11.What are the different legal consequences of an employment relationship or a contractor relationship between myself and the company?

Answer: The law provides different rules on the rights and obligations for employees under employment relations and contractors under contractor relations. For example, the former enjoys the most basic mandatory protection of employment rights, while the latter is entitled to freedom of contract and bargaining as an equal civil subjects.

If you are an employee, you are dependent to the employer and your work is part of the business. The relationship between you and the employer is regulated by employment law, and when a dispute arises, you should bring the employment dispute to the Employment Dispute Arbitration Committee. The employer shall provide you with paid annual leave and sick leave (if you meet the prescribed conditions), paid public holidays, rest and work-breaks, etc. The employer shall pay you no less than the minimum wage for your hours worked. If the employer wants to terminate the employment relationship with you, it must meet strict legal conditions and procedures. Employers are also obligated to deduct your social insurance contribution and personal income tax on your behalf. When you are injured at work, no matter whether you are at fault or not, the employer and/or social insurance institution must bear the responsibility related to work-related injuries.

But if you are an independent contractor, the relationship between you and the company is an equal commercial relationship, regulated by commercial law and contract law. Disputes between the two parties are handled by the courts like other commercial disputes. The remuneration paid by the company to you should be executed according to the contract. The company has no obligation to you such as rest, vacation, and minimum wage. You usually need to pay personal income tax and social insurance by yourself. When you are accidentally injured at work, the liabilities shall be borne according to the fault between you and the company. 1Article 1192 of the Civil Code states that ¡°In case of contractor relationship between individuals, if the contractor causes damage to others due to contractor services, the party receiving contractor services shall bear tort liability. After the party receiving the contractor service bears the tort liability, it may recover the compensation from the contractor who acted intentionally or in gross negligence. If contractor suffers damage due to the service, both parties shall bear corresponding liabilities according to the respective faults.¡±The termination and dissolution of the cooperative relationship between the two parties depends on how the service contract is agreed and how the two parties perform the contract.

It should be noted that in some cases of employment-like contractor relationship, for example, for work-related injuries of contractor who is over retirement age and has already received pension insurance, the courts may also order the employer to assume the obligation of compensation for work-related injuries.2Dingsheng Environmental Engineering (Shenzhen) Co., Ltd., Zhou Lingzhi Work injury insurance Treatment Dispute Retrial Review and Trial Supervision Civil Ruling Guangdong Provincial People¡¯s High Court Civil Ruling (2020) Yue Min Shen No.2754. ¡°Based on the facts of this case, we find that the court of second instance rightfully found that Zhou Mouhong’s death should be treated as a work-related injury as there was an employment contract relationship between the deceased Zhou Mouhong and Dingsheng Company (the deceased was a person who had received pension insurance and was over retirement age). ¡±This may reflect the defects in the construction of the legal framework of employment relations in China, because it cannot explain why contractors sometimes may be entitled to certain rights under employment law (such as work-injury entitlements. In real life, there is no clear boundary between employees and contractors, and sometimes it is difficult to distinguish between them. Assessing the nature of relationship for a worker needs to examine the substantive characteristics of the relationship between the two parties and their perceptions and agreements. Please see How do I distinguish between an employment relationship and a contractor relationship?

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  • 1
    Article 1192 of the Civil Code states that ¡°In case of contractor relationship between individuals, if the contractor causes damage to others due to contractor services, the party receiving contractor services shall bear tort liability. After the party receiving the contractor service bears the tort liability, it may recover the compensation from the contractor who acted intentionally or in gross negligence. If contractor suffers damage due to the service, both parties shall bear corresponding liabilities according to the respective faults.¡±
  • 2
    Dingsheng Environmental Engineering (Shenzhen) Co., Ltd., Zhou Lingzhi Work injury insurance Treatment Dispute Retrial Review and Trial Supervision Civil Ruling Guangdong Provincial People¡¯s High Court Civil Ruling (2020) Yue Min Shen No.2754. ¡°Based on the facts of this case, we find that the court of second instance rightfully found that Zhou Mouhong’s death should be treated as a work-related injury as there was an employment contract relationship between the deceased Zhou Mouhong and Dingsheng Company (the deceased was a person who had received pension insurance and was over retirement age). ¡±

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