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Case Introduction:

The author has recently handled a case involving work-related injury compensation. Although ordinary work-related injury cases are complicated and cumbersome per se, their legal relationships are generally straightforward. The most challenging part of the present case, however, lies in its complex legal relationships and the difficulty in determining the qualified employer subject, as the employer, the labor-using entity, the entity applying for work-related injury determination, and the salary-paying entity are all different subjects. Therefore, notwithstanding that the work-related injury has been duly determined, the selection of the respondent for the labor arbitration application remains particularly complicated. The specific facts of the case are set out below:

In Month X, 2020, the worker entered into a labor contract with Company A and was dispatched to Company B for actual work. Prima facie, Company A is the "employing unit" and Company B is the "accepting unit", while the worker was actually dispatched by Company B to work for Company A.[1]

In X, 2023, a worker was injured at a construction site in Shandong Province. Company C filed an application for work-related injury determination on behalf of the worker, and completed the work-related injury assessment. As indicated in the Written Decision on Work-Related Injury Determination, the employer was changed to Company C, which however does not hold the qualification for labor dispatch.

The payroll bank statements covering the period from the employee's entry into employment to the occurrence of the work-related injury indicate that Company D is the entity disbursing the employee's salary.

In light of the aforesaid facts, three "employers" and one "receiving unit" are involved in the present case. Where an application for arbitration is to be filed, it shall be determined first which of the relevant entities is the actual employer.

How to determine the defendant employer?

For labor dispute cases involving a large number of parties and complex legal relationships, the author proposes to "simplify the complicated situation" and take the arbitration objectives of the party as the guidance. In the present case, the party's claim is to obtain all the work-related injury compensation he is entitled to. He does not care which company he has labor relationship with, nor who shall pay the work-related injury compensation. Therefore, the simplest approach is to directly initiate arbitration against Company C, which applied for work-related injury determination on behalf of the party, as the employer. No matter how many labor contracts have been signed during the employment period, we only need to take the last employing company as the subject. In addition, Company C has already applied for work-related injury determination for the party, which also serves as "the most direct proof of labor relationship". The nature of the entities that have signed labor contracts with the party is irrelevant. What matters is that we can achieve the other objective of continuous calculation of length of service [2], since length of service is linked to economic compensation, and only continuous calculation can maximize the interests of the party.

Therefore, in the present case, the author finally filed an arbitration claim against Company C as the employing unit to demand payment of various items of work-related injury compensation. The arbitration case-filing tribunal accepted the case directly after confirming that the application for work-related injury determination was filed by Company C, and even did not inquire why the labor contract signed with another company was submitted as evidence, which also confirms the aforesaid statements made by the author.

Of course, the author has submitted multiple labor contracts concluded between the employee and Company A, as well as evidence proving that the employee has been working in the same position consistently and that Company A and Company C are affiliated companies, to establish that the employee's length of service commenced in 2020 and shall be calculated consecutively.

Compensation Calculation Standards and Legal Basis That May Be Involved in Work-Related Injury Cases Involving Labor Dispatch

(I) When calculating work-related injury compensation, shall the applicable compensation standard be based on the standard of the place where the employing unit is located or that of the place where the labor-using unit is located?

Pursuant to Article 61 of the *Labor Contract Law of the People's Republic of China* which stipulates that "Where a labor dispatching unit dispatches workers across regions, the labor remuneration and working conditions entitled to the dispatched workers shall be implemented in accordance with the standards of the place where the accepting unit is located", and Article 18 of the *Interim Provisions on Labor Dispatch* which stipulates that "Where a labor dispatching unit dispatches workers across regions, it shall register the dispatched workers for social insurance at the place where the accepting unit is located, pay social insurance premiums in accordance with the provisions of the place where the accepting unit is located, and the dispatched workers shall enjoy social insurance benefits in accordance with the provisions of the State",

Therefore, in accordance with the provisions of the law, social insurance for employees shall be paid pursuant to the standards of the place where the host employing unit is located, and work-related injury compensation shall be calculated in line with the standards of the place where the host employing unit is located. However, in practice, the employing unit usually fails to act in accordance with legal provisions, and instead pays social insurance for employees at the minimum social insurance contribution base in the place where the company is located or the place where its affiliated company is located, so as to save labor costs. When hearing such cases, the labor dispute arbitration authority will also make a preliminary determination based on the standards of the place where the employing unit is located and the place where the work-related injury insurance is contributed. It is rather difficult to actually claim for the application of the standards of the place where the host employing unit is located.

(II) Where a worker sustains a work-related injury at the employing unit, shall the employing unit be held liable?

Pursuant to Paragraph 2 of Article 92 of the *Labor Contract Law of the People's Republic of China*: "Where a labor dispatching unit or an employing unit violates the relevant provisions on labor dispatching hereof, the labor administrative department shall order it to make corrections within a specified time limit; if it fails to make corrections upon the expiration of the time limit, a fine shall be imposed at the standard of no less than RMB 5,000 but no more than RMB 10,000 per person, and the labor dispatching unit shall have its labor dispatching business operation license revoked. Where an employing unit causes damage to dispatched workers, the labor dispatching unit and the employing unit shall bear joint and several liability for compensation." In the event that a worker suffers a work-related injury at the employing unit, if the employing unit cannot prove that it has fulfilled its obligations of providing safety prompts and labor protection for the worker, the employing unit shall bear joint and several liability with the dispatching unit.

(III) After a work-related injury occurs, how shall a laborer claim compensation for the losses incurred during the period when the employing unit is unable to arrange work for him/her?

