Wonderful case | Successful recovery of labor compensation across 2,000 kilometers
Authors | Attorney Sun Jiuhua, Li Jiamailawyer
Case Summary
In May 2009, Mr. Wu was employed by Company A, which is 100% owned by Company W of Shandong Province; the workplace is located in Qingyang District, Chengdu. Subsequently, following the spin-offs, mergers, and business restructuring of the Group, Mr. Wu worked at Companies B, C, and D, which were either controlled by W Company or had previously been controlled by W Company.
In June 2024, the company once again made a decision to reduce Mr. Wu’s salary and reassign him to a different position without his consent. Mr. Wu was unwilling to accept the new job reassignment; accordingly, Ms. Sun from D Company’s human resources department discussed with Mr. Wu the termination of their employment relationship and promised to pay him an economic compensation of RMB 155,315. At the same time, she sent Mr. Wu the “Agreement on Termination of Employment and Compensation” through the company’s OA system, requesting that he complete the resignation procedures and, after signing the agreement, return it to the company via the OA system for the company’s official seal.
After signing, Mr. Wu only retained the copy of the “Labor Relationship Termination Compensation Agreement” bearing his own signature and did not have access to the version bearing the company’s official seal; furthermore, after his departure, Mr. Wu was no longer able to log into the company’s OA system. As a result, Mr. Wu neither received nor was able to retain the “Agreement on Termination of Employment and Compensation” bearing the company’s official seal.
Subsequently, on the condition that the company was willing to pay economic compensation, Mr. Wu cooperated with the company in completing his resignation procedures. However, the company has consistently failed to pay Mr. Wu the statutory economic compensation, and despite his repeated requests, he has yet to receive it.
On February 14, 2025, Mr. Wu filed an application for labor arbitration with the Chengdu Municipal Labor and Personnel Dispute Arbitration Commission. Because the “Agreement on Compensation for Termination of Labor Relations” signed by Mr. Wu’s other coworkers was stamped by Company C, where Mr. Wu had previously worked, he listed only Company C as the respondent in his arbitration application.
On June 9, 2025, the committee rendered a decision: as the authenticity of the “Compensation Agreement for Termination of Labor Relationship” could not be verified, it ruled to dismiss all of Wu’s claims. After receiving the arbitration award, Mr. Wu contacted the lawyers at our firm. After thorough consultation with Mr. Wu, the firm’s attorneys promptly finalized the litigation strategy.
Case-handling strategy
1. Initiate both labor arbitration and litigation simultaneously to determine the optimal litigation strategy.
Given that Mr. Wu has successively been employed by multiple companies and has established employment relationships with several of them.In light of the circumstances of the case, the attorneys representing our firm have decided to pursue a two-step strategy: arbitration followed by litigation.On the one hand, they filed a lawsuit with the People’s Court disputing the decision of the Chengdu Arbitration Commission; on the other hand, they initiated arbitration proceedings with the Labor and Personnel Dispute Arbitration Commission against other affiliated companies of Mr. Wu that had not previously been named as respondents.
After deliberation and discussion, the attorneys decided to list Companies A, D, and W as joint respondents in the labor arbitration case. The reasons are as follows: Given that Mr. Wu communicated with Ms. Sun from the Human Resources Department of Company D, and his resignation procedures were processed in Company D’s system, and furthermore, according to Article 46 of the “Interpretation (I) of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Labor Dispute Cases”: “Where an employee is assigned by the original employer to work for a new employer for reasons not attributable to the employee himself… when calculating the length of service for the purpose of paying economic compensation or damages, if the employee requests that the length of service with the original employer be combined and counted as the length of service with the new employer, the people’s court shall support such request.”
As the ultimate employer, Company D has assumed Mr. Wu’s employment relationship and is therefore obligated to pay him economic compensation in accordance with the law, taking into account his entire length of service. Accordingly, Company D is designated as the respondent. Furthermore, since Mr. Wu was initially hired by Company A and paid a deposit of RMB 5,000 to Company A upon hiring, Company A is also designated as a respondent and required to refund the deposit. Additionally, because Company W is the sole controlling shareholder of Company A, and Companies A, B, C, and D—where Mr. Wu was employed—are all affiliated with Company W, Company W is likewise designated as a respondent.
2. Every second counts—race against the statute of limitations.
Mr. Wu retained the services of our firm’s attorneys in June 2025. At that time, Mr. Wu had already obtained the arbitration award from the Chengdu Labor Arbitration Commission, and he completed his resignation procedures in June 2024. Consequently, both the one-year statute of limitations for labor arbitration and the 15-day period for filing a lawsuit with the court to contest the award were approaching their respective final deadlines. Time is of the essence; after finalizing the litigation strategy, the attorney promptly prepares all necessary documents.
In terms of jurisdiction, although the company where Wu was employed is located in Weihai, Wu’s position is in sales and he has consistently worked in Qingyang District, Chengdu. The company also has an office in Qingyang District, and Wu’s previous case was handled by the Chengdu Municipal Labor Dispute Arbitration Commission. The attorneys representing our firm first filed a lawsuit with the People’s Court of Qingyang District, Chengdu, and simultaneously submitted an application for arbitration to the Chengdu Municipal Labor and Personnel Dispute Arbitration Commission.
