Point of view... Research on the termination or termination of labor contracts in bankruptcy proceedings.

After the enterprise enters the bankruptcy liquidation procedure, some administrators notify the employees in writing to terminate the labor contract on the basis of the time when the court accepts the bankruptcy application; some administrators notify the employees in writing to terminate the labor contract on the basis of the time when the enterprise stops business after entering the bankruptcy liquidation procedure; some administrators notify the employees in writing to terminate the labor contract after investigating and understanding the basic situation of the employees of the enterprise; Some administrators, after the enterprise enters the bankruptcy liquidation procedure, negotiate with the employee to terminate the labor contract.

After the enterprise is declared bankrupt by the people's court, some managers think that the labor contract will be terminated naturally on the day when the ruling is declared bankrupt, and there is no need to notify the employees in writing; some managers think that the labor contract will be terminated on the day when the ruling is declared bankrupt, but it is necessary to notify the employees in writing of the termination of the labor contract; some managers think that after the ruling is declared bankrupt, it is necessary to notify the employees in writing to terminate the labor contract.

1, before the declaration of bankruptcy practical operation recommendations.

(1) The base date for the termination of the labor contract.

The law does not specify the benchmark date for the termination of labor contracts by enterprises in bankruptcy liquidation proceedings. Under the premise of maximizing the interests of creditors, the manager may, on the basis of factors such as whether the enterprise continues to operate, whether there is a possibility of liquidation to reorganization or settlement, and the understanding of the situation of employees, decide on the base date for the termination of the labor contract.

(2) The manner in which the labor contract is terminated.

First, negotiate the termination of the labor contract.

According to the provisions of Article 36 of the Labor Contract Law, the labor contract shall be terminated through negotiation with the employees.

Second, the enterprise unilaterally terminates the labor contract.

If the enterprise and the employee cannot negotiate to terminate the labor contract, the enterprise may notify the employee in writing to terminate the labor contract in accordance with Article 19 (12) and (14) of the "Regulations on the Implementation of the Labor Contract Law. Before notifying the termination of the labor contract in writing, the enterprise shall notify the labor union of the reasons for the termination in advance, pay economic compensation to the employees, issue a certificate of termination of the labor contract, and go through the procedures for the transfer of archives and social insurance relations.

Third, economic layoffs.

According to Item (II) of the first paragraph of Article 41 of the Labor Contract Law, if an enterprise unilaterally reduces more than 20 employees or reduces less than 20 employees but accounts for more than 10% of the total number of employees of the enterprise, it shall explain the situation to the trade union or all employees 30 days in advance, and after listening to the opinions of the trade union or employees, the reduction plan may be reported to the labor administrative department, The labor contract can be terminated through negotiation or unilaterally.

2, after the declaration of bankruptcy of the practical operation recommendations.

(1) Notify the termination of the labor contract in writing.

The view that the labor contract is terminated naturally after the declaration of bankruptcy is not in line with the actual situation that the administrator needs the cooperation of the employees to manage the property and business affairs of the enterprise, and it is also easy to dispute with the employees about the termination of the labor contract. The termination of the labor contract after the declaration of bankruptcy should be understood as the legal cause of the termination of the labor contract. The administrator shall notify the employee in writing to terminate the labor contract on this ground, or enter into an agreement with the employee to terminate the labor contract, issue a certificate of termination of the labor contract to the employee, pay economic compensation, handle the handover of work and transfer of social security file relationship.

According to Professor Wang Xinxin of the School of Law of Renmin University of China [1], there are cases in which enterprises continue to operate in bankruptcy liquidation, reconciliation or reorganization proceedings. With the permission of the people's court or the resolution of the creditors' meeting, if the enterprise needs to continue to operate, the declaration of bankruptcy means the natural termination of the labor contract, and it is obviously not feasible for the worker to leave without asking whether to continue to operate or not. It is more feasible to regard the declaration of bankruptcy as one of the statutory reasons for terminating the labor contract. When to terminate the labor contract depends on when the administrator handles the relevant procedures for terminating the labor contract with the laborer after the legal cause occurs.

(2) The date on which the bankruptcy ruling is declared shall be the date of termination of the labor contract.

