Laws of the People's Republic of China

The General Office of the of Ministry Labor and Social Security

Letter of the General Office of the Ministry of Labor and Social Security Concerning Issues of Whether Economic Compensation Shall be Made When Factual Labor Relationship is Terminated

LaoSheTingHan [2001] No.249

November 26, 2001

Labor and Social Security Department of Zhejiang Province:

Your department's Request for Instructions on Whether Economic Compensation Shall Be Made When Labor Relationship is Terminated (ZheLaoSheZhong [2001] No. 259) has been received. After discussing with the the Supreme People's Court, hereby reply as follows:

Article 16 of the Highest People's Court's Interpretation of Several Questions about Application of Laws on Hearing Cases of labor Dispute (FaShi [2001] No.14), prescribes that: "Laborer can continue working in the original employing unit after expiration of the labor contract. If the employing unit does not object, it shall be regarded that the two parties would like to continue performing the labor contract under the original terms. If one party claims to terminate the labor relationship, the claim shall be supported by the people's court." In this provision, "termination" happens under the condition that after the expiration of the labor contract, the labor still work in the prime employing unit and the unit does not object. The labor relationship factually exists between the labor and the unit, but the two parties do not sign a new labor contract under the terms of the prime one. If one party claims to terminate the labor relationship, it shall be judged that the factual labor relationship is terminated.