Under the Implementing Regulations for the Employment Contract Law, when a worker reaches the statutory retirement age, the employer has the right to end his or her employment contract without payment of severance. In practice, when it comes to the retirement of female employees (for the purpose of this article, female Chinese nationals) and foreign employees, it is common for disputes over the retirement age to arise.
Partner
Jingtian & Gongcheng
Retirement age disputes
With the implementation of the employment contract system in the early 1990s, the traditional boundaries between “cadres” and “workers” in enterprises were broken and their management shifted from status management to job management. Against such a background, the retirement age for female employees evolved from the initial status-dependent (i.e., female workers retired at 50 and female cadres at 55) to being determined by the nature of their jobs.
Currently, the approved retirement policy of the human resources and social security authorities in Beijing and Shanghai for female employees is that the retirement age of a female employee in a managerial or technical job is 55; for those in other than a managerial or technical job, it is 50.
However, there are no clear and specific regulations in either city on how to differentiate between the two types of jobs.
In practice, there have been many cases where, for example, an employer determines that a female employee should retire at 50 based on their job. The employee, however, believes the correct retirement age for her role is 55 and makes a claim against her employer for unlawfully ending her employment.
When adjudicating on such cases, courts in both Beijing and Shanghai have taken two divergent views.
In one, courts have held that the determination of the nature of jobs falls within the scope of the business autonomy of the employer, involves internal management of the enterprise and, as such, does not fall within the scope of labour disputes that courts are required to accept. The courts do not intervene and rule not to accept such cases.
The other approach is that many courts in both places do accept such cases and conduct substantive hearings, requiring the employer to adduce evidence of the nature and features of the employee’s job in terms of the provisions of the employment contract, its rules and regulations, actual details of employment, etc.
Considering the uncertainty in judicial practice, employers should expressly state the nature of the employee’s job in his or her employment and personnel affairs documents (e.g. offer letter, employment contract, etc.) in advance and additionally add information on the company’s job structure in its rules and regulations, clearly stating what type or level of job is of a managerial or technical nature.
Do regulations of China apply to foreign employees?
If an employer employs a foreign national who has reached or exceeds the statutory retirement age in China, it needs to verify in advance whether it is possible to secure or maintain a work permit for foreign nationals, regardless of whether it is a new hire or an existing employee whose employment is continuing.
In general, only high-end foreign talent in relatively high-ranking positions or with professional achievements are not subject to age restrictions for work permits. For this category of foreign talent, it is still possible for males over 60 and females over 55 to successfully obtain a work permit.
There has been a long-simmering debate in practice as to whether, provided a foreign national is able to continuously maintain his work permit, the regulations on the statutory retirement age in China apply to foreign nationals and whether the relationship between an employer and a foreign national who has reached or exceeds the statutory retirement age in China constitutes an employment relationship or a service relationship.
Adjudication authorities in the Beijing region tend to hold that foreigners can establish employment relationships with employers in China but that there are no special regulations that exempt them from the retirement age restrictions in Chinese laws. So long as a foreigner has reached or exceeds the statutory retirement age in China, the parties have entered into a service relationship. In this context, the employer can summarily end the employment contract on the grounds that the employee has reached retirement, even if there is a valid employment contract with the employer.
Adjudication authorities in the Shanghai region, however, have a different view, holding that the law does not completely prohibit foreign nationals who have reached or exceed the legal retirement age in China from seeking employment. If the parties execute an employment contract and a lawful work permit is secured, the employer may not end the employment contract of the foreign employee on the grounds that they have reached the statutory retirement age. However, local regulations in Shanghai provide that an employer may specify with a foreign employee in their employment contract the conditions for termination of such contract and terminate the labour relationship in accordance with the provisions agreed to by them without strictly following the provisions of the Employment Contract Law. This point has also been accepted in mainstream judicial practice in Shanghai in recent years.
Based on our analysis of judicial practice in Beijing and Shanghai, an employer in Beijing still retains the right under the employment contract with a foreign employee who has reached the statutory retirement age in China to end their employment at any time on the grounds that they have reached retirement. However, in Shanghai, we would recommend that an employer specifies in the employment contracts with relevant foreign employees that it has the right to terminate their employment contracts at any time, as this will aid the enterprise in keeping the initiative in employment.
Tracy Liu is partner at Jingtian & Gongcheng
45/F, K. Wah Centre
1010 Huai Hai M. Road
Shanghai 200031, China
Tel: +86 21 2613 6125
E-mail: tracy.liu@jingtian.com
