Perspective | Exploring the Legal Pathways for Workers to Protect Their Rights in Situations of Company Wage Arrears

In the labor employment system of the modern market economy, workers exchange their labor for corresponding remuneration to maintain their livelihood and achieve personal value development. However, the phenomenon of unpaid wages by companies occurs from time to time, which not only directly harms the economic interests of workers but also negatively impacts their life stability, family harmony, and even the social trust system. Against this backdrop, in-depth research on the legal paths for workers to protect their rights in the event of wage arrears is of great practical significance, helping to build a fair, just, and harmonious labor market environment.

Unjustified wage delays refer to a situation where a company fails to pay wages to workers according to the established payment cycle without any legal basis. For example, in some small enterprises, due to cash flow difficulties or poor financial management, wages may not be paid for over a month or even several months. According to Article 50 of the Labor Law of the People's Republic of China, it is clearly stipulated that "wages shall be paid to workers in monetary form on a monthly basis. Wages shall not be deducted or unjustifiably delayed." This provision legally defines the principles of timeliness and certainty in wage payment, and the company's unjustified wage delays clearly violate this basic legal requirement.
 

Wage deductions manifest as the company reducing the amount of wages owed to workers for unreasonable or illegal reasons. Common situations include the company using reasons such as "failure to meet work targets" or "violation of internal regulations" to forcibly deduct workers' wages without sufficient basis in a legitimate and effective performance evaluation system or without following due process. For example, a company unilaterally sets strict performance evaluation standards and does not communicate or negotiate adequately with employees. When employees fail to meet these standards, their wages are significantly deducted, which severely infringes upon the workers' right to receive full labor remuneration as stipulated in the labor contract and labor laws.
 

At specific points of termination or dissolution of labor contracts, companies are legally required to settle workers' wages in one lump sum. However, in practice, some companies may fail to fulfill this obligation for various reasons. For instance, if a company goes bankrupt due to poor management or during a restructuring process, it may neglect the issue of employee wage settlement, leading workers to face wage arrears while losing their jobs. This situation not only violates the relevant provisions regarding the rights and obligations of both parties upon termination of labor contracts in the Labor Contract Law of the People's Republic of China but also places significant economic pressure on workers during the transition phase of re-employment or life.
 

1. Labor Contract
 

The labor contract, as the core legal document establishing the labor relationship between workers and companies, holds crucial evidential value. It clearly stipulates the rights and obligations of both parties, especially the specific standards for labor remuneration, payment methods, and payment cycles. For example, in a certain labor dispute case, the worker successfully proved the company's wage arrears based on the wage amount and payment time stipulated in the labor contract, laying a solid foundation for rights protection. Workers should properly keep the original labor contract and provide copies as evidence for rights protection when necessary.

2. Pay Slips

Pay slips detail the composition of workers' wages, including basic salary, performance pay, bonuses, allowances, deductions, and actual wages. They can intuitively reflect the workers' wage income status and whether the company has deducted or delayed wages. Workers should develop the habit of regularly saving pay slips, which can be preserved in various forms such as electronic documents or paper files. In actual rights protection processes, pay slips can provide strong written evidence for workers to calculate wage arrears and prove wage standards.

3. Attendance Records

Attendance records are important evidence for measuring workers' working hours and attendance, which indirectly affects the calculation of workers' wage income. Although attendance records are usually managed and preserved by the company, workers should also actively take measures to obtain relevant evidence. For example, they can take photos of clock-in records, seek testimonies from colleagues to prove their attendance, etc., to provide strong support for their claims when the company denies their attendance or uses it as a reason to deduct wages.

4. Work Chat Records and Emails

In daily work communication, chat records or email exchanges between workers and supervisors, human resources departments, etc., regarding wage payment matters hold significant evidential meaning. These records may contain explanations of the company's wage policies, notifications or commitments regarding wage delays, etc., which can genuinely reflect the company's attitude and behavior regarding wage payment issues. Workers should promptly back up and organize relevant chat records and emails to submit as supplementary evidence during rights protection, enhancing the completeness and credibility of their evidence chain.

Workers need to comprehensively and deeply learn and master relevant labor laws and regulations, such as the Labor Contract Law of the People's Republic of China, the Labor Law of the People's Republic of China, and local regulations on wage payment. These laws and regulations serve as the legal basis and action guidelines for workers' rights protection. For example, Article 30 of the Labor Contract Law of the People's Republic of China stipulates: "Employers shall pay workers' wages in a timely and full manner according to the labor contract and national regulations. If employers owe or fail to pay wages in full, workers may apply to the local people's court for a payment order, and the people's court shall issue a payment order according to law." Workers can only accurately protect their rights based on such provisions if they are familiar with them, clearly express the legality and legitimacy of their claims to the company or relevant departments, and avoid being hindered in their rights protection or suffering losses due to a lack of legal knowledge.
 

