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Employees vs Independent Contractors China

Introduction

According to the Labor Laws of the People’s Republic of China, “employees” could be generally defined as the individuals who have established employment relationships with the businesses or individual economic organizations (hereinafter referred to as “employers”) within the territory of the People's Republic of China or who have contractual employment relationships with the government organs, institutions or social organisations. Therefore, whether an individual is an employee depends on whether there is an “employment relationship” between the individual and the employer.

On the other hand, there is no specific concept of “independent contractor” under the labor laws of China, but under the civil laws of China, an individual may enter into a contract for service with a company or business under certain conditions, and both parties of the contract are equal and independent civil subjects without subordinate relationships. Such individual is referred to as an “independent contractor” for the purpose of the discussion in this article. In practice, the question whether a person is an employee or an independent contractor usually comes up when the company engages an unretired person and enters into a contract for service instead of an employment contract with the person. In this case, the contract for service would be easily confused with the employment contract for an employee. If any dispute arises from or in connection with the contract for service, the person will likely initiate labor arbitration and litigation proceedings to request confirmation of the employment relationship. If the effective arbitration award or judgment finally confirms that the person has an employment relationship with the company, this person should be an “employee” and will be entitled to protection by labor laws. Otherwise he/she would generally be deemed an “independent contractor”.

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