Pursuant to Article 58 of the *Labor Contract Law of the People's Republic of China*: "A labor dispatching unit shall conclude a fixed-term labor contract with a term of no less than two years with the dispatched worker, and pay labor remuneration on a monthly basis; during the period when the dispatched worker is out of work, the labor dispatching unit shall pay remuneration to such worker on a monthly basis in accordance with the minimum wage standard prescribed by the local people's government at the locality of the labor dispatching unit." Therefore, where the receiving entity fails to arrange work for the worker or refuses to arrange work for the worker after the worker sustains a work-related injury, the worker may also claim remuneration from the employing unit (i.e. the labor dispatching unit) in accordance with the minimum wage standard.

Is "the employee's own wage", which serves as the calculation base for the lump-sum disability benefit, the average monthly wage of the employee for the 12 months preceding the occurrence of the work-related injury?

Take the case mentioned at the beginning of this article as an example. The conclusion of the labor capacity appraisal is Grade 10 disability. Pursuant to Article 37 of the *Regulations on Work-related Injury Insurance*: "Where an employee is assessed as having Grade 7 to Grade 10 disability due to work-related injury, he shall be entitled to the following benefits: (1) A lump-sum disability subsidy shall be paid from the work-related injury insurance fund according to the disability grade, with the standards as follows: 13 months of the employee's own wages for Grade 7 disability, 11 months of the employee's own wages for Grade 8 disability, 9 months of the employee's own wages for Grade 9 disability, and 7 months of the employee's own wages for Grade 10 disability". Therefore, the lump-sum disability subsidy claimable in this case is calculated as: the employee's own wages × 7. Then, is the "own wages" referred to herein the average monthly wage of the employee for the 12 months prior to the occurrence of the work-related injury? The answer is actually no.

Pursuant to Article 64 of the *Regulation on Work-related Injury Insurance*: "The term 'personal wage' as mentioned in these Regulations refers to the average monthly contribution wage of an employee suffering from work-related injury for the 12 months prior to the work-related accidental injury incurred during work or the contraction of an occupational disease. Where the personal wage is higher than 300% of the average wage of employees in the overall planning area, it shall be calculated at 300% of the average wage of employees in the overall planning area; where the personal wage is lower than 60% of the average wage of employees in the overall planning area, it shall be calculated at 60% of the average wage of employees in the overall planning area." That is to say, the aforesaid personal wage does not refer to the actual wage of the employee, but is linked to the amount of work-related injury insurance contributions. To be more specific: the concept of personal wage only applies under the circumstance that the employer pays work-related injury insurance premiums for the employee in accordance with the law, and the Work-related Injury Insurance Fund also takes the amount of work-related injury insurance contributions as the calculation base when disbursing compensation.

In practice, to cut costs, employers may set the contribution base for work-related injury insurance paid for employees lower than the actual wages of employees. That is, the social insurance contribution wage is often lower than the amount of wages actually disbursed to employees, which will lead to a gap between the work-related injury insurance benefits that employees are entitled to and the benefits verified and issued by the Work-related Injury Insurance Fund. Such gap shall also be paid by the employer. Therefore, where the actually received work-related injury insurance benefits are lower than the work-related injury insurance benefits that employees are entitled to, employees may apply to the company for the payment of the aforesaid gap. If the company refuses to make the payment, employees may file a complaint with the relevant authority or apply for labor arbitration.

The above constitutes the full content of this article, which also covers the difficult and error-prone issues in the handling of work-related injury cases as identified by the author. As can be seen, the occurrence of a work-related injury poses certain challenges to both the employing unit and the employee. The author hereby reminds:

Employers shall strictly comply with laws and regulations in their routine personnel management activities, and pay social insurance contributions for employees in full in accordance with relevant provisions to guard against labor employment risks. Otherwise, they may end up suffering greater losses for seeking petty benefits and bear heavier compensation liabilities.

Laborers shall also possess a certain level of legal awareness in the course of working for enterprises. Where the employing unit is obviously non-compliant with relevant provisions, laborers shall collect and properly preserve relevant evidence, so as to facilitate rights protection in the event of subsequent disputes and safeguard their legitimate rights and interests to the maximum extent.

END

[1] It is hereby clarified that although the employee signed a labor contract directly with Company A after entry into employment, the employee was actually recruited by Company B and holds a post directly at Company B. To avoid employment risks, Company B engaged Company A, a human resources service agency, to sign a labor contract with the employee, and then dispatched the employee to work at Company B. Ostensibly, the employee is dispatched by Company A to work at Company B, but this is by no means "labor dispatch" in the ordinary sense, and involves another concept, namely "reverse labor dispatch". The employee may directly request to confirm the existence of a labor relationship with Company A and claim compensation. The reason why the claim of reverse labor dispatch was not raised in this case is that Company C has already applied for work-related injury determination for the employee and completed the labor capacity appraisal, which makes such a claim redundant.

[2] Article 5 of the Interpretation (IV) of the Supreme People's Court on Issues Concerning the Application of Law in the Trial of Labor Dispute Cases stipulates that: "Where an employee is assigned to work for a new employer from the original employer not for reasons attributable to the employee himself/herself, and the original employer has not paid economic compensation, if the employee rescinds the labor contract with the new employer pursuant to Article 38 of the Labor Contract Law of the People's Republic of China, or the new employer proposes to rescind or terminate the labor contract with the employee, when calculating the length of service for the payment of economic compensation or damages, the people's court shall uphold the employee's request to consolidate his/her length of service with the original employer into the length of service with the new employer."