Employee Wins First Reported Employment Contract Law Case - International Law Office

In February 2008, in the first reported case decided under the Employment Contract Law, a district court in Beijing’s Chaoyang district upheld an arbitration tribunal's ruling that had awarded an employee an open-ended employment contract.

The employee, Ms Zhou, was employed by the Township Enterprises Mansion for over 10 years before she moved to France in 2001. Before her relocation the parties signed a one-year agreement, which provided that Zhou’s employment relationship would continue even though she would not receive a salary during her absence. The company agreed to keep her personnel files and to make social insurance payments on her behalf, although Zhou was required to reimburse the company for the payments.

On returning to Beijing in 2005, Zhou repeatly sought to resume work with the company, but her requests were reportedly refused. The company argued that Zhou’s employment relationship had terminated in 2002 when the 2001 agreement expired and was not renewed.

However, the court reportedly ruled that the employment relationship had not been terminated. It supported Zhou’s claim for an open-ended contract on the grounds that:

• the parties had agreed to maintain the employment relationship;
• the company had paid social insurance contributions on Zhou's behalf;
• the company had kept Zhou’s personnel files; and
• Zhou had worked for the company for over 10 years.

For further information on this topic please contact Andreas Lauffs or Jeffrey Wilson at Baker & McKenzie's Hong Kong office by telephone (+852 2846 1888) or by fax (+852 2845 0476) or by email (andreas.lauffs@bakernet.com or jeffrey.wilson@bakernet.com).