TYGlobe

Introduction

With the rapid development of the Internet economy, various live streaming and short video platforms such as Douyin and Kuaishou have attracted a vast number of participants. According to statistics from relevant authorities, the number of online anchors in China has exceeded 15 million, and the number of MCN institutions has surpassed 25,000. Labor disputes between online anchors and MCN institutions occur relatively frequently.

Accurately determining whether the relationship between online streamers and MCN companies constitutes a labor relationship or a cooperative relationship is of great significance to the proper settlement of labor disputes.

I. A labor relationship is constituted between online anchors and MCN companies.

Case: Civil Judgment of First Instance in the Dispute over Confirmation of Labor Relationship between Wang Mou and Moumou Company (Case No. (2023) Hu 0114 Min Chu No. 19971)

# Case Overview In March 2023, Wang Mou was recruited via BOSS Zhipin to join a media company domiciled in Shanghai as a live streamer. The two parties signed the *Artist Brokerage Agency Contract*, which stipulates as follows: Wang Mou entrusts the aforesaid Shanghai-based media company as his full-authority brokerage agent, and the scope of entrusted agency includes operations on various platforms, film and television performances, advertising performances and advertising activities, vocal music agency, among others; the Shanghai media company shall collect brokerage commissions based on proceeds generated from actual agency services, and pay 50% of the net profit from live streaming to Wang Mou. Provided that Wang Mou works 26 full days per month, the Shanghai media company shall guarantee a minimum monthly income of RMB 15,000 for Wang Mou for a term of 3 months. If Wang Mou fails to meet attendance requirements, his remuneration shall be settled on a commission basis. Other proceeds involved shall be determined upon mutual consultation between the two parties. Starting from March 4, 2022, Wang Mou worked as a live streamer for the aforesaid company, which provided live streaming venues, equipment and other supporting resources. Live streamers including the plaintiff carried out entertainment live streaming on Douyin and Kuaishou platforms using accounts provided by the defendant, and the content and schedule of live streaming were determined by the host. The Shanghai media company paid proceeds to Wang Mou on a monthly basis via bank transfer. Starting from February 2, 2023, the plaintiff ceased working as a live streamer on the ground that the defendant failed to disburse salaries on schedule. A dispute arose between Wang Mou and the Shanghai media company over whether an employment relationship is established between the two parties, and the dispute was subsequently brought before the court.

Judgment Gist: Pursuant to relevant provisions, where an employer pays wages to a worker, the worker is subject to the management and constraints of the employer, or the work of the worker forms part of the employer's business, among other circumstances, the existence of a labor relationship between the two parties may be deemed. First, Wang carried out live streaming using the venue provided by the company and obtained live streaming rewards, with his work content forming part of the company's business. Second, the proceeds derived from live streaming are credited to the company's account before redistribution, and Wang has no discretionary power over the said proceeds. Third, the company's commitment to pay a "guaranteed minimum wage" indicates that Wang is not required to share business risks with the company. Fourth, Wang completed work in accordance with the company's instructions, and was subject to its supervision, management and constraints. Although the *Artist Brokerage Agency Contract* signed by the two parties is not a labor contract, the performance of rights and obligations thereunder meets the characteristics such as personal dependency and property subordination required for the determination of labor relationship. On the foregoing grounds, the court held that a labor relationship is established between Wang and a Shanghai-based media company.

II. A Cooperative Relationship Is Constituted Between Online Streamers and MCN Companies

Case: Labor Dispute Case of Wang Mou v. a Beijing Cultural Media Co., Ltd. ((2023) Jing 03 Min Zhong No. 7051, Guiding Case No. 239)

Case Summary Wang is an online streamer who established and operated self-media accounts on online platforms. In March 2020, Wang signed an *Exclusive Brokerage Contract* with a Beijing-based media company, which stipulates as follows: Wang authorizes the said Beijing media company to exclusively provide brokerage services and commercial operation services relating to matters involving images, texts, audio and video content on self-media platforms for him; Wang's main income is obtained based on the monthly transaction amount, his minimum guaranteed fee and commission shall be determined according to the monthly transaction amount, after deducting relevant necessary expenses from the revenue, the said Beijing media company shall distribute the remaining amount between the two parties in proportion, and Wang shall have the right to raise objections to income distribution and settlement; Wang shall arrive at the workplace on time and complete work items as agreed in accordance with the arrangements of the said Beijing media company; this Contract is a cooperation service contract, not a labor contract, and no labor relationship shall be established between the two parties upon the signing of this Contract. During the execution of the Contract, Wang made revisions favorable to himself focusing on the income distribution clause. Afterwards, Wang participated in the operation of the self-media accounts as agreed by both parties. His monthly income was unfixed, which depended on the platform advertising revenue generated from the joint operation of the two parties. A dispute subsequently arose between the two parties. Wang petitioned to confirm that a labor relationship was established between him and the said Beijing media company, and finally filed a lawsuit with the people's court.