However, after numerous communications by the plaintiff’s attorney, both the Qingyang District People’s Court and the Chengdu Labor Arbitration Commission maintained that the place where Mr. Wu performed his work was not clearly defined. At this point, the attorneys representing our firm promptly filed a lawsuit with the People’s Court of Huancui District, Weihai City, and simultaneously submitted an application for arbitration to the Labor and Personnel Dispute Arbitration Commission of the Weihai Lingang Economic Development Zone. Both cases were successfully approved for filing.
3. Argue on the basis of reason to maximize client benefits.
On July 16, 2025, the People’s Court of Huancui District, Weihai City, held a court hearing in this case. During the court proceedings, the attorneys representing our firm presented the “Compensation Agreement for Termination of Labor Relations” signed by Mr. Wu’s other coworkers, in order to demonstrate that Company C had affixed its official seal to those agreements. The absence of Company C’s seal on Mr. Wu’s agreement does not negate the fact that Company C is the liable party in this case.
At the same time, the attorneys representing our firm contend that, without having engaged in sufficient consultation with Mr. Wu, the employer unilaterally restructured his job position, thereby leaving Mr. Wu unable to ascertain whether such a reassignment entails any adverse consequences for him or whether the employer has formulated appropriate support and compensation measures. Consequently, the employer should pay Mr. Wu the corresponding economic compensation.
The employer also lacks sufficient evidence to demonstrate the reasonableness of the job reassignment, and therefore shall bear the adverse legal consequences of failing to meet its evidentiary burden. During the trial, the judge focused on questioning the relationships among Companies A, B, C, D, and W. Because Defendant C Company was unclear about the specific division of responsibilities and the relationships among its various group companies, it also remained uncertain as to which entity should handle the dispute between the company and Mr. Wu. Consequently, the judge ultimately decided to adjourn the first hearing, with the date of the second hearing to be determined later.
On July 30, 2025, the Labor Arbitration Commission of Lingang District, Weihai City, held a hearing, and representatives from all three respondent companies—C, D, and W—attended the proceedings.During the court proceedings, the respondent stated that, because the attorneys representing this firm had listed all employers that could be designated as respondents as respondents, thereforeWThe company attaches great importance to this matter and convened a meeting prior to the court hearing.Relevant personnel from Companies C and D held a meeting to thoroughly discuss the proposed solutions.
Companies C, D, and W are willing to pay compensation to Mr. Wu; however, Mr. Wu and Companies C, D, and W disagree on the specific amount and components of the compensation. After more than three hours of mediation, the attorneys representing our firm fully articulated Mr. Wu’s wishes and secured the maximum possible rights and benefits for him. Ultimately, all respondents agreed to pay Mr. Wu an economic compensation of RMB 155,315 by the end of August, to refund his deposit of RMB 5,000 by the end of September, and to disburse a sales commission once the company receives the corresponding payment.
As the case has already been resolved by the Labor Arbitration Commission of Lin’gang District, Weihai City, the People’s Court of Huancui District, Weihai City, granted the withdrawal of the lawsuit and did not hold a second hearing.
Case outcome
After the case was settled through mediation, the attorneys at our firm continued to maintain contact with the opposing party and follow up on the payment progress.On September 8, 2025, Mr. Wu has received the full amount of economic compensation and the deposit. At this point, the case involving the successful recovery of labor compensation across a distance of two thousand kilometers has been successfully concluded.
Case Summary
Case-handling philosophy
1. Parties should take labor arbitration seriously to avoid omitting or incorrectly listing the respondent.
Most parties believe that labor arbitration is not the same as filing a lawsuit in court and that they can handle it themselves. Once the labor arbitration procedure is initiated, one will face the issues of identifying the respondent and presenting evidence. In many cases, companies assign employees to work at different subsidiaries or branch offices, resulting in discrepancies between the entity that pays their wages and makes social security contributions and the entity where they are actually employed. In such situations, if an employee lists only the actual employer as the respondent, they risk having their claim dismissed by the labor arbitration authority. Even if they subsequently file a lawsuit in court, they may be unable to add additional defendants, thereby facing the risk of losing the case.
Therefore, in labor arbitration cases, it is crucial to list all respondents accurately, so as to avoid the issues of omitting or incorrectly listing respondents.
2. The labor arbitration must specify the place of work.
In this case, both parties’ employers are located in Shandong Province, yet they have been working long-term in the Sichuan–Chongqing region. During the labor arbitration and litigation processes, the local labor arbitration institutions and courts in Chengdu refused to accept the cases on the grounds that the place of work was unclear. As a result, the parties were compelled to pursue labor arbitration and litigation at the location of their employers, thereby increasing their costs and creating uncertainty in the protection of their rights.
Therefore, the author advises that when parties seek to protect their labor rights through labor arbitration and litigation, they should preserve and collect evidence regarding their place of work to avoid unnecessary litigation burdens.
Author
Introduction
Sun Jiuhua
Member of the Management Committee, Zhiheng Chengdu Law Firm
Director of the Corporate Governance and Labor & Personnel Legal Affairs Department
Director of the Young Lawyers Working Committee
Business areas:
Commercial dispute resolution, corporate governance, labor and workplace injury contract disputes, marital disputes, legal advisory services.
Contact information:
740832334@qq.com
Li Jiamai
Full-time lawyer at Zhiheng Chengdu Law Firm
Business areas:
Dispute resolution, civil and commercial lawfield
Contact information:
18380433787547174384@qq.com
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