[Case Summary]This case involves a dispute over the illegal termination of a labor contract in a labor dispute. The worker, Li * *, signed fixed-term labor contracts with multiple affiliated companies from 2014 onwards. In 2021, after working for 10 consecutive years, Li * * proposed to sign a non-fixed-term labor contract, but the company refused and terminated the contract on the grounds of Li * *'s refusal to sign a fixed-term contract. Beijing Hengluo Law FirmChen PingThe lawyer represented the client and argued that the employer's practice of signing successive contracts should count as continuous contract renewals, and that Li * met the conditions for entering into a non-fixed-term contract, thus the employer's termination of the contract was illegal. The first-instance court ruled that the employer should pay Li * compensation for the illegal termination of the contract amounting to 188,670 yuan, and unpaid annual leave wages of 9,576 yuan. After the company appealed, the second-instance court upheld the original judgment.

I. Review of the case

Workers often ask, "Do I have to sign a non-fixed-term contract after working continuously for 10 years?" and "Is it illegal for the company not to renew the non-fixed-term contract?" On July 1, 2014, a Guangdong-based human resources company signed a labor contract with Li *. The term of the contract was from July 1, 2014 to December 31, 2017; Li *'s position was a marketing position, and he worked under a flexible working system at Guangzhou WS Health Industry Co., Ltd., which is within the scope of the company's business operations.

On December 1, 2015, WS Beijing Sales Co., Ltd., Li * and the human resources company signed the "Agreement on Changing Labor Relationships", in which the three parties confirmed that Li * and the human resources company would terminate their labor relationship. The next day, WS Beijing Company and Li * signed a "Labor Contract" to establish a labor relationship, and WS Beijing Company agreed to count Li *'s work experience at the human resources company as his work experience at WS Beijing Company. On January 1, 2018, Guangzhou WS Company, Li * and WS Beijing Company signed the "Agreement on Changing Labor Relationships", in which the three parties confirmed that the day after Li * and WS Beijing Company terminated their labor contract relationship, Guangzhou WS Company would sign a "Labor Contract" with Li *, and Guangzhou WS Company agreed to count Li *'s work experience at WS Beijing Company and his work experience at the group and its subsidiaries as his work experience at Guangzhou WS Company.

From July 9, 2021, Li * and Guangzhou WS Company negotiated the renewal of the labor contract. Guangzhou WS Company did not agree to renew a non-fixed-term labor contract with him, so it issued a "Notice of Termination of Labor Contract" to him on July 19, 2021, citing his refusal to renew the contract. The labor contract between the two parties was terminated on July 20, 2021. Since neither Li * nor Guangzhou WS Company agreed with the results of the labor arbitration award, Li * entrusted Hengluo Law Firm to handle the case for him.Chen PingThe lawyer filed a lawsuit on behalf of his client.

II. The focus of the case

  • Focus 1: Whether the number of contracts signed by related companies should be counted consecutively when they take turns to sign contracts.WS Beijing and WS Guangzhou belong to the same group and have a relationship of affiliation. The number of times they sign contracts alternately should be counted consecutively.
  • Focus 2: Whether the employee meets the conditions for entering into a non-fixed-term labor contract.Li * has signed three fixed-term contracts in a row and has worked for 10 years, meeting the requirements for signing a contract.
  • Focus Three: Whether the company's termination constitutes an illegal termination and the calculation of compensation.He only agreed to sign a fixed-term contract, and Li *'s refusal to sign it would result in the termination of the contract, which is an illegal termination.

III. Professional intervention by Hengluo Lawyers

The worker claimed that:After working continuously for 10 years and signing three fixed-term contracts, the employee should be offered a non-fixed-term contract. If the company terminates the contract illegally, it shall compensate the employee accordingly.

The employer argued that:As an independent legal entity, it should not automatically count the number of times continuously if it does not maliciously evade its obligations.

Hengluo Lawyer's Agency Opinion:The Guangzhou WS Company illegally terminated the employment contract with Li *. Given the affiliation between the WS Beijing Company and the Guangzhou WS Company, the two companies alternately signed labor contracts with Li *, and the number of times Li * signed fixed-term labor contracts should still be counted consecutively. Therefore, Li * has met the conditions for signing an open-ended labor contract. However, the Guangzhou WS Company still required Li * to sign fixed-term labor contracts, and when Li * explicitly refused, the company directly issued a notice of termination of the labor contract upon its expiration, which constitutes an illegal termination of the labor relationship. Regarding the claim for unpaid annual leave wages: Li * had cumulatively paid social insurance for 10 years by January 2019, and was entitled to 10 days of annual leave per year starting from January 1, 2019. The defendant should pay the corresponding wages.

IV. Outcome of the case

The court of first instance, in accordance with the relevant provisions of the Labor Law and the Labor Contract Law, ruled that the defendant should pay Li * a compensation of 188,670 yuan for illegally terminating the labor contract within 7 days, and pay Li * 9576 yuan for unpaid annual leave wages. The court of second instance held that WS Beijing Company and Guangzhou WS Company were in the situation of alternately signing labor contracts with the worker. Considering the affiliation between the two companies, the number of times Li * signed the third fixed-term labor contract should be counted consecutively. Li * proposed to sign an open-ended labor contract, but Guangzhou WS terminated the labor contract with Li * on the grounds that Li * refused to sign a fixed-term labor contract, which constituted an illegal termination. Therefore, Guangzhou WS Company's appeal request could not be established and should be rejected. The judgment of the court of first instance was based on clear facts and correct application of the law, and should be maintained.

5. Hengluo Law Firm's Reminder

This case is handled by Beijing Henglu Law Firm.Chen PingThe attorney (practice certificate number: 11101201411619680, subject to the document issued by the judicial administrative organ) acts as the agent. After the successive conclusion of two fixed-term labor contracts, the worker has the right to request the conclusion of a non-fixed-term labor contract. If the employer terminates the contract illegally, the employer shall pay compensation.

VI. Common Questions about Cases Involving the Unlawful Termination of Labor Contracts FAQ

  1. Q: Is it necessary to sign a non-fixed-term contract after working continuously for 10 years?
    A:If the worker proposes or agrees to renew or sign a labor contract, unless he or she proposes to sign a fixed-term contract, a non-fixed-term labor contract shall be signed instead.
  2. Q: How many times does it count if a related company signs a contract in turn?
    A:The affiliated companies shall alternately sign contracts with the workers, and the number of times of signing such contracts shall be counted consecutively, and they shall not evade their obligations by taking advantage of their status as independent legal persons.
  3. Q: How is the compensation for unlawfully terminating a labor contract calculated?
    A:It shall be paid at twice the standard of economic compensation, and the economic compensation shall be paid at one month's salary for each year of service.
  4. Q: How to claim the unpaid annual leave salary?
    A:The employee may claim that the employer pay the unpaid annual leave compensation at 300% of the daily wage income (including the wages already paid).
  5. Q: Is it illegal for a company not to renew a non-fixed-term contract?
    A:If the employer refuses to renew a non-fixed-term contract that meets the conditions for signing and terminates it directly, it generally constitutes an illegal termination, and the employer shall pay compensation.