Legal way to recover unpaid wages
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Conceptual interpretation
The timely and full payment of wages and salaries to workers in accordance with the law is the legal responsibility of the employer. Contrary to what many employees believe, there are proper procedures, legally, to recover wages. When an employer owes wages to employees, employees can recover salaries through consultation, arbitration, prosecution, application for compulsory execution, reporting complaints to the labor inspection department, and applying for payment orders from the court.
The employee needs to bring an arbitration to the labor arbitration committee within a specific time limit to ask the employer to pay labor remuneration. Once the time limit expires, the employee will face the risk of not getting effective legal relief.
Related Laws
What is the applicable law regarding employee's wages?
[Article 30] of the Labor Contract Law: The employer shall pay the labor remuneration in full and on time to the employee following the labor contract and the state regulations.
[Article 38] of the Labor Contract Law: If the employer fails to pay the labor remuneration in full and on time, the employee may terminate the labor contract, and the employer shall pay the employee compensation. The financial compensation fund shall be paid for one month for each full year, according to the years employed by the specific company. If the salary is less than one year, but for more than six months, it shall be calculated for one year; for less than six months, the employee shall be paid for half a month wage as compensation.
China Labor Contract Law:
http://www.npc.gov.cn/wxzl/gongbao/2013-04/15/content_1811058.htm
Does the employment of foreigners in domestic companies also apply to the Labor Contract Law?
According to the existing laws of China, foreigners holding employment (work) permits can legally work in China and can form labor relations with domestic employers (e.g. locally registered companies). The regulation of the labor relationship is mainly the "Regulations on the Administration of Employment of Foreigners in China."
[Article 22] of the Regulations stipulates that the working hours, rest, vacation, and labor of foreigners employed in China safety and health and social insurance are all implemented following relevant state regulations.
[Article 25] stipulates that labor disputes between the employer and the employed foreigner shall be handled following the Labor Law of the People's Republic of China and the Labor Dispute Mediation and Arbitration Law of the People's Republic of China.
Note: Even though this is national regulation, we suggest you verify local regulations. Often local regulations slight different than national regulations. However, Local law should be in line with national regulations. So employees can still file arbitration against issues arises with employer.
Regulations on the Administration of Employment of Foreigners in China:
http://www.mohrss.gov.cn/SYrlzyhsh-bzb/zcfg/flfg/gz/201704/t20170413_269433.html
When can the employee report the issue to the labor arbitration bureau?
Labor Dispute Mediation and Arbitration limitation period of [Article 27] stipulates that the labor dispute arbitration applies within one year. The limitation period of arbitration shall be calculated from the date when the parties know or should know that their rights have been violated.
The limitation of arbitration stipulated in the preceding paragraph is interrupted because one party claims rights to the other party, or requests rights relief from relevant departments or the other party agrees to perform its obligations. From the time of interruption, the statute of limitations will be recalculated.
If a dispute arises during the labor relationship due to arrears of labor remuneration, a worker's application for arbitration is not subject to the limitation period of mediation. However, if the labor relationship is terminated, it shall be filed within one year from the date of termination of the labor relationship.
Case Studies:
After graduating from Shanghai University, John was employed by a company. He signed a three-year fixed-term labor contract with the company, stipulating that his salary is 5,000 yuan per month. In the first year, the company paid wages on time every month. In the second year, the company did not pay salaries for three months. The reason provided by the company was that capital turnover was difficult. John negotiated with the company because he had just graduated and rented a house to use the money. He hoped that the company could send wages to him as soon as possible. The company said that the company's funds were complicated and could only wait for a few months. John had no choice but to file labor arbitration. The company issued arrears of wages of 15,000 yuan, paid compensation of 5,000 yuan, and terminated the labor contract with the company.
Case analysis
Before we discuss how the above example relates to the law, we wanted to point out that we have heard a few cases that such an event could go in for several months without being paid, but these were usually related to a very specific situation and resulted in the employee believing the boss. It is unusual for an employee to continue working for several months straight without being paid.