When workers discover that the company owes wages, they should first try to negotiate amicably with the company. This approach is based on the cooperative relationship between both parties and aims to resolve disputes through equal dialogue, which is efficient, convenient, and low-cost. During the negotiation process, workers can refer to the Labor Contract Law of the People's Republic of China and other relevant laws and regulations to clearly point out the illegality of the company's wage arrears and the potential legal consequences they may face, such as paying compensation or being penalized by labor administrative departments. For example, workers can mention Article 85 of the Labor Contract Law of the People's Republic of China, which states: "If the employer fails to pay the worker's wages in full and on time according to the labor contract or national regulations, the labor administrative department shall order the employer to pay the wages, overtime pay, or economic compensation within a specified period; if the wages are below the local minimum wage standard, the employer shall pay the difference; if the payment is overdue, the employer shall pay the worker compensation of 50% to 100% of the amount due." Through this method, it encourages the company to recognize the seriousness of the issue and actively fulfill its obligation to pay wages, achieving a balance and harmonious resolution of both parties' interests.
 

If negotiations do not yield the desired results, workers can file a complaint with the local labor inspection department. The labor inspection department, as the enforcement and supervision agency for labor laws and regulations, has the responsibility and authority to supervise and inspect employers' wage payments and other labor behaviors. According to Article 11 of the Labor Security Inspection Regulations, labor security administrative departments implement labor security inspections on employers' payment of wages and compliance with minimum wage standards. When filing a complaint, workers need to bring sufficient evidence, such as labor contracts, pay slips, attendance records, etc., and provide a detailed account of the company's wage arrears to the labor inspection department. After accepting the complaint, the labor inspection department will investigate and verify the company. If it is determined that the company has wage arrears, it will order the company to pay wages within a specified period according to relevant legal provisions. If the company still fails to pay after the deadline, the labor inspection department can impose administrative penalties such as additional compensation or fines to compel the company to fulfill its payment obligations and protect the legitimate rights and interests of workers.
 

When the handling by the labor inspection department does not effectively resolve the wage arrears issue, or if the worker chooses to skip the complaint stage for personal reasons, applying for labor arbitration becomes an important way for workers to protect their rights. Labor arbitration is a statutory procedure in which the Labor Dispute Arbitration Committee makes a mediation decision on labor disputes between workers and employers based on labor laws and regulations. Workers must submit an arbitration application within the specified time limit. According to Article 27 of the Labor Dispute Mediation and Arbitration Law of the People's Republic of China, the time limit for applying for arbitration in labor disputes is one year. The arbitration time limit is calculated from the date the parties know or should know that their rights have been infringed. During the arbitration process, workers should fully present the various types of evidence they have collected, and the arbitration tribunal will conduct a comprehensive review and adjudication based on the evidence from both parties and relevant legal provisions. If the arbitration decision supports the worker's claim and orders the company to pay wages, and the company refuses to comply with the decision, the worker can apply to the people's court for enforcement according to Article 51 of the Labor Dispute Mediation and Arbitration Law of the People's Republic of China, using judicial enforcement to ensure their rights are realized.
 

In rare special cases, such as when a worker is dissatisfied with the labor arbitration result, or when the arbitration institution refuses to accept the arbitration application for certain reasons, the worker has the right to file a lawsuit in court. The court, as a national judicial authority, will conduct a comprehensive, in-depth, and fair hearing of the wage arrears dispute between the worker and the company based on relevant laws and regulations. During the litigation process, the court will strictly examine whether the evidence submitted by both parties is authentic, valid, sufficient, and conclusive, whether the company's wage arrears behavior is true, and whether the labor arbitration process is legal and compliant, and whether the applicable laws are accurate and appropriate. Through a rigorous judicial trial process, the court will ultimately make an authoritative and final judgment to effectively protect the legitimate rights and interests of workers, demonstrating the fairness and authority of the law, and providing final judicial protection for the resolution of labor disputes.
 

1. When the employee proposes to terminate the labor contract.
 

The employer fails to provide labor protection or labor conditions as stipulated in the labor contract; the employer fails to pay wages in full and on time; the employer fails to pay social insurance premiums for the worker as required by law; the employer's rules and regulations violate laws and regulations, harming the rights and interests of workers; the employer uses fraud, coercion, or takes advantage of the situation to make the worker enter into or change the labor contract against their true intentions; the employer exempts itself from statutory responsibilities or excludes the rights of workers in the labor contract; the employer violates mandatory provisions of laws and administrative regulations; the employer forces workers to work through violence, threats, or illegal restrictions on personal freedom; the employer issues unsafe work orders or forces risky operations that endanger the personal safety of workers.

It is recommended that employers provide labor protection as stipulated in the contract, pay wages on time, and pay social insurance.

2. When the employer proposes to terminate the labor contract.

The labor contract is terminated by mutual agreement; the worker is ill or injured not due to work and cannot perform their original job after the specified medical period, and the employer gives 30 days' written notice; the worker is unable to perform their job, and after training or job adjustment, still cannot perform their job, and the employer gives 30 days' written notice; significant changes in the objective circumstances on which the labor contract was based occur, making it impossible to perform the labor contract, and after negotiation, no agreement is reached on changing the labor contract, and the employer gives 30 days' written notice.

