At present, many people have deeply felt the biting cold wind of traditional Internet. Both entrepreneurs and practitioners are busy looking for the second curve of career development, waiting for a new outlet.
The ensuing web3.0 era is about to emerge and is booming.
Unlike traditional industries, Web3 adopts more distributed office mode. Many tasks only need to be coordinated online. Everyone can freely choose the office location and work from home.
The ceiling of the Internet industry is gradually emerging, and the popularity of Web3 has brought similar jobs, including operations, products, technology, etc. A group of practitioners are migrating to the Web3 field.
Good salary and the ability to work remotely while balancing personal life are important reasons that attract them to join.
At this point, perhaps some people have already gotten on board, some are watching from the sidelines, and some are rubbing their hands, eager to try, ready to do a big job.
So, when facing emerging industries, in addition to the anxiety and expectations about the unknown, as workers, we need to understand the relevant laws and do a good job of risk prevention and control in order to safeguard our own rights and interests.
Recently, I often receive inquiries from some parties. The company wants to terminate the labor contract, but I disagree with the negotiation plan. How can I protect my rights through legal means?
After a chat, I found out that he actually signed the contract directly with an overseas entity, and the relationship between him and the employer was a labor service relationship, which is not formally protected by my country's labor law and relevant laws and regulations.
Domestic foreign-related labor relations refer to foreign-related labor relations where the labor contract is performed within China, including the following situations:
(1) Foreign companies employ Chinese people to work in China
(2) Foreign companies employing foreigners to work in China
(3) Foreign companies’ branches or representative offices in China employ Chinese nationals to work in China
(4) Foreign companies’ branches or representative offices in China employing foreigners to work in China
(5) Chinese companies employ foreigners to work in China
What people usually refer to as overseas entities are actually foreign companies, which are companies registered overseas in accordance with foreign laws.
The labor relationship established with the overseas entity is called a foreign-related labor relationship.
This article analyzes and explains the legal issues involved when foreign companies employ Chinese people to work in China, in order to help more professionals manage risks and better protect their rights and interests.
When a worker establishes a relationship with an overseas entity, the employer often signs a consulting contract or a service contract with the worker in China instead of a labor contract.
So, is this operation legal? What impact does it have on workers?
In fact, foreign companies or permanent representative offices of foreign companies can hire Chinese employees through local foreign agency service departments (legal employers).
A tripartite agreement is signed to form a special employment relationship similar to labor dispatch, that is, if a dispute occurs, the Labor Contract Law can be referred to and applied to protect the workers' rights to labor remuneration, social insurance, welfare and other related rights.
However, many foreign companies also choose to directly employ Chinese employees to carry out their work, and the labor and employment issues caused by this are also increasing.
According to Chinese laws, foreign companies are not allowed to directly conduct business activities in my country, let alone directly recruit Chinese employees in China.
Therefore, it is not in compliance with the law for overseas companies to directly sign labor contracts with workers in my country and will be deemed invalid.
This is also an important reason why overseas entities usually choose to sign consulting contracts or labor contracts with workers.
The impact of directly signing an overseas entity
1. Labor relations are not protected by my country's labor laws and related laws
Due to the relationship between the foreign company and the Chinese employee, it is not protected by my country's labor laws.
However, in order to protect the interests of Chinese citizens, the court may include such disputes in the ordinary civil dispute trial and handle them as disputes between equal parties.
2. The salary payment method is quite special
When workers sign a contract with an overseas entity, HR will often emphasize the salary advantages to employees. There are two types of salary payment models.
One is to receive legal currency, such as RMB, which is similar to ordinary work.
The other is to obtain stablecoins such as USDT and project tokens.
Tokens are like wages. “This token has a certain value on the exchange. The better the project develops, the higher the value of the token.”
In this model, the relationship between practitioners and projects is not an employment relationship, but rather "I invest in the project with my labor."
This model will inevitably involve virtual currency. Whether the corresponding virtual currency can continue to appreciate is full of uncertainty, and the labor put in is likely to be in vain in the end.
At the same time, this is contrary to domestic policies, which brings us to another major risk, namely legal risk.
In addition, this approach can achieve the effect of tax planning to a certain extent, and to a certain extent workers will receive more money every month.
However, if there is no salary record or only a small amount of salary record in the bank statement, it will be difficult for the workers to provide evidence of labor costs.
3. Employers do not pay social insurance directly
Since the workers directly sign the contract with an overseas entity, the employer will generally convert the portion of the payment that the unit should pay into cash based on the lowest social security payment base, and let the workers find an agency to pay it on their own.
Social insurance, as a mandatory requirement of our country's laws for domestic enterprises, is a protection for workers.
There are risks whether the workers pay the taxes themselves or the employer pays the workers their share in cash.
4. If the employer terminates the contract, the employee has no legal basis to claim economic compensation or damages.
Although many people have signed consulting agreements, they do not have a particularly clear perception of the company's management of them, as well as everyone's daily feelings and labor relations.
Some of my friends even had labor contracts signed with domestic companies of their employer.
Later, because the employer moved abroad, I signed a consulting contract. However, there was no substantial change in the work content, working methods, team business, etc., so I didn’t feel any impact.
However, disputes often arise at the time of leaving. Once the employer decides to terminate the labor relationship with the employee, they will definitely use the nature of the consulting contract as an excuse.
Thereby refusing to pay the economic compensation or damages that the workers should enjoy under the labor relationship.
