An Employer May Be Criminally Liable If He Refuses To Pay Wages Without Cause In China

Case:

Without the requested licenses and qualifications, Mr Hu undertook part of the work on a construction project.?Subsequently, Mr Hu recruited 20 workers and organized them to provide the contracted work.?After completion of the work, Mr. Hu received the appropriate payment from the contract-issuing party. However, Mr. Hu has been in arrears with the payment of the workers' wages, the amount of which is RMB150, 000.?After receiving complaints from the workers, the government authorities ordered Mr Hu to pay the workers' wages on time. However, Mr. Hu still did not pay the wages as requested and fled by flight the day after he received the order from the authorities.?

Mr. Hu was later arrested and convicted of the Crime of Refusal to Pay Labor Remunerations.

(This case is adapted from the seventh batch of Guiding Case No. 28 published by the Supreme People's Court of the People's Republic of China.)

Issue：

What are the elements of the Crime of Refusal to Pay Labor Remunerations in China?

Analysis：

According to the?Criminal Law of the PRC, the definition of the Crime of Refusal to Pay Labor Remunerations is “whoever evades payment of a relatively large amount of labor remunerations by transferring property or escaping and hiding or refuses to pay a relatively large amount of labor remunerations though capable, and still refuses to pay even after being ordered by the relevant government department to pay”. In defining whether the Crime of Refusal to Pay Labor Remunerations is committed, the following factors should be paid attention to:

1.?????Employers who do not have business licenses or other qualifications can still be charged with this crime. Either a business or an individual can be the subject of this crime.?In this case, Mr Hu did not have the licenses or qualifications as a qualified contractor, which did not prevent him from being convicted of this crime.?Mr Hu might be charged with other offenses for the lack of relevant licenses and qualifications.

2.?????What is the act for committing the crime? Firstly, the employer expressly refuses to pay without any reasonable ground.Secondly, the employer makes payment impossible by transferring assets while promising the employees that they will be paid for their labor. Finally, unlawful deduction of workers' wages or fines by the employer. Either one of the above actions or omission can be deemed as the act of committing the Crime of Refusal to Pay Labor Remunerations.

3.?????The employer will not be guilty of this crime if the relevant government authority has not ordered the employer to pay wages first, which means that employees must first file complaints before the authority.

4.?????How much money can be considered as “a relatively large amount of labor remunerations” in this crime??Interpretation of the Supreme People's Court on Several Issues concerning the Application of Law in the Trial of Criminal Cases of Refusal to Pay Labor Remunerations provides?that any of the following circumstances shall be considered as “a relatively large amount of labor remuneration”:?

(a) refusal to pay labor remuneration of a laborer for three or more months, with the amount ranging from?5,000 yuan to 20,000 yuan or more; or?

(b) refusal to pay labor remunerations of ten or more laborers, with the accumulative amount ranging from?30,000 yuan to 100,000 yuan or more.

Suggestions：

Companies must have reasonable cause for withholding payment of remuneration to employees, and should also promptly file a reconsideration or lawsuit after receiving the order of payment from government authorities, in order to avoid or mitigate the risk of committing the Crime of refusing to pay the remuneration.

Author:??Peter Lee??(Li Jianchao), who graduated from Fudan University, currently works at the Sunivers Law Firm based in Shenzhen, as Senior Legal Counsel and Director of CSR and also leads a team focusing on?dispute resolution?and?corporate compliance.

He has considerable experience in dispute resolution both in China and cross-border. He has worked as an in-house counsel in?a well-known?FORTUNE 500 tech company. During that period, he joined the disputes management team and handled major disputes for business. He has also spent a year working in South America, as a legal Manager in charge of?legal compliance?for a subsidiary including?employment, export control, and data protection.

He also has accumulated extensive knowledge and experience in?Charity Law, Non-Profit Organization Law,?and?ESG-related Issues.

Many thanks to?Chen Yaqi?(Intern) for her contribution to this article.

This article is for general information only and does not constitute any legal opinion of the author or his firm on a particular matter, nor should it be used for taking or not taking any action. For advice on your specific matters, please contact the author by phone (86-14776255163), or by email ([email protected]).

Copyright 2023 Jianchao Li (Peter Lee). No reproduction, copying or translation of materials without prior permission of the author.