In practice, there is a dispute that the termination date of the labor contract is the date of the ruling, the date of service of the ruling, and the date of service of the notice of termination of the labor contract. Taking "Item (IV) of Article 44 of the Labor Contract Law" as the key word, 19 judgment documents of the Intermediate People's Court were retrieved from the Weike Advance Judgment Document Database,(2020) Lu 11 Civil Judgment No. 394 of the People's Republic of China and most other judgment documents held that the labor contract was terminated on the date of the civil ruling declaring bankruptcy;(2018) A few judgment documents, such as Lu 17 Min Zhong No. 2209 Civil Judgment, held that the labor contract was terminated on the date of service of the civil order declaring bankruptcy. The labor contract shall be terminated on the date on which the notice of termination is deemed to have arrived without the judgment document. Document No. 36 of the "People's Court Bankruptcy Procedure Legal Document Style (Trial)" issued by the Supreme People's Court stipulates that the civil ruling for the declaration of enterprise bankruptcy shall take effect from now on. After the enterprise is declared bankrupt, the time node of the termination of the labor contract is the date on which the civil ruling of bankruptcy is made.

In summary, after the enterprise is declared bankrupt by the people's court, the administrator shall promptly notify the employees in writing of the termination of the labor contract, and the labor contract shall be terminated from the date of the decision to declare bankruptcy.

1. Surviving reorganization and whether the labor contract is terminated

Professor Wang Xinxin believes that the debt burden should be solved by means of debt relief, deferred settlement and debt-to-equity swap, supplemented by the improvement of corporate governance structure and management, the reduction or increase of registered capital, and even the transformation of business or the replacement of assets, so as to achieve the purpose of enterprise reconstruction and regeneration. Its iconic feature is to maintain the legal personality of the original enterprise and reorganize within the shell of the original enterprise, although the shareholders of the enterprise may change [2].

(1) Keep the labor contract.

On September 11, 2018, Company A entered bankruptcy reorganization proceedings. During the reorganization period, the manager did not terminate the labor contract with 80 employees on the basis of "continuing to operate and retaining the necessary employee reserves in case of starting production at any time. On June 3, 2019, eight companies, including Company A, entered into substantive consolidation and reorganization proceedings. On September 30, 2020, the Bankruptcy Court ruled to approve the substantial merger reorganization plan and terminate the bankruptcy reorganization proceedings of eight companies. During the implementation of the reorganization plan, Company A terminated the labor contract with all employees [3].

According to the purpose of the reorganization and the requirements of the reorganization plan, Company A retained the labor contract with the employees during the reorganization period, and the labor contract was completely terminated during the implementation of the reorganization plan.

(2) termination of the labor contract.

On November 9, 2017, Company B entered into bankruptcy reorganization proceedings. During the reorganization, the manager of Company B formulated the employee placement plan in accordance with Article 41 of the Labor Contract Law, and decided to terminate the labor contract with all employees from June 1, 2018 [4].

According to the purpose of reorganization, Company B terminates the labor contract with all employees during the reorganization.

2, liquidation reorganization and labor contract is terminated.

Liquidation reorganization, the theoretical and practical circles have not yet had a precise meaning. According to some law firms [5], liquidation reorganization is the auction, distribution, etc. of the debtor's property by reference to liquidation proceedings in the reorganization of an insolvent enterprise, without conversion to liquidation proceedings; or, the liquidation of the debtor's property as part of the reorganization plan. The liquidation of the debtor's property does not necessarily lead to the extinction or non-extinction of the business entity. According to some law firms [6], liquidation reorganization is to refer to the bankruptcy liquidation procedure to obtain the ordinary debt settlement rate, and on this basis, to introduce strategic investors, eliminate the excess part, to achieve the rebirth of the enterprise. The efficiency value of liquidation reorganization and the advantages of the rescue function of reorganization proceedings, the disposal of the debtor's assets to realize the settlement of claims, and the retention of the debtor's corporate legal personality.

(1) Keep the labor contract.

On December 29, 2016, the People's Court of Shanghai Pudong New Area issued (2016) Shanghai 0115 Civil Ruling No. 7-8, approving the reorganization plan of Company C and terminating the reorganization procedure. The reorganization plan stipulates that Company C will dispose of the old main business assets as a whole by means of liquidation reorganization, retain the new manufacturing business and production service business, and the reorganization entity will still survive [7]. During the implementation of the reorganization plan, the reorganization entity continued to operate new manufacturing business and production service business, and retained labor contracts with some employees.

