May 2025
/ Contents /
Spotlight on News
1. The Supreme People's Court Plans to Issue Judicial Interpretations to Strengthen the Protection of New Employment Forms Workers' Rights.
2. China Securities Regulatory Commission (CSRC) Issues the "Action Plan for High-Quality Development of Public Funds," Aiming to Urge the Securities and Fund Industry Companies to Enhance Salary Management Strength and Adjust Performance Remuneration Reasonably.
Legislation Updates
1. The Supreme People's Court Releases Typical Cases on the Protection of New Employment Forms Workers' Rights.
2. Shanghai Integrates Employment Subsidy Policies to Precisely Boost Employment for Key Groups.
Case Study
1. Shanghai Courts and Labor and Social Security Bureau Jointly Release Top Ten Typical Cases of Labor Dispute Arbitration: Companies Shall Not Selectively Adjust Salaries of Specific Departments Through "Pro Forma Democratic Procedures" that Lack Substantive Fairness.
2. The Primary People's Court of Bao'an District, Shenzhen Releases a Typical Case on Judicial Protection of Trade Secrets: An Employee Controlling Competing Companies During Employment to Intercept Company Transaction Opportunities Constitute Infringement of Business Secrets.
Spotlight on News
- The Supreme People's Court Plans to Issue Judicial Interpretations to Strengthen the Protection of New Employment Forms Workers' Rights.
As reported by the People's Daily on May 7th 2025, the Supreme People's Court has announced plans to enhance the guidance on civil disputes involving new forms of employment, promoting the introduction of relevant judicial interpretations to deeply resolve disputes and maintain social harmony and stability.
"New employment forms workers" refers to workers characterized by dynamic labor relations, diverse content of work and relatively flexible working methods, resulting from the rapid development of the internet and digital economy. This includes but is not limited to couriers, online platform workers (such as ride-hailing drivers and delivery riders), as well as online influencers, etc. On December 23rd 2024, the Supreme Court held a press conference, presenting an overview of the legal protection of labor rights and typical cases of wage arrears disputes and guiding cases on new employment forms labor disputes, emphasizing the protection of this group's labor rights. The Supreme Court’s statement on the proposed judicial interpretations reflects the judiciary's ongoing focus on protecting the rights of workers in this sector.
A core issue in effectively safeguarding the legal rights of new employment forms workers is defining whether these workers are "employees" protected under the Labor Law or "independent contractors." In past judicial practice, ruling bodies usually determined this by examining factors like "personal subordination, economic subordination, and organizational subordination." The forthcoming judicial interpretations might provide more specific elements or rules for determining labor relations, especially considering the characteristics of platform-based employment, and reasonably adjust traditional criteria that might not fully apply to new employment forms.
It is worth noting that the recently amended version of "Implementation Measures of the Trade Union Law of the People's Republic of China by Shandong Province" came into effect on May 1st 2025, which expressly states: "Workers in new employment forms can join the unions of platform enterprises, labor cooperation enterprises, or the relevant unions in their work or residence areas." This local legislation represents Shandong Province’s proactive effort to incorporate new employment forms workers into the traditional labor protection structure (trade unions). - China Securities Regulatory Commission (CSRC) Issues the "Action Plan for High-Quality Development of Public Funds," Aiming to Urge the Securities and Fund Industry Companies to Enhance Salary Management Strength and Adjust Performance Remuneration Reasonably.
On May 7th 2025, the CSRC has issued the "Action Plan for High-Quality Development of Public Funds" (CSRC [2025] No. 21). The plan proposes 25 reform measures over six aspects: optimizing fund operation modes, improving assessment and evaluation systems, vigorously developing equity funds, maintaining a risk baseline, strengthening regulatory enforcement, and promoting high-quality development. Notably, it emphasizes refining compensation management rules, supplementing and enhancing the existing financial regulatory legal system to provide clearer legal guidance for fund industry compensation management, setting a new standard for high-quality development in the securities and fund industry.