Labor law and labor contract law protects employees. If the employer fails to pay labor remuneration in full and on time, the employee can terminate the labor contract, and the employer needs to pay compensation to the employee. In this case, the company's behavior has affected John's life. According to the Labor Contract Law, it is necessary to pay wages by the company to protect its legitimate rights and interests. If the employee just stopped working, then it is considered a breach, as well, but it cannot be resolved.
What should you do if in a similar situation?
1. Negotiation: to ask for a salary directly from the boss or other appropriate personnel in the company, you can negotiate the details such as the timeframe, and amount of payment.
2. Arbitration: Wage disputes are labor disputes, which can be submitted to the labor arbitration within the time limit for appeal. The worker can apply to the labor and personnel dispute arbitration committee (劳动仲裁委员会) in the place where the labor contract is performed or where the enterprise is located for arbitration to request the unit to pay the wages. The conclusion is completed by a maximum of 45 days from the date of acceptance and in most cases, it is completed as soon as possible. If it is a complicated case, it can be extended for only 15 days.
3. If the party refuses to accept the mediation, it may bring a lawsuit to the People’s Court, and the court shall make a judgment (after the first instance, if one party refuses to accept the arbitration, it may appeal (申诉)). This process can take 6-12 months.
4. Application for compulsory execution: after the arbitration or judgment takes effect, and if the employer refuses to perform, it may apply to the court for compulsory execution.
5. Report complaints to the labor supervision department (劳动监察部门). The labor department has the right to order the unit to pay wages and pay compensation, or even to impose penalties.
6. The recovery of salaries can be applied to the court for an order of payment.
How to manage your stay in China?
• If you are leaving the country after quitting this job and your employer is going to cancel your work permit and resident permit, you can ask Exit-Entry Bureau to grant you a Stay permit for up to 30 days so you can process your arbitration dispute and hopefully completely before leaving. If time is insufficient, you can sign POA (Power of Attorney) to someone who can continue without your absent.
• If you have found a new job and your employer is canceling your work permit and resident permit, you can ask Exit-Entry Bureau to grant you a Stay permit for up to 30 days which is sufficient to transfer your work and resident permit to new employer. Afterward, you can file arbitration within one year as mentioned above.
• If you have found a new job but your employer is not willing to cancel your work permit to allow you to transfer to the new employer, in that situation you still have to file Arbitration dispute to Labor Arbitration Committee which can help with wages as well as release documents.
Note: In any situation above, you could also file a complaint to Labor Arbitration Committee against your employer asking to pay for the damage caused by your employer to you in case you can’t smoothly exit the company or get your release documents.
Tips and Reminders
1. Sign the labor contract with the employer. After the employee finds a job, he should sign a labor contract with the employer and obtain a foreigner's work permit so the law will safeguard his rights.
2. Pay attention to the collection or preservation of evidence materials for employment, such as work permits, payroll, etc.
3. If the employee finds that the employer is in arrears with the salary, he/she can try to negotiate with the employer first and ask the employer to pay the wages according to law.
4. If the negotiation with the unit fails or is inconvenient, the worker can directly report to the labor and social security supervision institution.
Authors:
Are you looking for more useful tips for your life in China? Get in touch with contributors for a consultation and follow us in our WeChat Group to receive the latest news.
Julian (WeChat: julian_beijing) is based in Shanghai but often travels for work and runs a company that works with individuals and organizations doing business between the US, China, and Africa. He has been based in China for a number of years.
Ikky (WeChat: ikky888) is an R&D Manager working in Shanghai. He has been living in China for over 11 years.
Jatin (known by the nickname "Prince Jatin") (WeChat: jatinsoni) is a Multicloud DevOps Engineer working in Shanghai. He has been living in China for over eight years and owns three Indian community WeChat groups known for "Helping Indians" with their specific inquiries.
Disclaimer:
We have written his article based on the gathering and interpretation of laws and regulations, government official websites, and Internet-related knowledge. If you are in a similar situation, please consult government officials or lawyers for a consultation.
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