China: Shanghai Minhang District Labour and Personnel Dispute Arbitration Court and the Minhang District People’s Court: Workers Who Do Not Actively Exercise their Labour Rights Will Not be Supported in their Claim for Double Salary Compensation

On 25 March 2025, the Shanghai Minhang District Labour and Personnel Dispute Arbitration Court and the Minhang District People’s Court drafted and released the White Paper on Labour and Personnel Dispute Mediation, Arbitration, and Adjudication in Minhang District, Shanghai (2023-2024), which includes the top ten typical labour and personnel dispute cases in Minhang District. One of the typical cases involves a worker requesting a ruling that a hairdressing salon pay the difference in double wages for not signing a labour contract. In this case, the worker lost the lawsuit due to not actively exercising their rights.

In this case, Wang began working at a beauty and hairdressing salon on 3 May 2019 as the store manager, responsible for the specific arrangement of all work at the store, including personnel matters, and directly managing all other employees. The salon’s owner, Wu, was primarily in charge of finances, and Wang’s work was managed by Wu. During employment, Wang did not sign a labour contract with the salon. The salon believed that there was no employment relationship between the two parties, as Wang and the owner Wu jointly operated the store, and their relationship was that of a partnership. As the store manager, Wang had full authority to manage the store. Due to a dispute over double wages, Wang applied for arbitration.

Whether Wang’s claim can be supported by arbitration first requires that there is a factual employment relationship between him and the employer. The focus of this case was whether the salon should pay the difference in double wages for not signing a labour contract.

According to the original Ministry of Labour’s Notice on Matters Related to the Establishment of Labour Relations, which states that if an employer recruits a worker without concluding a written labour contract, but simultaneously meets the following conditions, an employment relationship is established.

First, the employer and the worker meet the legal and regulatory requirements for subject qualifications. Second, the employer’s labour rules and regulations, formulated in accordance with the law, are applicable to the worker. The worker is subject to the employer’s labour management and engages in paid labour arranged by the employer. Third, the labour provided by the worker is a component of the employer’s business. Wang complied with the salon’s rules and regulations, was subject to the salon’s labour management, and engaged in paid labour. Therefore, an employment relationship existed with the salon.

Wang testified that he was responsible for all overall work at the store, including the duty to sign labour contracts with employees. As the person primarily responsible for handling the salon’s labour contract matters, he owed a duty of diligence and loyalty to the salon and bore a certain responsibility for whether his own labour contract was signed. Therefore, the responsibility for not timely signing the labour contract could not be solely attributed to the salon. During his tenure as store manager for over a year, Wang should have promptly and actively proposed or urged the salon’s owner to sign a labour contract with him, but he never fulfilled his responsibility. Now, based on this, he is demanding that the salon pay double wages for not signing a labour contract with him, which violates the principle of good faith, and his request should not be supported.

Key Action Points

Although according to the provisions of the Labour Contract Law of the People’s Republic of China, if an employer fails to conclude a written labour contract with an employee within one month from the date of employment but less than one year, the employer shall pay the employee double wages monthly. As evidenced by this case, courts and arbitrators believe that the conclusion and performance of labour contracts should more importantly adhere to the principle of good faith.  In actual judicial practice, it is not only necessary to consider if the employer has fulfilled the obligation of honest negotiation, but also to examine if the delay in concluding the labour contract was due to the employee’s reasons. In reality, there are also situations where employers can be exempt from liability. Currently, many labour dispute cases involve claims for double wages due to the absence of a written labour contract. Supporting the employee’s claim for double wages requires an analysis based on the specific circumstances of each case.