On September 20, 2022, the People's Court of Rugao City, Jiangsu Province issued a civil ruling (2020) Su 0682 Po No. 20 and approved the liquidation reorganization plan of Ding Company. The reorganization plan stipulates that Ding's assets are divided into reorganization assets and disposal assets, and the reorganization assets are separated from the disposal assets and the company's debts. After evaluation, the restructured assets are disposed of through online bidding, and the one with the highest bid price is the restructured investor. After the reorganization investor pays the auction price to the manager, the transferee transfers 100 per cent of the shares of the company to form a restructured new company. The restructuring investor and the new company shall not be liable for the debts of the company, and the restructuring investor shall be responsible for the property management and business affairs of the new company. The labor contracts between Ding and the six employees were retained until the auction of the restructured assets was completed [8].

According to the purpose of reorganization and the requirements of the reorganization plan, during the reorganization period and the implementation of the reorganization plan, Company C and D retain or partially retain the labor contract with the employees.

(2) termination of the labor contract.

On August 8, 2022, the Intermediate People's Court of Ningde City, Fujian Province issued a civil ruling (2020) Min 09 Breaking No. 2 quater, approving the liquidation reorganization plan of Company E and terminating the reorganization procedure. The reorganization plan stipulates that the reorganization investor will provide funds to carry out liquidation reorganization of Company E. The nature and subject qualification of the company will remain unchanged. The reorganization investment funds will be used to pay bankruptcy expenses, common debts and pay off debts. The reorganization investor will obtain 100 of the equity of Company E and the actual control of corresponding assets (excluding monetary assets) in accordance with the reorganization plan approved by the court, and the debtor's liabilities will be stripped in accordance with the reorganization plan. During the implementation of the reorganization plan, negotiate with all employees to terminate the labor contract, pay off the wages owed and pay economic compensation [9].

In accordance with the purpose of the reorganization and the requirements of the reorganization plan, Company E retains the labor contract during the reorganization and terminates the labor contract during the implementation of the reorganization plan.

3, the sale of reorganization and labor contract is terminated.

Sale reorganization, also known as business transfer reorganization, is to sell all or a major part of the debtor's dynamic business to others so that it can continue to operate and survive in the new enterprise, and to pay off creditors with the consideration of the transfer, that is, the continuing business value, and the liquidation income of the untransferred legacy property, that is, the liquidation value [10].

(1) Keep the labor contract.

On July 5, 2021, the People's Court of Lengshuitan District, Yongzhou City, Hunan Province issued a civil ruling (2019) Hunan 1103 Breaking No. 2 bis, approving the company's equity sale reorganization plan. The reorganization plan stipulates that the overall assets of the company will be listed on the Ali bankruptcy assets auction platform with an estimated value of 30,508,365.06 yuan as the starting price. The auction proceeds will be used to pay the reorganization expenses and pay off all kinds of debts according to the provisions of the reorganization plan, and the reorganization investors will acquire 100 percent of the shares of the company. The nature of the company's legal person and the qualification of the market subject will remain unchanged, and all intangible assets such as production qualification, system certification and patents will be retained; the company's production is non-stop, the team is not scattered, the market is not lost, and it continues to operate [11].

In accordance with the purpose of the reorganization and the requirements of the reorganization plan, the company has retained the labor contract with the employees during the reorganization and the implementation of the reorganization plan.

(2) termination of the labor contract.

On March 20, 2019, the Intermediate People's Court of Liaoyuan City, Jilin Province issued a civil ruling (2018) Ji 04 Min Po No. 3-6, approving the asset sale reorganization plan of the company and terminating the reorganization procedure. The reorganization plan provides for the full settlement of the claims owed by GG to its employees, and the reorganization investor as a whole acquires all of GG's effective assets and receives all of its employees [12].

According to the purpose of the reorganization and the requirements of the reorganization plan, the company will terminate the labor contracts of all employees during the implementation of the reorganization plan, which will be accepted by the reorganization investor.

4, pre-reorganization and labor contract is terminated.

