International Pilots Labor Protection

Introduction
China is one of the fastest-growing aviation markets in the world and remains an attractive place for international pilots to work. However, it is also a complex environment for international pilots to navigate, especially when it comes to labor protection.
The Chinese aviation markets went through difficult three years since the beginning of the covid-19, and it is now experiencing a strong recovery with the abandon of the zero-covid policy. An official from the Civil Aviation Administration of China (“CAAC”), said during a press conference, that "the civil aviation sector has shown a V-shaped recovery". Notwithstanding the future is promising, risks in regard to the labor protection of international pilots repeatedly emerged during the downhill time of the “V-shape” and it deserves attention and countermeasures from both pilots and airlines.
[Is the international pilot an employee of the airline company?]
People who work in the aviation industry may know that wage reduction and labor disputes between international pilots and airline companies frequently happened in the past three years. However, pilots may not know airline companies frequently adopt a strategy towards the claims of the pilots sometimes by denying employment relationships when a dispute is brought to a court or labor arbitral tribunal of China. In other words, the pilots may be astounded by the fact that some airlines do not recognize the international pilot as an employee.
[Different between labor relationship and employment relationship]
Prior to the analysis of relevant cases in the following paragraph, please be advised that there are variations between “labor relationship” and “employment relationship” under Chinese law, and the extent of protection to the party who provides labor remains different. The “labor relationship” refers to a legal relationship that one party provides labor service to another under a contract, and both parties are logically equal and independent. No party shall be subject to the other’s management and the services are usually solely for one time or last for a short period. The “labor relationship” is subject to the Contract Law of China. To the contrary, the “employment relationship” is in the context of situation that one party is subject to another’s management and leadership. The employees continuously receive salaries from the employers. The “employment relationship” is subject to laws of employment protection which always comes with a strong and integrated protection to the employees under Chinese law.
[Case Study and relevant rules]
In case Javier Pascualf Arina vs Shanghai Juneyao Airlines, the pilot, Javier Pascualf Arina, applied to be a pilot for Juneyao Airlines and was successful. He was engaged by VOR company, a Hong Kong registered company, who agreed to supply Juneyao Airlines with pilots in accordance with the Agreement of Provision of Foreign Pilot Services entered into between VOR and the Juneyao Airline. VOR then signed an Independent Contractor Agreement with Javier Pascualf Arina for the purpose of making the pilot to operate as self-employed. Javier Pascualf Arina was then dispatched to work for Juneyao. Mr Javier Pascualf Arina received no Chinese social securities under this structure. In 2021, Mr. Javier Pascualf Arina brought a lawsuit against Juneyao Airline with two claims, the first was to confirm the employment relationship between him and the Juneyao Airline and the second one was to request compensation for the termination of the employment relationship. The Juneyao Airline replied that there is no employment relation based on the fact that Juneyao Airline has never signed any employment agreement with Mr. Javier Pascualf Arina. It further states that Juneyao Airline only receives labor dispatch services from the VOR, and the claim of compensation should not be supported by the court since there was no employment relationship.
In the case James Hodgkiss vs. Shenzhen Airline, Shenzhen Airline denied the employment relationship as well, notwithstanding that there was a direct contract between the parties of the dispute. In this case, the pilot James Hodgkiss and Shenzhen Airline executed a labor agreement, instead of an employment agreement. Mr. James Hodgekiss’s claims include confirming that the employment relationship between the parites has been terminated since September 15, 2015, the defendant shall hand over certain documents to the plaintiff, and the defendant shall pay the due and payable salary. The very first point of the response of the defendant, Shenzhen Airline, was that the labor agreement is not an employment agreement. It claims that the relationship between defendant and the plaintiff is merely a labor relationship, which has even been clearly specified in the text of labor agreement signed by both parties.
The above two cases share some facts in common, for instance 1) there was no agreement in the name of employment agreement between the pilot and the airlines; 2) both pilots hold the Foreign Expert Certificates; 3) both of them worked as captains of the flights and were expected to wear the uniform of the airlines, and was, in practice, under general management of the airlines; and 4) airlines denied the existence of the employment relationship to get rid of the rather heavy responsibilities as an employer.
