, if the employer is directly granted the right to terminate the employment contract because the worker reaches the statutory retirement age, it will also cause damage to the legitimate rights and interests of workers to a certain extent. Therefore, the examination of the application of Article 21 of the Regulations on the Implementation of the Employment Contract Law of the People’s Republic of China should also specifically examine whether the reasons the workers can not enjoy basic pension insurance benefits are related to employers.¡± The High Court of Hunan Province issued the fourth “100 Excellent Judgment Documents” and “100 Excellent Court Trials”, the Civil Judgment of Changsha Intermediate People’s Court of Hunan Province (2021) Xiang 01 Min Zhong 452 in the labor dispute appeal case between Hunan Louyuan Hotel Co., Ltd. and Zhang Mou; Liaoning Provincial People¡¯s High Court (2021) Liao Min Shen No.8056, Li Guangli, Gaizhou Environmental Health Service Center Labor Dispute Civil Application for Retrial Review Civil Ruling.
  • 5
    Xiangyang Hongri Wanli Dregs Transportation Co., Ltd., Bu Haibo Labor Dispute Retrial Review and Trial Supervision Civil Ruling Hubei Provincial People’s High Court Civil Ruling (2020) E Min Shen No.2293. Zhang Caihe, Weiyuan County Maikang Security Co., Ltd. Civil Ruling of Second Instance of Labor Dispute Civil Ruling of Gansu Provincial People¡¯s High Court (2022) Gan Min Shen No.740. Application for retrial of labor dispute between Xinzheng Tiansu Building Materials Co., Ltd. and Gu Jinqin, etc. Civil Ruling of Henan High Court (2022) Yu Min Shen No.3817. Wheat Research Institute of Shanxi Agricultural University, Zhang Genlin Labor Dispute Civil Trial Supervision Civil Ruling Shanxi High Court Civil Ruling (2022) Jin Min Shen No.1014.

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