It is recommended that employers be cautious when proposing to terminate the labor contract, or implement the provisions of Article 39 of the Labor Contract Law of the People's Republic of China to address the worker's fault and then propose to terminate the labor contract, or they may not need to pay economic compensation.

3. Economic layoffs by the employer.

The employer is undergoing reorganization according to the Enterprise Bankruptcy Law; the employer is facing serious operational difficulties; after changing the labor contract due to business transformation, major technological innovations, or adjustments in business methods, personnel reductions are still necessary; other significant changes in the objective economic situation on which the labor contract was based occur, making it impossible to perform the labor contract.

4. Termination of the labor contract.

The labor contract expires, and the employer does not agree to renew it; the labor contract expires, and the employer lowers the conditions for renewing the labor contract, and the worker does not agree to renew it; the labor contract with a fixed term for completing a certain task is terminated upon completion of the task; the employer is declared bankrupt by law; the employer's business license is revoked, ordered to close, dissolved, or the employer decides to dissolve early; the labor contract cannot continue to be performed due to the expiration of the employer's business term; if the worker does not sign a written labor contract with the employer for more than one month but less than one year from the date of employment, the employer gives written notice to the worker to terminate the labor relationship; if the labor contract expires and the worker does not renew the written labor contract with the employer for more than one month but less than one year, the employer gives written notice to the worker to terminate the labor relationship.

Given the particularity of the employer, there may be many cases where short-term labor contracts need to be terminated upon expiration. It can be clearly stipulated in the labor contract that due to the special nature of the company's business, the work location must follow the location of the cooperation project. That is, the employee agrees that the employer can adjust their work location according to specific projects. Before the contract expires, the employer should notify the employee in advance about the work location adjustment. If the employee cannot accept it, they can choose not to renew the labor contract and provide corresponding explanations to reduce the company's cost of terminating the labor contract. At the same time, various factors such as the future project location should be considered to clearly and reasonably expand the employee's work location to reduce the risk of invalid or unreasonable agreements.

1. If the employee is ill or injured not due to work and cannot engage in their original work after the specified medical period, nor can they engage in work arranged by the employer;
 

2. If the employee is unable to perform their job and, after training or job adjustment, still cannot perform their job;

3. If there is a significant change in the objective circumstances on which the labor contract was based at the time of signing, making it impossible to perform the labor contract, and the employer and employee fail to reach an agreement on changing the labor contract content after negotiation.

In practice, many HR personnel and employees consider a 30-day advance notice as a necessary condition for paying compensation for not providing notice when terminating the labor contract. However, only in the above three situations (after medical period, inability to perform work, and change of circumstances) does the employer need to pay compensation for not providing 30 days written notice when terminating the employee's labor contract. In other situations, even if the employer does not provide 30 days written notice, they do not need to pay compensation.

If the employer unlawfully terminates or ends the labor contract, they must pay the employee double compensation. Article 42 of the Labor Contract Law of the People's Republic of China states that if the employee is in any of the following situations, the employer may not terminate the labor contract according to Articles 40 and 41 of this law:
 

1. Employees engaged in work that exposes them to occupational disease hazards have not undergone a pre-departure occupational health examination, or suspected occupational disease patients during diagnosis or medical observation;

2. Employees who have contracted occupational diseases or have been injured at work and have been confirmed to have lost or partially lost their ability to work;

3. Employees who are ill or injured not due to work and are within the specified medical period;

4. Female employees during pregnancy, childbirth, or breastfeeding;

5. Employees who have worked continuously for fifteen years in the same unit and are less than five years away from the statutory retirement age;

6. Other situations as stipulated by laws and administrative regulations.

Article 48 of the Labor Contract Law of the People's Republic of China states that if the employer violates the provisions of this law to terminate or end the labor contract, and the employee requests to continue performing the labor contract, the employer shall continue to perform it; if the employee does not request to continue performing the labor contract or the labor contract can no longer be performed, the employer shall pay compensation according to Article 87 of this law. Article 87 states that if the employer violates the provisions of this law to terminate or end the labor contract, they shall pay the employee compensation at twice the economic compensation standard stipulated in Article 47 of this law.

It is recommended that employers strictly control the health examination process during recruitment, which can protect the legal rights of employees and control the employment risks for the employer.

There is no compensation scheme of "2N + 1" in the legal provisions, and courts generally do not support it. Compensation for not providing notice is only required when the employer legally terminates the contract without fault and does not provide 30 days notice. 2N is compensation for unlawful termination, and the two cannot coexist. However, if the company has the financial means and both parties agree, compensation of 2N + 1, 2(N + 1), or more is possible.
 

Compensation formula = S × N.
 

S refers to the average monthly salary of the employee in the 12 months prior to the termination or end of the labor contract. If the employee's monthly salary exceeds three times the average monthly salary of employees in the previous year published by the municipal government where the employer is located, the economic compensation standard shall be paid according to three times the average monthly salary of employees, and the maximum length of service shall not exceed 12 years.

N is calculated based on the employee's length of service in the unit, paying one month's salary for each full year of service. For service of more than 6 months but less than 1 year, it is calculated as 1 year; for less than 6 months, half a month's salary is paid as economic compensation.