Pre-reorganization means that in order to timely and effectively connect with judicial reorganization, when the relevant parties apply to the people's court for bankruptcy reorganization, they request the people's court for support on the grounds that the debtor's out-of-court reorganization can be realized in a short period of time. The people's court shall review the legality and feasibility of the relevant application plan, and agree that within the breaking application procedure, the relevant parties shall hire a professional intermediary agency or apply to the people's court to appoint a temporary administrator, A procedural mechanism for the people's courts to provide appropriate legal guidance, supervision and necessary judicial coordination [13].

(1) Keep the labor contract.

On March 10, 2022, the People's Court of Changshu City, Jiangsu Province issued (2021) Su 0581's No. 6 and No. 121 Decisions to initiate pre-reorganization of Xin Company and Ren Company in accordance with the law.

On September 8, 2022, the court issued (2022) Su 0581's civil rulings No. 64 and No. 65, holding that during the pre-reorganization period, the two companies had clearly intended investors and submitted a pre-reorganization plan. Although the secured creditor's rights group and the ordinary creditor's rights group did not pass the pre-reorganization plan, the two companies still had reorganization value. Therefore, the court ruled to accept the bankruptcy reorganization of Xin Company and Xin Company on October 19, 2022, the court made a civil ruling (2022) Su 0581 No. 64 and No. 65, ruling that the two companies merge and go bankrupt and reorganize. On February 22, 2023, the court issued (2022) Su 0581 Po No. 64 and No. 65 six civil rulings, ruling to approve the reorganization plan of the two companies and terminate the reorganization procedure. The pre-reorganization plan stipulates that after the interim administrator submits the pre-reorganization plan to the creditors for a vote, it applies to the court for a ruling to transfer to the reorganization procedure, and then formulates a draft reorganization plan on the basis of the pre-reorganization plan. After the draft reorganization plan is approved by the creditors' meeting and approved by the court ruling, the reorganization investor and investment amount are determined through online bidding. After paying the consideration to the administrator, the restructuring investor acquires 100 percent of the equity interest in the two companies and the corresponding corporate assets, and the legal personality of the two companies is retained and the business personnel are retained [14].

In accordance with the purpose of the reorganization and the requirements of the reorganization plan, Xin and Ren have retained their labor contracts with their employees during the pre-reorganization period, during the reorganization period, and during the implementation of the reorganization plan.

(2) termination of the labor contract.

On November 29, 2019, the People's Court of Kunshan City, Jiangsu Province issued (2019) Su 0583's Civil Ruling No. 29, ruling to accept the bankruptcy liquidation of Kwai Company. The Draft Pre-Reorganization Plan formulated by the administrator prior to the declaration of bankruptcy of Kwai was approved by the second creditors' meeting on November 18, 2020. On December 17, 2020, the court ruled that Kwai was reorganized in bankruptcy. On December 22, 2020, the court made (2019) Su 0583's Civil Ruling No. 29 ter, approving Kwai's Pre-Reorganization Plan (I. e., the Reorganization Plan).

The pre-reorganization plan stipulates that after the investor pays the investment to the manager, the investor acquires 100 of the shares of Kwai Company and the corresponding real estate, bank deposits and other assets. After receiving all the investment funds, the manager assists the investor in completing the registration of the change of equity. After that, the administrator transfers the property and operational affairs to the investor. In view of the fact that all the original employees of Kwai Company have left their jobs, in order to resume production and operation, investors need to recruit employees and will give priority to the original employees under the same conditions [15].

According to the actual situation of the case, after Kwai Company entered the bankruptcy liquidation procedure, the administrator terminated the labor contract with all employees in accordance with the law. In accordance with the requirements of the pre-reorganization plan, Kwai re-recruited employees during the implementation of the reorganization plan.

1. The base date for the termination of the labor contract.

The law does not specify the benchmark date for the termination of labor contracts with employees in bankruptcy reorganization proceedings. During the pre-reorganization period and the reorganization period, under the premise of maximizing the interests of creditors, the administrator may, at his discretion, terminate the base date of the labor contract on the basis of considering the actual needs of the management of property and business affairs, whether the enterprise will continue to operate, the choice of the reorganization model and other factors. During the implementation of the reorganization plan, it shall determine whether to terminate the labor contract with the employee according to the arrangement of the reorganization plan.

2, the way to terminate the labor contract.

(1) Negotiate the termination of the labor contract.