Although the company's practice does not violate legal regulations, it actually creates a serious deviation from the workers' understanding of termination, resulting in great disagreements and the workers' rights and interests being harmed.
In judicial practice, an important prerequisite for claiming economic compensation or economic damages when an employer terminates a contract is that both the employer and the employee confirm the existence of a labor relationship.
However, there is no legal basis for claiming economic compensation or damages based on a labor relationship, and arbitration is generally not accepted.
How do workers protect their rights after a dispute occurs?
Based on the above analysis, foreign companies and their Chinese representative offices cannot enter into labor contracts or establish labor relations with directly employed Chinese employees, and neither party can assert relevant rights under the Labor Law.
1. Supervisory and jurisdiction: How is the jurisdiction of relevant disputes determined?
For Chinese employees, they can apply for labor arbitration after a dispute occurs.
However, according to Article 2 of the Labor Dispute Mediation and Arbitration Law, this Law shall apply to the following labor disputes between employers and employees within the territory of the People's Republic of China.
If one party to the dispute does not have the legal status of an employer, the labor (personnel) arbitration committee may decide not to accept the case on the grounds that the dispute does not fall within the scope of labor arbitration.
Any party to the dispute may directly file a civil lawsuit in court if it claims that the two parties have a labor contract relationship.
2. Compensation or damages: Can Chinese employees claim double wages, economic compensation, or other compensation for not signing a labor contract?
Since the basis for claims for double wages, economic compensation, and damages for failure to sign a labor contract is based on the relevant provisions of the Labor Contract Law, the conclusion of a labor contract or the establishment of a de facto labor relationship between the employee and the employer is a prerequisite for this claim.
According to the above analysis, it is impossible to enter into labor contracts and establish labor relations between Chinese employees and foreign companies and their Chinese representative offices. Therefore, such claims cannot be supported due to lack of basis for claims.
Therefore, for Chinese employees, it is necessary to understand whether the other party has the legal status of an employer before signing an employment agreement, so as to better safeguard their legitimate rights and interests when disputes arise.
3. Responsibility: What legal responsibilities may foreign companies face when they illegally employ Chinese employees?
(1) Civil liability
Although there is no labor contract relationship between foreign companies and Chinese employees, the agreement between the two parties still stipulates the rights and obligations of each other.
According to Article 153 of the Civil Code, an agreement can still constitute a contract in the sense of civil law if the content does not violate the mandatory provisions of laws and administrative regulations and does not violate public order and good morals.
The provisions of this contract regarding rights and obligations remain binding on both parties.
In judicial practice, it is generally handled according to the labor contract relationship. If one party violates the agreement, the other party may file a civil lawsuit and require the other party to perform the obligations stipulated in the labor contract.
However, the Chinese employees’ claims will be limited to the agreement between the two parties, and they cannot claim the special protections provided by China’s labor law, such as payment of social insurance, double wages for failure to sign a labor contract, economic compensation, damages, work-related injury benefits, etc.
(2) Administrative responsibility
Based on the above analysis, foreign companies or their representative offices in China directly hiring Chinese employees violates Article 11 of the "Interim Provisions of the State Council on the Administration of Permanent Representative Offices of Foreign Enterprises".
However, the interim regulations do not make clear provisions on the administrative responsibilities of foreign companies' representative offices in China.
The more explicit administrative responsibility can be found in Article 35 of the Regulations on the Registration and Administration of Permanent Representative Offices of Foreign Enterprises: "If a representative office is established or engaged in representative office business activities without registration, the registration authority shall order it to cease its activities and impose a fine of not less than RMB 50,000 yuan but not more than RMB 200,000 yuan.
If a representative office violates the provisions of these Regulations and engages in profit-making activities, the registration authority shall order it to make corrections, confiscate the illegal gains, confiscate the tools, equipment, raw materials, products (commodities) and other property used specifically for profit-making activities, and impose a fine of not less than RMB 50,000 yuan but not more than RMB 500,000 yuan; if the circumstances are serious, the registration certificate shall be revoked.
What should workers pay attention to when signing overseas entities?
1. For those who are about to start work, they can claim that there is no need to agree on a probation period, because the premise of agreeing on a probation period is that the employee and the employer have established a labor relationship.
The probation period is part of the labor relationship. Since there is no labor relationship between the two parties, they can claim that the probation period should not be agreed upon.
2. You can claim for the portion of your salary to make up for or exceed the amount you were unable to enjoy due to social insurance and provident fund benefits. The specific circumstances vary from person to person.
3. The conditions for termination of the contract can be agreed upon in the breach of contract clause to restrain the employer from arbitrarily terminating the contract. It is best to clearly stipulate the obligations that one party should bear upon termination.
4. Pay attention to leaving traces of your work and retain as much work-related evidence as possible. Once the employer unilaterally terminates the contract, you can use it as a bargaining chip or evidence in litigation.
Due to the recent poor market conditions in the cryptocurrency market, some companies have begun to lay off employees. It is recommended that workers retain relevant evidence in a timely manner and take precautions as much as possible before the worst outcome occurs to protect their own interests.
Life is an adventure. Risks can be found everywhere in our lives. The existence of many things is reasonable, so we don’t need to be anxious or panic.
If you have chosen or are planning to choose a job that requires signing an overseas entity, identify the risks in advance, correctly view the relationship between yourself and the employer, and do a good job in risk prevention and management to protect your rights and interests to the greatest extent possible.