Compared to other industries, the compensation returns in the securities and fund industry linked to high investment returns have always been a focal point of public attention. In response, the plan offers constructive guidance on compensation management for fund company employees. It details that fund companies should improve the industry's assessment and evaluation system, abundantly strengthening long-term assessment and incentive constraint mechanisms. Specific measures include urging the industry to enhance compensation management. Fund companies should establish a sound compensation management system that links to fund investment returns. It requires strengthening mandatory co-investment proportions and lock-up period requirements for fund companies, executives, and fund managers. The plan mandates the strict implementation of deferred payment systems for performance remuneration of senior executives and key positions in fund companies, with provisions to claw-back or deduct salaries from those responsible for serious legal violations. For fund managers whose product performance is more than 10 percentage points below the performance benchmark over three years, their performance remuneration should significantly decrease; conversely, for those whose product performance significantly exceeds the benchmark, performance remuneration may reasonably and appropriately increase.
The plan's regulations linking fund managers' performance to salaries have officially formalized the quantitative standards and legal consequences of performance evaluation. This provision not only provides a clear legal basis for fund companies to formulate specific compensation schemes but also offers an important reference standard for judicial practice in adjudicating related labor disputes and investor compensation claims.
Legislation Updates - The Supreme People's Court Releases Typical Cases on the Protection of New Employment Forms Workers' Rights.
In response to the high social concerns about protecting new employment forms workers' rights and to unify judicial practices, the Supreme People's Court released a new batch of typical cases on the protection of new employment forms workers' rights on April 30th , 2025. The released typical cases mainly focus on the recognition standards of labor relations in the online freight vehicle sector and the rules of liability for damages suffered by new employment forms workers at work and for damages caused to others.
The cases emphasize that determining whether there is a labor relationship between platform enterprises and new employment forms workers (such as online freight drivers) requires substantial review. This includes a comprehensive assessment of whether the enterprise manages workers through reward and punishment rules, whether workers can independently decide on tasks and prices, whether labor remuneration constitutes their primary income source, and whether their work is an integral part of the enterprise's business. If there is evidence of employment fact and dominant labor management, a labor relationship should be legally recognized. The cases encourage enterprises to mitigate the risks new employment forms workers may face at work and the compensation risk for damages to third parties, through purchasing commercial insurance (such as employer liability insurance and third-party liability insurance). The cases specify that under certain circumstances, victims can directly claim compensation from the commercial liability insurance provider. They clarify that the occupational injury protection benefits received by new employment forms workers do not exempt or reduce the liability of third parties causing such injuries, ensuring workers receive more comprehensive relief. The cases also provide guidance on the issue of liability for damages caused by new employment forms workers to third parties while performing work tasks, indicating that when insurance compensation is insufficient, the enterprise assigning the work tasks may need to assume corresponding tort liability. - Shanghai Integrates Employment Subsidy Policies to Precisely Boost Employment for Key Groups.
On May 9th 2025, the Shanghai Municipal Human Resources and Social Security Bureau, Shanghai Municipal Finance Bureau, and Shanghai Municipal Education Commission jointly issued the "Notice on Merging the Implementation of One-Time Employment Subsidy and One-Time Expansion Subsidy Policies for Key Groups in the City." The notice clarifies the merging of one-time employment subsidy and one-time expansion subsidy policies for key groups in the city, effective from May 1st 2025, to December 31st 2025.
The subsidy targets are enterprises and social organizations in the city that hire 2025 graduates, college graduates within two years of leaving school, and unemployed youth aged 16-24 registered in the city between January 1st and December 31st 2025, sign labor contracts with them, and purchase unemployment, work injury, and employee pension insurance premiums for three months or more as required.
It is noteworthy that labor dispatch units are also included in the scope of enjoying the one-time expansion subsidy, but it is explicitly stated that they are not eligible for the "application-free direct benefit" approach, and employers placing in public welfare jobs do not enjoy this subsidy. However, workers dispatched to government agencies and institutions are not within the scope of this subsidy. Eligible employers can enjoy a one-time expansion subsidy of 1,500 yuan per person hired.
The policy particularly emphasizes that, after receiving the subsidy, labor dispatch units must transfer the subsidy funds for dispatched workers in full to the actual employing unit within 15 days and report the transfer voucher and other materials to the district human resources and social security department within 60 days. For the subsidy portion of the unit's own employees (including contractors and outsourced service personnel), the labor dispatch unit enjoys it independently.
