China: Brokerage agreement between company and individual streamer is not an employment relationship

The Company entered into a brokerage agreement with individual steamer Ms. Lu, which provides that the streamer should only use the three designated online accounts provided by the company to broadcast live. However, the streamer violated the brokerage agreement and used two other unknown accounts for live broadcasts. The company filed a lawsuit against the individual streamer and claimed the streamer’s violation of agreement and payment of liquidated damages in the amount of 2 million RMB. The individual streamer rebutted that she established employment with the company and claimed that liquidated damages are not applicable to her as an employee. The court of second instance in Beijing ruled in favour of the company based on the following: i) the relationship between the company and streamer did not meet the basic characteristics of employment, i.e. personal affiliation and surrender to daily management; ii) the brokerage agreement is a civil agreement rather than an employment contract, which prohibits the inclusion of liquidated damages; and iii) the brokerage agreement is entered by the parties’ true intentions and not in violation of any law, and thus the liquidated damages agreed therein are enforceable.