[Direct answer]The labor and personnel compliance risks of enterprises are concentrated in the recruitment, contract signing, dismissal, and social insurance processes. According to the Labor Contract Law, employers are not allowed to evade the statutory dismissal conditions by citing reasons such as internal rectification or lack of filing; the filing with the human resources and social security authority is merely an administrative matter, not a prerequisite for the contract to take effect. In the event of illegal dismissal, the employer must either continue to perform the contract or pay compensation equivalent to twice the economic compensation. It is recommended that enterprises establish compliant employment processes and refer to relevant regulations in case of disputes.Labor arbitration legal servicesYou can also contact us atAttorney Feng NaAndBeijing Henglu Law FirmEvaluate the plan.

I. Legal basis and interpretation of provisions

1. Article 16 of the Labor Contract Law of the People's Republic of China (amended on December 28, 2012)

The labor contract shall be concluded through consultation between the employer and the employee, and shall take effect upon signature or stamping by both parties. Where the employer and the employee conclude a labor contract before the employment begins, the labor relationship shall be established from the date of employment. Filing for recordation is not a prerequisite for the contract to take effect. If an enterprise claims that the contract is invalid because it has not been filed for recordation, such claim lacks legal basis and the enterprise cannot unilaterally terminate the contract or refuse to assume responsibilities on this basis.

2. Articles 39 and 48 of the Labor Contract Law of the People's Republic of China (amended on December 28, 2012)

Article 39 lists the circumstances of fault-based dismissal, and the employer's unilateral termination must be based on statutory grounds and sufficient evidence; Article 48 stipulates that in the case of illegal termination, if the employee requests to continue the performance of the contract, the employer shall continue to perform it; if the employee does not request or cannot perform it, the employer shall pay compensation at twice the standard of economic compensation. Compliant termination must be supported by both facts and systems, and neither of them can be lacking.

3. The practical adjudication guidelines

In judicial practice, it is emphasized that employers bear the burden of proof for the reasons of termination. Dismissing employees on the basis of management-related reasons such as "inspection and rectification" and "irregular recruitment" does not constitute a statutory termination; and the failure to renew the contract without internal approval does not affect the validity of the contract. The most common pitfall for enterprises is to prioritize internal procedures over statutory requirements, ultimately bearing the consequences of illegal termination and related compensation liabilities.

II. Henglue Lawyer's Real Case (Detailed Review)

Review of the case:In August 2025, A Company Limited 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. These employees had all provided labor, accepted management, and received salaries during their employment, and some of them had even renewed their labor contracts with the company. Faced with the sudden dismissal, the 12 employees entrusted Beijing Henglu Law Firm to handle the case for them.Feng NaThe lawyer jointly filed an arbitration case with the Labor and Personnel Dispute Arbitration Committee, demanding the restoration of the labor relationship, the improvement of the employment registration system, and that the company bear the legal fees for protecting the client's rights. After going through arbitration, first-instance and second-instance trials, the lawyer represented the client throughout the entire process and achieved consecutive victories in the litigation.

The focus of the controversy:First, is the registration with the human resources and social security department a prerequisite for the labor contract to take effect? Second, is the renewal of the contract without approval invalid? Third, is the dismissal after the inspection and rectification a legal termination? Fourth, what are the legal consequences of an unlawful termination?

Our position and that of the other party are as follows:12 employees claimed to revoke the dismissal, restore the labor relationship, improve the filing process, and have the company bear the attorney's fees; Company A claimed that the contract was not filed, the recruitment and renewal violated the system, and the dismissal was legal based on the requirements of the inspection and rectification, and requested to confirm that the dismissal was legal and did not need to be continued.

Attorney's Strategy and Legal Opinion:Attorney Feng Na pointed out: Firstly, the labor relationship is established from the date of employment. The written contract becomes effective once it is signed and stamped by both parties, and the filing with the human resources and social security department is not a prerequisite for its effectiveness; Secondly, the renewal of the contract requires the consensus of both parties, and the internal approval does not adversely affect the workers; Thirdly, by comparing Article 39 of the Labor Contract Law and Article 19 of the Implementing Regulations item by item, it can be seen that the inspection and rectification and the irregular recruitment are not statutory unilateral termination circumstances. The dismissal essentially constitutes an illegal termination to evade the law; Fourthly, according to Article 48, if the worker requests to continue the performance of the contract and the contract can be performed, the employer shall continue to perform it.