Case Study - Shanghai Courts and Labor and Social Security Bureau Jointly Release Top Ten Typical Cases of Labor Dispute Arbitration: Companies Shall Not Selectively Adjust Salaries of Specific Departments Through "Pro Forma Democratic Procedures" that Lack Substantive Fairness.
Facts
Wang, who joined a technology company as a programmer in the IT department in 2021, faced a situation where the company, severely affected by COVID-19 and subsequent investment failures, decided to cut salaries by 20% for all IT department employees to reduce costs due to a decline in workload. This decision was approved by an employee representative meeting and the union and was announced at a staff general meeting. Wang disagreed and initiated arbitration, arguing that the salary cut was not agreed upon by him personally and should be compensated. The company argued that the salary reduction was due to objective circumstances and had gone through democratic procedures, thus no compensation was necessary.
Judge’s Viewpoint
The Labor Arbitration Committee of Putuo District, Shanghai has determined that the primary binding element between employer and employee is the mutually agreed labor contract. The company's salary reduction breached the terms of the labor contract. Regulations or major issues affecting all employees' interests must be formulated in an open, justified and impartial manner, and the company's adjustment only to IT department salaries violated these principles, making its claim of "democratic procedures" superficial. Furthermore, the Ministry of Human Resources and Social Security's guideline during the pandemic, allowing businesses to adjust salaries through mutual agreement with employees to stabilize jobs, was a temporary policy and not meant for indefinite application. The company’s misuse of this special policy was inappropriate, requiring it to reimburse the salary arrears to Wang.
In business operations, lowering employees' salaries due to operational difficulties involves significant legal issues that cannot be ignored. Legally compliant salary reduction practices are crucial as they directly impact employees' rights. This case clarifies that following democratic procedures to adjust employee salaries must not violate mandatory legal provisions and must treat all employees fairly, rather than targeting specific groups or individuals for unjust salary cuts. Employers must prudently apply legal provisions, actively fulfill social responsibilities, and construct harmonious labor relations through mutual respect and equal negotiation with employees. - The Primary People's Court of Bao'an District, Shenzhen Releases a Typical Case on Judicial Protection of Trade Secrets: An Employee Controlling Competing Companies During Employment to Intercept Company Transaction Opportunities Constitute Infringement of Business Secrets.
Facts
Defendant Zhang, employed by Company A as a sales team leader from May 2014 to April 2022, had access to Company A's customer information, sales processes, quotes, orders, and approvals through access credentials. Company B, with the same primary business as Company A, was established in November 2021, where Defendant Xie, Zhang's spouse, was the sole shareholder. In early 2022, Company A discovered the relationship between Company B and Zhang and that former employee Lin also worked at Company B. Company A suspected Zhang of harming its interests and discussed this with Zhang, who admitted to placing "private orders" with Company A's suppliers and acknowledged the competition between Company B and Company A. Company B's VAT invoices from December 2021 to October 2022 showed that most customers before July 2022 were Company A's, with taxable transactions amounting to 720,000 yuan.
Judge’s Viewpoint
The Primary People's Court of Bao'an District, Shenzhen determined that the trade secrets claimed by the plaintiff primarily involved customer transaction habits and product needs, distinct from publicly accessible information. This business information required significant time and resource investment by the plaintiff to accumulate and could secure stable trading relationships, offering competitive advantages and economic benefits, thus having commercial value. The plaintiff employed a REP management system to assign different access levels to employees, implementing confidentiality measures. Defendant Zhang, during his tenure at Company A, controlled Company B and facilitated transactions with some of Company A's customers, exploiting Company A's customer list trade secrets to divert business opportunities, thereby infringing on Company A's trade secrets.
This infringement case illustrates the covert nature of trade secret violations where an employee establishes a competing business during their tenure, using trade secrets obtained at their original employer. Defendant Zhang’s actions of enabling Company B to transact with some of Company A's clients, diverting business opportunities, violated principles of fairness, good faith, and recognized commercial ethics, damaging Company A's legitimate interests and disrupting normal market competition. The court considered the nature, duration, degree of fault, and the commercial value of the trade secrets involved, awarding a relatively high compensation in relation to the transaction amount in the case, ordering Defendants Zhang and Company B to jointly compensate the plaintiff for economic losses and reasonable legal costs 300,000 yuan in total, with Defendant Xie bearing joint liability for Company B's debts.