Author: Jiang Junlu, Doctor of Law, Director and Chief Partner of Beijing Puran Law Firm.
Author: Peng Ranqing, LL.M., Beijing Puran Law Firm, lawyer.
When an employee resigns, the company shall issue a certificate of dissolution or termination of the labor contract, and within 15 days, go through the procedures for the transfer of files and social insurance relations for the employee. If the company's social security reduction is not timely, causing losses to employees, who will bear the losses?We illustrate this for the reader through a judicial precedent. [1]
1. Introduction to the case
In June 2018, Xu Ming joined a cultural company as a teacher. Later, Xu Ming was injured at work and was recognized as a work-related injury. In August 2020, Xu Ming resigned on the grounds that he had not paid his salary on time. In September 2020, Xu Ming signed an employment contract with a commercial company, which informed Xu Ming that he needed the former employer's cultural company to handle social security reduction for him, otherwise he would be deemed to be unable to pay social security and would not meet the employment conditions during the probationary period. On November 5, 2020, the commercial company terminated the employment contract with Xu Ming on this ground. Later, Xu Ming sued the court to demand compensation from the cultural company for the losses caused by the failure to handle the social security reduction in time. The cultural company claimed that because Xu Ming had suffered a work-related injury and the handling procedures were complicated, it did not handle it on time, and its company paid social security for Xu Ming until October 2020 and handled the social security reduction on November 20, 2020, so it did not agree to compensate for the loss.
2. The Court's View
After terminating the employment relationship with Xu Ming, the former employer's culture company failed to go through the formalities for Xu Ming's transfer of social security relationship within the statutory time limit, resulting in Xu Ming's employment relationship being terminated due to his inability to pay social insurance after the new employer's commercial company. Although the cultural company claimed that it could not handle it in a timely manner due to social security policy reasons, it did not submit evidence to prove it. In summary, the court found that the cultural company failed to handle the social security reduction for Xu Ming in a timely manner, resulting in the termination of the employment relationship between the commercial company and Xu Ming, and should pay Xu Ming corresponding compensationAt the same time, considering that Xu Ming did not inform the cultural company of the consequences of being hired by the new employer and the consequences of the termination of the labor relationship if he did not handle the social security reduction in time, and that the employer's continued payment of social insurance for the employee after his resignation was usually a self-inflicted act, the cultural company did not have the subjective intention of not handling the social security reduction, so the liability of the cultural company should be reduced. In the end, the court ruled that the cultural company should compensate Xu Ming for part of the losses based on factors such as the time of termination of the labor relationship between Xu Ming and the new employer, the time of re-employment, the monthly wage standard of the new employer, and the degree of fault of both parties.
3. Lawyer's review
It is illegal for the company not to apply for social security reduction for employees. Failure to reduce the number of employees due to social security in a timely manner may lead to employees failing to pay social security, the new company cannot handle the increase in social security, the medical expenses incurred during the period need to be borne by the employees, and the qualifications of employees to purchase houses may also be affected.
If the company fails to reduce the number of employees in a timely manner, the employee can file a complaint with the labor inspection department where the company is located and request that the social security reduction be done as soon as possible. If the employee is unable to join the new company in the above case, the employee can apply for labor arbitration in accordance with the law and claim compensation from the company for the corresponding losses. In view of the extent of the loss, the arbitration commission and the court will comprehensively determine the subjective intention of the original company not to handle the social security reduction, the time when the employee terminated the labor relationship with the new company, the time of re-employment, the monthly salary of the new company, and the degree of fault of both the employer and the employee.
We recommend that in order to avoid liability for compensation, the social security transfer procedures should be completed in a timely manner within 15 days after the employee leaves the company.
1] See (2021) Jing 0118 Min Chu No. 204 Civil Judgment.