1. Circumstances of agreeing on liquidated damages
Article 25 of the Labor Contract Law stipulates that "except as provided for in Articles 22 and 23 of this Law, the employer shall not agree with the employee that the employee shall bear the liquidated damages." That is, liquidated damages can only be stipulated in the training service period agreement and the non-compete agreement. In addition to these two cases, the agreement that the employee shall bear liquidated damages to the employer is invalid. Yingke Shanghai Law Firm Sometimes, the employment contract does not clearly specify that it is "liquidated damages", such as "Party B shall compensate for the loss caused by Party A." If the loss is difficult to calculate, Party A shall be compensated for two months' wages." In this kind of clause, although it is not explicitly stated as "liquidated damages", it is liquidated damages by its nature, because it is not linked to the actual loss and is punitive. Therefore, such a clause is also null and void. However, please note that the Employment Contract Law only strictly restricts the employer from agreeing with the employee to bear liquidated damagesThere is no restriction on the employer to bear the agreed liquidated damages. Therefore, if the employment contract stipulates that "if both parties terminate the labor contract in advance, they shall bear liquidated damages of RMB 10,000 to the other party", this liquidated damages clause is invalid for the employee, but it is valid for the employer. If the employee resigns early, the employer cannot require the employee to pay liquidated damages of 10,000 yuan. However, if the employer dissolves or terminates the labor contract in advance, the employee may request the employer to pay liquidated damages as agreed in the contract. In practice, some employment contracts stipulate that if the payment of wages is delayed for more than a certain number of days, the employer shall pay liquidated damages to the employee, which is legal and valid. 
2. Circumstances under which compensation is paidCompensation generally refers to the corresponding compensation given to the other party by the party at fault based on its own fault causing losses to the other party. There is a connection and a difference between compensation and liquidated damages, and the main differences are:
1. Whether it must be written into the contract. Liquidated damages must be agreed by both parties, and there is no liquidated damages if there is no agreement. However, regardless of whether there is an agreement on the compensation, the compensation shall be compensated in accordance with the law. 2. Whether it causes actual losses. Compensation is usually based on the actual damage caused, otherwise there is no compensation. Liquidated damages do not require that the loss was actually incurred. 3. Whether the amount is linked to the actual loss. The amount of liquidated damages does not need to be consistent with the actual loss, and the compensation follows the principle of making up for the loss, that is, the amount of loss is compensated. 4. If the actual loss is higher than the agreed liquidated damages, the breaching party may be required to compensate according to the actual loss. (Note: The above differences are general.) However, in the labor law, some compensation has been stipulated in advance by the law, and it is not necessarily related to the actual loss, for example, the compensation standard for illegal termination is statutory) The compensation does not need to be agreed, so does it mean that we do not need to stipulate the compensation clause in all the agreements of the labor relationship? Neither is it. Although we cannot determine the amount of compensation in advance (if it is determined in advance, it will become liquidated damages), we can agree in advance on the liability for compensation (if the employer suffers losses, whether the employee should compensate for all the losses or bear them proportionally), and we can also agree on the relevant losses (such as whether it includes lawyer's fees, investigation costs, etc.). 
Under what circumstances should an employee be liable to the employer? 1. Illegal termination of labor contract. Please note that if the employer is notified in writing 30 days in advance, or the employer is notified 3 days in advance of the probationary period, the employee is not liable for compensation because it is not illegal to terminate the employment contract. 2. The employee violates the confidentiality obligation or the non-compete obligation. 3. The worker violates the rules and regulations, labor discipline, or the provisions of the labor contract, causing losses to the unit. If the employee fails to perform his job duties and causes losses to the employer, it can also be regarded as a violation of the labor contract and rules and regulations. There is no clause in the labor law that directly stipulates the standard of compensation for employees, which means that when an employer claims compensation from an employee, it must prove its actual losses. If the actual loss cannot be proven, it is difficult to claim compensation. This is also a kind of protection for workers under the law. There are more cases in which the employer is liable to the employee for compensation, and the following are some of the main situations:1. Illegal termination of labor contract. If an employer dismisses an employee under the conditions of dissolution or termination of the labor contract, including dissolving or terminating the labor contract in violation of legal procedures, it is an illegal termination of the labor contract and shall pay compensation. The compensation shall be calculated at twice the severance rate, and the number of years of service shall be calculated from the actual employment date, not from 2008. Therefore, if the employee has worked for a long time, the amount of compensation for illegal termination of the labor contract is not small. 2. In case of arrears of wages, overtime pay and economic compensation, the labor administrative department shall order the payment within a time limit, and if the payment is not made within the time limit, the worker shall be compensated according to 50 to 100 percent of the amount in arrears. It should be noted that the labour administration can order additional compensation only if the payment is not made within the time limit. 3、If an employer illegally collects property from a worker, it shall be liable for compensation if it causes damage to the worker in addition to returning it. If the employer violates the law and fails to issue a written certificate of dissolution or termination of the labor contract, and causes damage to the employee, it shall be liable for compensation. If the employer violates the law and fails to go through the formalities for the transfer of files and social insurance relationship for the departing employee, it shall be liable for compensation. In essence, double wages resulting from not signing an employment contract are actually a form of compensation. Disclaimer: This article represents the views of the author only and should not be regarded as formal legal advice issued by the firm or lawyers.
Article contribution: Lawyer Chen Yuan.