[Direct answer]Labor disputes arising from the resignation of executives typically involve issues such as the determination of the nature of the labor relationship, non-compete clauses and confidentiality obligations, equity and performance incentives, economic compensation or damages, and liability for official duties. According to Articles 23 and 24 of the Labor Contract Law of the People's Republic of China regarding non-compete clauses, and Articles 37 to 48 of the same law regarding the termination and rescission of labor contracts, employers and employees should have legal or contractual grounds and follow corresponding procedures when terminating labor contracts. It should be noted that whether a labor relationship exists depends on personal dependency and economic subordination. Executives who merely hold equity and participate in decision-making may not constitute a labor relationship. When adjudicating such cases in Beijing, courts typically assess the situation based on comprehensive evidence including contracts, salary records, and attendance records.

1. Problem background and typical scenarios

There are typically three types of disputes: First, the company regards the executive as a partner or shareholder and denies the existence of an employment relationship, leading to disputes over wages and compensation; Second, after the executive leaves the company, he/she violates the non-compete agreement or takes away client resources, and the company claims breach of contract penalties or damages; Third, the two parties have disagreements over severance pay, performance bonuses, and equity exit. These disputes often involve both labor law and company law issues. When handling them, it is necessary to distinguish between different legal relationships to avoid confusion in claims. In addition, the executive's status is often accompanied by confidentiality, non-compete, and equity arrangements. When dealing with these issues, it is necessary to review both the labor contract and commercial documents to avoid conflicting claims.

II. Key points of dispute

The controversy focuses on four points: Firstly, whether a labor relationship has been established, the core of which is whether the employee accepts labor management and has economic dependence on the employer; Secondly, whether the termination is legal. The employer needs to have legal grounds and provide evidence when terminating the contract unilaterally; Thirdly, whether the non-compete agreement is effective and the liquidated damages are reasonable, which requires reviewing the agreement provisions and the payment of compensation; Fourthly, the nature and ownership of equity incentives and performance bonuses, which need to be determined based on the grant documents and conditions. In addition, the allocation of the burden of proof directly affects the outcome. The employer usually bears more obligations to provide evidence for the grounds of termination and the basis of the system, so it should prepare in advance.

In terms of this focus, it is necessary to pay attention to basic evidence such as attendance, salary, and job responsibilities, and require the employer to bear the burden of proof for the basis of the disciplinary action. When necessary, professional lawyers can be engaged to avoid losing a favorable position due to procedural or time-limit issues.

III. Professional analysis by Henglue Lawyers

Henglue Law Firm once represented a dispute case in which multiple workers were unilaterally dismissed from their labor contracts. In August 2025, A Company issued "Notices of Termination of Labor Relationship" to 12 employees, including Zhang Li, Hu Fei, and Liu Gang, on the grounds that the recruitment procedures were found to be irregular during inspections and audits, unilaterally terminating the labor contracts. During their employment, these employees had provided labor, accepted management, and received salaries as usual. Some of them even renewed their labor contracts with the company. After accepting the case, Attorney Feng Na pointed out: Firstly, the labor relationship is established from the date of employment. A written labor contract becomes effective upon both parties signing and stamping it, and human resources and social security filing is not a prerequisite for the contract's effectiveness. Secondly, the principle of consensus applies to contract renewal, and whether internal approval is required is a company management process that cannot be used to oppose workers. Thirdly, by comparing Article 39 of the Labor Contract Law and Article 19 of the Implementing Regulations of the Labor Contract Law, neither the inspection and rectification nor the irregular recruitment procedures constitute statutory grounds for unilateral termination. Fourthly, according to Article 48 of the Labor Contract Law, if the worker requests to continue the contract and the contract can still be performed, the employer shall continue to perform the contract. After going through arbitration, first-instance and second-instance trials, both the arbitration committee and the two-level courts adopted the lawyer's opinion, determining that the termination was illegal, revoking the termination, and requiring the continuation of the labor contract. This case was handled by Beijing Henglue Law Firm.Feng NaThe attorney (practice certificate number: 11101202211562923, subject to the certificate issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

