Foreigner Terminates Contract, Gets Compensation for 。。。

Source: OT-Team(G), 上海市青浦区香花桥街道总工会

  On June 11, the Shanghai Xianghuaqiao Labor Union posted a case in which a company was ordered by the court to pay economic compensation for failing to provide social insurance for a foreign employee.

  Brief introduction of the case

  On April 1, 2015, a foreigner, Shen, joined Shanghai SH Company as an assistant to the general manager. SH Company obtained a work permit for Shen. The employment contract stipulated that SH Company was to pay social insurance contributions for Shen on a monthly basis, but it did not specify that economic compensation should be paid in the event of termination of the employment contract.

  In June 2020, after getting married, Shen obtained a Chinese green card and decided to settle in China. Considering that not paying social insurance in China would affect the receipt of a pension after retirement, Shen applied to SH Company for social insurance contributions. However, SH Company did not respond to Shen's request; instead, it demoted Shen from a managerial role to an ordinary employee, and adjusted Shen's salary accordingly.

  In August 2020, Shen formally sent a letter to SH Company, unilaterally terminating the employment contract on the grounds that SH Company had not paid social insurance contributions. SH Company still did not respond. Shen then applied for arbitration with the Labor Dispute Arbitration Committee, demanding that SH Company pay economic compensation, and subsequently took the case to court.

  Judgment result

  After the trial, the court held that since both parties had agreed that SH Company should pay social insurance contributions for Shen, and SH Company had failed to do so, Shen's termination of the employment contract on this basis met the conditions for receiving economic compensation. The economic compensation for terminating the labor contract would be  calculated based on Shen's employment time and monthly salary standard.

  Lawyer's Commentary

  In this case, the employer's refusal to pay economic compensation on the grounds that laws and regulations do not stipulate the payment of economic compensation to foreign employees upon termination of the employment contract, and that there was no such provision in the employment contract, constitutes a misunderstanding.

  According to Article 22 of the "Regulations on the Administration of Employment of Foreigners in China", the working hours, rest, vacation, labor safety and health, and social insurance of foreigners employed in China shall be implemented in accordance with relevant national regulations.

  Therefore, the employer is obligated to pay social insurance contributions for foreign employees. If the employer fails to pay these contributions, the employee has the right to unilaterally terminate the employment contract according to Article 38 of the "Labor Contract Law" and demand economic compensation from the employer in accordance with Article 46.