When should employers in China pay double wages?
According to Article 82 of the Labour Contract Law of the PRC, Article 6 and Article 7 of the Regulation on the Implementation of the Labour Contract Law of the PRC, employers who fail to conclude a written labour contract within one month from the employee’s start date must pay the employee double wages from the second month onward until the day before the conclusion of a written labour contract, up to a maximum of 11 months.
If an employer fails to enter into an open-ended labour contract with an employee as required by Paragraph 2 of Article 14 of the Labour Contract Law of the PRC, the employer must pay the employee double wages from the date when the open-ended labour contract should have been concluded until the day before the conclusion of the open-ended labour contract, up to a maximum of 11 months.
If the employee continues to work for the employer after expiration of the labour contract and the employer fails to conclude a new written labour contract with the employee within one month, the employer must pay must pay the employee double wages from the second month onward until the day before the conclusion of a written labour contract, up to a maximum of 11 months.
However, according to the Interpretation of the Supreme People's Court on Several Issues about the Application of Law for the Trial of Labour Dispute Cases (II), the double wages rules for the situation without a written labour contract shall not be applied under the following circumstances:
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Failure to enter into a written labour contract due to reasons not attributable to the employer, for example:
(1) Fail to enter into a written labour contract due to force majeure.
(2) Fail to enter into a written labour contract due to the employee’s intentional act or gross negligence.
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The following circumstances where the labour contract extended automatically upon expiration in accordance with the law:
(1) The employer is prohibited from terminating the labour contract as provided in Article 42 of the Labour Contract Law, for example, the female employee is pregnant, on maternity leave, or in breastfeeding period; the employee is undergoing medical treatment, etc.
(2) The service period has not yet expired as provided in Article 17 of the Regulation on the Implementation of the Labour Contract Law.
(3) The term of office has not yet expired as provided in Article 19 of the Trade Union Law.
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If an employer fails to sign a written labour contract for one year from the employee’s start date, it shall be deemed that the employer has concluded an open-ended labor contract with the employee from the date that one year period expired. Double wages cannot be claimed for the deemed period even though no written labour contract is concluded during this period.
When an employer fails to conclude a written labour contract with an employee in accordance with the law, double wages that should be paid must be calculated on a monthly basis. If the period is less than one month, payment shall be calculated based on the actual working days in that month. Double wages include the wages already paid to the employee by the employer.
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