Action list: First, clarify the nature of the legal relationship and distinguish between labor relations and shareholder or cooperation relationships; Second, verify whether the reasons and procedures for termination are legal. Employers should keep the evidence of system publicity and disciplinary actions; Third, review the provisions of non-compete and confidentiality agreements to confirm whether compensation has been paid; Fourth, obtain written evidence regarding the ownership of performance bonuses and equity incentives; Fifth, promptly apply for labor arbitration after a dispute arises, and file a lawsuit against the arbitration decision if necessary. For matters involving corporate governance and equity arrangements, reference materials can be consultedBusiness and contract disputes in enterprisesFor those involved in labor dispute procedures, you can learn more about it.Labor arbitration and work-related injury compensationLegal basis: Articles 23, 24, 39, 46, 47, and 48 of the Labor Contract Law of the People's Republic of China (amended on December 28, 2012), and Article 19 of the Implementing Regulations of the Labor Contract Law of the People's Republic of China (effective since September 18, 2008). The specific application shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglue Law Firm's Reminder

Firstly, the status of an executive and that of a worker can coexist, but this requires the existence of a genuine employment relationship. Simply holding shares and making decisions does not necessarily constitute an employment relationship. Secondly, the employer should have legal grounds and provide evidence when unilaterally terminating the employment contract, otherwise it may be deemed an illegal termination. Thirdly, the non-compete agreement must be supported by reasonable compensation, otherwise its validity may be affected. Fourthly, disputes involving equity and incentives should be formalized in written documents as soon as possible and can be resolved through legal means if necessary.Labor arbitration and work-related injury compensationUnderstand the program schedule of the column.

It would be more prudent to pay attention to the arbitration statute of limitations, the allocation of the burden of proof, and the calculation standards for compensation items, so as to avoid reducing the substantive rights due to procedural issues. When necessary, you can entrust professional lawyers to intervene to avoid losing a favorable position due to procedural or statute of limitations issues.

VI. Frequently Asked Questions

Q1: Are executives necessarily workers?

Not necessarily. Whether a labor relationship exists depends on whether the employee accepts the employer's labor management and has economic dependence on the employer. Those who only hold equity, participate in major decision-making, and earn income from dividends without being subject to labor management are usually not considered to have a labor relationship; conversely, if they accept attendance and performance management and receive fixed compensation, a labor relationship may exist.

Q2: Are there any financial compensations for executives who resign from their positions?

It depends on the circumstances of the termination. If the termination is initiated by the employee due to statutory circumstances such as the employer's failure to pay the labor remuneration in full and on time, or if the employer terminates the employment without any fault, the employer usually needs to pay economic compensation; if the employee terminates the employment illegally and causes losses to the employer, the employee may need to bear compensation liability. The specific provisions shall be subject to the termination grounds and legal regulations.

Q3: Is the non-compete clause effective for executives?

For senior managers who are subject to confidentiality obligations, employers may stipulate non-compete clauses. Effective non-compete clauses must stipulate a reasonable scope, geographical area, and duration (not exceeding two years), and monthly payment of economic compensation during the restriction period; failure to pay compensation may affect the validity of the agreement or the assumption of liability.

Q4: Is it illegal for executives to leave the company and take their clients with them?

If executives are subject to confidentiality or non-compete obligations, and violate the agreement by taking away client resources or disclosing trade secrets, they may be in breach of contract or infringement and be liable for compensation and other responsibilities. In serious cases, they may also face criminal risks. Employers should improve their confidentiality and non-compete arrangements, and pay attention to preserving relevant evidence.

Q5: Is it necessary to go through arbitration first in the event of a labor dispute?

Yes. For labor disputes, the arbitration precedence principle generally applies. The parties should first apply for arbitration to the labor and personnel dispute arbitration committee. If they are not satisfied with the arbitration award, they can file a lawsuit with the people's court within the statutory time limit. For non-labor disputes involving equity, cooperation, etc., they can resolve them through civil litigation separately. It is important to distinguish between different legal relationships.

The above content is based on the judicial practice in the Beijing area. The facts of individual cases and the jurisdiction of the court may affect the conclusions. Welcome to consult Henglu Law Firm for specific situations.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, so as to avoid missing the statutory time limit. →Labor arbitration legal services·Attorney Feng Na·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and public adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.