The Chinese labor arbitral tribunals and courts have the jurisdiction to decide the existence of the employment relationship where no written employment agreement has been concluded. Article 33 of the Interpretation of the Supreme People's Court on Issues Concerning the Application of Law in the Trial of Labor Dispute Cases (I) sets out that:
“Where a foreigner who holds a Foreign Expert Certificate and has obtained a Work Permit for Foreigners establishes a working relationship with an employer within the territory of the People's Republic of China, such working relationship may be determined as an employment relationship.”
Furthermore, when it comes to the decision of whether a working relationship shall be determined as an employment relationship, the labor arbitral tribunal and court always refer to a rule issued by Ministry of Labour and Social Security, namely Notice on Issues relating to Confirmation of Labour Relationship which provides that:
“Where an employer does not enter into a written employment contract with a worker, an employment relationship shall be deemed to be concluded under the following circumstances:
(1) the employer and the worker possess the entity qualification stipulated by the laws and regulations;
(2) the employer has, in accordance with the law, formulated such employment regulations and systems which apply to the worker; the worker is subject to employment management by the employer and engages in remunerated labour work arranged by the employer; and
(3) the labor provided by the worker is a component of the employer's business.”
In line with the principles enshrined in the above rules, both courts in Javier Pascualf Arina Case and James Hodgkiss case confirmed the employment relationship between the pilot and airlines. In the James Hodgkiss case, the court of Shenzhen held that:
“As for the existence of employment relations between the two parties, the establishment of employment relations is not based on the name of the contract signed by the two parties, but should be analyzed based on the substantive characteristics of the employment relations between the two parties. In this case, James Hodgkiss provided work for Shenzhen Airlines, accepted the work arrangement and management of Shenzhen Airlines, and received remuneration from Shenzhen Airlines, which was consistent with the characteristics of employment relationship”
However, it is a remarkable fact to the pilot that legal system of China is not case law, therefore, a judicial precedent does not have the binding force to the other cases. The aforementioned cases can only be used as references.
[Risks remain where a written employment agreement is absent ]
Notwithstanding the above courts’ decision in favor of the claim of confirmation of employment where no written employment agreement is executed, there are still risks and disadvantages for pilots if the employment agreement remains unexecuted. The reasons are as the following:
A classic employment agreement usually includes clauses such as social securities, annual and sick leaves, medical, management, termination of the employment and relevant formality when termination happens, salary, bonus, insurance, and others. It means a direct connection between the pilot and the airline and articles that designed for employment agreement will be included. But in the event of the absence of employment agreement, those should have been duly agreed will be subject to the discretion of the court It results in uncertainty and risks for pilots.
In the following two cases Verges Cruz Albert vs. Spring Airlines and Maciej Christoph Schumann vs. Spring Airlines, both Mr. Albert and Mr. Schumann claim to request the Airlines’ handover of the security evaluation for the purpose of their transferring work to other airlines. However, both claims were rejected by the court. The court held that non-PRC employees’ rights, except the minimum wages, working hours, vacations, work safety and health which are subject to the protection of Chinese labor law system, shall be determined in accordance with the employment agreement (rather than the labor laws). Since there is no clear agreement as to the handover of the security evaluation, the court find itself has no jurisdiction to decide (in accordance with the labor laws), and therefore pilots’ requests in relation to the handover of security evaluations are not supported by the court. In the above Javier Pascualf Arina Case, the court, similarly, found there is no ground for Mr. Arina to claim for the breach of contract of the Junyao airline by failing to pay for the pilot’s social security based on the fact no such text has be specified.
As we know, failing to handover the security evaluation formalities to the new employer will substantially affect pilots’ new work. It may wind up with international pilots’ failure of getting employed. Social securities are not only connected to some’s welfare. In many cities of China, it is in relation to the qualification of purchasing a real estate. Works decision and domiciles are important factors for international pilot who decide to settle down in Chia, the fact, unfortunately, turns out to be no supported by a court if there is no direct employment agreement.
We found that some international pilots may not pay a lot of attention to its agreement with the airlines or an agents. But please be advised that this piece of paper is vital for your rights as an employee in China and may have profound and lasting impact on your life decision if you decide to settle down in China in the future.