According to the provisions of Article 36 of the Labor Contract Law, the labor contract shall be terminated through negotiation with the employees.

(2) The enterprise unilaterally terminates the labor contract.

If the enterprise and the employee cannot negotiate to terminate the labor contract, the enterprise may notify the employee in writing to terminate the labor contract in accordance with Article 19 (11) of the "Regulations on the Implementation of the Labor Contract Law. Before the termination of the labor contract by written notice, the enterprise shall notify the trade union of the reasons for the termination in advance. After the termination of the labor contract, the enterprise shall pay economic compensation to the employees, issue a certificate of termination of the labor contract, and go through the procedures for the transfer of archives and social insurance relations.

(3) Economic layoffs.

The manager may reduce the number of personnel according to the actual employment needs of the continuous operation of the enterprise. If the one-time layoff of an enterprise reaches more than 20 people as stipulated in the first paragraph of Article 41 of the Labor Contract Law, or the layoff of less than 20 people but accounting for more than 10% of the total number of employees of the enterprise, legal procedures shall be performed.

First, explain the reduction of personnel to the trade union or all employees 30 days in advance, and listen to the opinions of the trade union or employees.

Secondly, a staff reduction programme.

The personnel reduction plan should include: the legal basis or reasons for the reduction of personnel, specific implementation steps and time nodes, personnel roster, economic compensation, job handover, social security file transfer, etc.

According to the second paragraph of Article 41 of the "Labor Contract Law", special employees must be retained first or should not be reduced first. According to Article 42 of the Labor Contract Law, employees with special circumstances cannot be laid off.

Third, report to the local labor administration on the retrenching programme.

Fourth, implement the reduction plan.

The enterprise announces the plan for the reduction of personnel, terminates the labor contract with the employees, pays economic compensation, issues a certificate of termination of the labor contract, and handles the procedures for the transfer of archives and social insurance relations.

1. Negotiate the termination of the labor contract

Taking "bankruptcy settlement" or "bankruptcy settlement agreement" as the key words, searching the national enterprise bankruptcy reorganization case information network, the bankruptcy settlement cases found generally have the following characteristics: the debtor's enterprise is small in scale, the number of employees is small, the amount of creditor's rights is small, the debtor's shareholders or third parties provide debt repayment funds or debt repayment guarantee, bankruptcy liquidation is converted into bankruptcy settlement, and the procedure is short and efficient [16].

In the bankruptcy settlement procedure, whether the labor contract continues to perform or is terminated, because the number of employees involved is small, and the debt service funds provided by the debtor or a third party fully cover the employees' claims, the rights and interests of employees can be fully protected and can be resolved through negotiation.

2. The labor contract is retained during the settlement period and terminated during the execution of the settlement agreement.

On December 27, 2013, the Dinghai District People's Court of Zhoushan City ruled to accept the merger and settlement application of Yin Company and other four companies. On February 25, 2014, the court ruled to recognize the merger and bankruptcy settlement agreement of four companies, including Yin Company. The settlement agreement states that the four companies, including Yin, will retain only the ocean fishing business after the bankruptcy settlement. Based on the above facts, Yin's claim that it terminated its acquisition of the business of a Uruguayan fishing company after the bankruptcy settlement is admissible. However, Yin Company failed to provide evidence to prove that it had notified the plaintiff to terminate the labor relationship between the two parties. Therefore, the court did not accept Yin Company's claim that the labor relationship between the two parties was terminated on February 25, 2014. Now the plaintiff has provided evidence to prove that he resigned from Yin Company on November 27, 2014, and the Court has confirmed that the labor relationship between the two parties was terminated on November 27, 2014 [17].

The company retains the labor contract with the employee during the settlement period. During the implementation of the settlement agreement, the relevant content of the settlement agreement determines that Yin Company needs to terminate the labor contract with the employee, but it cannot have the consequence of self-termination of the labor contract with the employee. The relevant content of the settlement agreement is only a reasonable reason for Yin Company to terminate the employee's labor contract. Yin Company did not notify the employee to terminate the labor contract, and the labor contract was not automatically terminated.

Consultation is the main, unilateral lifting is supplemented. If the labor contract is terminated unilaterally, the employee shall be notified in writing. After the termination of the labor contract, the enterprise shall pay economic compensation to the employees and go through the procedures for the transfer of social security files.