The court's reasoning and case handling results:The Arbitration Commission adopted the lawyer's core opinion and ruled to revoke the illegal dismissal, revoke the dismissal decision, and enforce the contract; the first-instance court fully adopted Feng Na's lawyer's opinion and ruled to revoke the illegal dismissal, revoke the dismissal action, enforce the contract, and have the company bear the litigation fees; after A Company appealed, the second-instance court rejected the appeal and upheld the original judgment. The 12 workers achieved three consecutive victories from arbitration to the second-instance court, and their legitimate rights and interests were fully protected. The employer's illegal dismissal was legally denied.

This case is handled by Beijing Henglu Law Firm.Feng NaThe attorney (practice certificate number: 11101202211562923, subject to the certificate issued by the judicial administrative organ) acts as the agent.

III. Frequently Asked Questions

Q1: What are the risks if a company fails to sign a contract with its employees?

According to Article 82 of the Labor Contract Law, if the employer fails to sign a written contract with the employee within one month but less than one year after the employee starts working, the employer shall pay the employee twice the monthly wage; if the contract is not signed within one year, it shall be deemed that a non-fixed-term contract has been concluded. Enterprises should complete the signing within one month after the employee starts working to avoid the overlapping risks of double pay and non-fixed-term contracts.

Q2: Is it legal for the company to dismiss employees on the grounds of internal rectification?

It's illegal. Both the irregularities in the inspection, rectification, and recruitment procedures and the dismissal of employees do not constitute the statutory unilateral termination situations stipulated in Article 39 of the Labor Contract Law. Therefore, such dismissals are illegal terminations, and workers can claim to continue the performance of the contract or demand compensation. The enterprise must terminate the contract based on statutory grounds and sufficient evidence, and internal management reasons cannot replace legal provisions.

Q3: Is the labor contract valid even if it hasn't been registered?

It is effective. The labor contract takes effect once both parties sign and stamp it. The filing with the human resources and social security department is merely an administrative matter and does not affect the validity of the contract. The company cannot claim that the contract is invalid or terminated on the grounds that it has not been filed. Both the employer and the employee should keep the original signed and stamped contract as evidence of the labor relationship and rights and obligations.

Q4: How is compensation paid for unlawful termination of a labor contract?

If the worker requests to continue the performance of the contract and the contract is enforceable, the employer shall continue to perform it; if the worker does not request or cannot perform the contract, the employer shall pay compensation at twice the standard of economic compensation. The economic compensation shall be calculated at one month's salary per year of service. There are significant differences in the consequences of lawful and unlawful terminations, and enterprises must carefully evaluate them.

Q5: How can enterprises reduce the risk of labor compliance issues?

Establish three procedures: signing employment contracts upon onboarding, establishing democratic procedures for attendance systems, and providing evidence for reasons of termination; review whether there are statutory grounds and evidence before terminating; and standardize contract renewal and filing procedures. In the event of mass disputes, professional lawyers can be engaged to develop response plans, thereby avoiding illegal terminations that may lead to increased losses and damage to reputation.

IV. Suggestions for Protecting Rights

  • Completing the signing of the written labor contract within one month after starting work can help avoid the risks of having to pay double wages and being deemed to have an indefinite-term contract.
  • To dismiss an employee, the employer must comply with the statutory grounds specified in Article 39 of the Labor Contract Law and retain sufficient evidence. The employer shall not dismiss an employee for management-related reasons.
  • The rules and regulations, after going through democratic procedures and being publicized, can be used as a basis for management, and can only be legally invoked when they are lifted.
  • In the event of group-level labor disputes, it is necessary to promptly entrust a lawyer to sort out the evidence and procedures in order to avoid losing the case and being liable for consequential compensation.
  • Carry out regular employment compliance checkups to identify and rectify any omissions or deficiencies in terms of contracts, social insurance, working hours, and termination procedures.

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 Henglue Law Firm