### Judgment Gist First, pursuant to the brokerage contract, Wang Mou shall arrive at the workplace on time and complete the agreed work items in accordance with the arrangements of a Beijing-based media company. However, Wang Mou is not required to comply with the company's relevant work rules, labor disciplines and reward and punishment measures. The aforesaid management acts do not constitute labor management in the sense of China's Labor Law, but are obligations that Wang Mou shall perform as agreed in the contract. Second, Wang Mou has relatively strong negotiation right and bargaining power over matters including the income distribution method, which reflects that the legal relationship between the two parties is characterized by equal consultation. Besides, the agreed profit-sharing income distribution method is obviously different from that applied to labor relationships. Third, in terms of the purpose and content of the contract, the two parties intend to establish a cooperative relationship to further enhance Wang Mou's influence and popularity on relevant platforms, so as to obtain greater benefits through cooperation. The contract mainly specifies rights and obligations including brokerage matters, remuneration and income distribution, liability for breach of contract, etc., and does not contain the essential elements of a labor contract. To sum up, since the aforesaid Beijing-based media company does not exercise dominant labor management over online streamer Wang Mou, the two parties do not form a labor relationship but a cooperative relationship.

III. Legal Analysis

In the internet industry where new forms of employment are thriving, there exist a multitude of economic dependency relationships arising from the deep binding of live streamers' income to the business operations of enterprises. Some enterprises cover up the actual nature of employment under the guise of "brokerage contracts", "cooperation agreements" and other similar legal instruments, thereby evading their statutory obligations including the payment of social insurance premiums and compensation for work-related injuries.

For the purpose of accurately determining the nature of the relationship established between internet influencers and MCN companies, namely whether it is an employment relationship or a cooperation relationship, in conjunction with the aforesaid cases, the specifics are set forth as follows:

1. The determination of labor relations under new forms of employment shall be based primarily on substantial elements.

Where an employer pays wages to a laborer, the laborer is subject to the management and restraint of the employer, or the work of the laborer constitutes an integral part of the employer's business, among other circumstances, it may be determined that a labor relationship exists between the two parties. The determination of whether labor management exists shall be based on the three elements of personal subordination, economic subordination and organizational subordination.

Personal subordination refers to the application and binding effect of the employing unit's rules and regulations on employees. For example, in Case No. (2023) Hu 0114 Min Chu No. 19971, it is ascertained that "the content and time of Wang's live streaming are determined by the host" and "Wang is required to work 26 full days per month", among other relevant facts.

Economic subordination refers to the fact that employees are economically dependent on employers, and usually obtain consideration by providing labor. Employers provide work raw materials and production tools; employees do not need to bear risks on their own, and enjoy the right to obtain labor remuneration and labor benefits. Similarly, in Case No. (2023) Hu 0114 Min Chu 19971, Wang had a guaranteed base salary and did not need to share risks jointly with the company. In Case No. (2023) Jing 03 Min Zhong 7051, by contrast, the two parties distributed proceeds in proportion, and Wang had the right to raise objections to the income distribution and settlement.

Organizational subordination refers to the scenario where workers participate in the relevant business operations of the employer, complete specified work tasks either independently or jointly with other workers, and may also conduct external work in the name of the employer.

2. Comprehensively determine the relationship between online celebrity anchors and MCN institutions with formal elements as supplementary considerations.

Formal elements mainly refer to the external manifestations that can reflect a labor relationship, such as the conclusion of labor contracts, wage payment records, social insurance contribution records, work certificates, identity credentials and other such formal elements.

In determining whether a labor relationship or a cooperative relationship exists between an internet celebrity livestreamer and an MCN institution, priority shall be given to substantive elements, with formal elements as supplementary.

Section IV Summary and Conclusion: The Distinction Between Form and Substance — Piercing Through Formalities to Probe the Substantive Nature

In practice, many contracts bear the title of "XX Contract" prima facie, but upon careful scrutiny of their clauses, they are essentially "wolves in sheep's clothing". This phenomenon is particularly prevalent among labor contracts between online live streamers and MCN agencies generated by the booming internet platform economy in China, and a great many of such contracts are inconsistent in name and substance, for the purpose of better safeguarding the rights and obligations of both parties.

As MCN companies, they shall standardize contractual stipulations, clarify whether the relationship formed with online influencers and live streamers is a labor relationship under the framework of the *Labor Contract Law of the People's Republic of China*, or a cooperation relationship between equal subjects regulated in accordance with provisions of laws including the *Civil Code of the People's Republic of China*, and conclude appropriate contracts on the basis of facts.

As a live-streaming influencer, you shall enhance your legal literacy and legal awareness, fully understand the rights and obligations stipulated in the contract, carefully examine the contract terms, and seek guidance from professionals when necessary.