Perspective | In construction projects involving illegal subcontracting, re-subcontracting, or “hanging” arrangements, who bears responsibility if construction workers recruited by the “foreman” are injured during the course of work?
Published:
2025-12-29
Regarding construction projects involving illegal subcontracting or assignment, the law and judicial interpretations have clearly stipulated who bears the responsibility for work-related injury insurance when construction workers hired by “foremen” are injured during construction, as well as how to determine the time when the dispute arose and how to observe the statute of limitations for protecting one’s rights during the rights-assertion process.
I. Introduction
Regarding construction projects involving illegal subcontracting or assignment, the law and judicial interpretations have clearly stipulated who bears the responsibility for work-related injury insurance when construction workers hired by “foremen” are injured during construction, as well as how to determine the time when the dispute arose and how to observe the statute of limitations for protecting one’s rights during the rights-assertion process.
Article 7 of the “Opinions of the Ministry of Human Resources and Social Security on Implementing Certain Issues of the Regulations on Work Injury Insurance” states: “If a contracting entity that possesses the qualification to employ workers violates laws and regulations by sub-contracting or further sub-contracting its contracted work to an organization or natural person that does not have such qualification, and the workers hired by that organization or natural person suffer work-related injuries or fatalities while performing the contracted work, the contracting entity that possesses the qualification to employ workers shall bear the work injury insurance responsibilities that the employer is legally required to assume.”
Article 3, Paragraph (4) of the “Provisions of the Supreme People’s Court on Several Issues Concerning the Adjudication of Administrative Cases Involving Work Injury Insurance” clearly states: “If an employing unit violates laws and regulations by subcontracting its business to an organization or natural person that does not have the qualification as an employer, and a worker hired by such organization or natural person suffers work-related injury or death while performing the subcontracted work, the employing unit shall be the entity bearing responsibility for work injury insurance.”
In addition, the “Interpretation (II) of the Supreme People’s Court on the Application of Laws in the Adjudication of Labor Dispute Cases” further clarifies key issues related to rights protection. Specifically, regarding construction projects involving subcontracting, illegal subcontracts, and reliance on shell companies, it clearly defines the responsible parties for questions such as to whom construction workers recruited by “foremen” should seek payment of their labor remuneration and how to claim work-related injury insurance benefits after a work-related injury has been recognized. This provides injured construction workers with a clear path for asserting their rights. Furthermore, based on these provisions, workers can file claims for work-related injury insurance benefits against the entity within the nearest higher-level subcontracting or sub-subcontracting relationship that is qualified to pay wages.
II. Case Studies
On March 22, 2023, Plaintiff Company A entered into a Construction Contract with Defendant Company B, under which Company A was contracted to undertake a certain construction project for Company B. Subsequently, since Company A did not possess the requisite qualifications, its representative negotiated with Defendant Company C regarding a "hanging-up" arrangement. The two parties reached an agreement in early July 2023, whereby Defendant Company C authorized Company A’s representative to handle matters related to the project in question, and Company A agreed to pay a hanging-up fee. However, prior to this agreement, the project had already been undertaken in Company A’s name. After taking on the project, Company A subcontracted part of the work to Wang, who then hired Yang and others to perform labor at the construction site.
On the morning of May 16, 2023, Yang was working at a construction site when the support foot of a concrete pump truck sank and tilted, causing him to be crushed at the joint between the concrete pump’s flexible hose and elbow. He was subsequently taken to the hospital for treatment. After being discharged from the hospital, Yang submitted a written application for workers’ compensation recognition. The Human Resources and Social Security Bureau of a certain county issued a “Decision on Workers’ Compensation Recognition,” determining that Yang’s injury constituted a work-related injury and identifying Company A as the entity responsible for the workers’ compensation liability. Dissatisfied with this determination, Company A filed a lawsuit in court, requesting the annulment of the “Decision on Workers’ Compensation Recognition.”
The People’s Court, after trial, held that in this case, Company A took over the project in question in March 2023. Due to qualification issues, Company A had to seek another company to act as its fronting entity, and it was not until July 2023 that Company A reached an agreement with Company C regarding the fronting arrangement. During this period, Company A consistently served as the actual contractor for the project in question. Therefore, it can be conclusively determined that, at the time when the third party, Mr. Yang, was injured, the entity undertaking the project was Company A.
Based on the ascertained facts and in accordance with the statutory procedures, the defendant—the Human Resources and Social Security Bureau of a certain county—issued a determination of work-related injury that is supported by sufficient and conclusive evidence, correctly applies the relevant laws and regulations, and follows lawful procedures. Therefore, the court rules to dismiss the plaintiff, Company A’s, claim.
III. Attorney’s Reminder
1. Core of the liability claim: Injured construction workers do not need to prove the existence of an employment relationship with a contractor that has the requisite qualifications to act as an employer. Instead, they may directly assert their rights—based on disputes over work-related injury insurance benefits—against the entity in the immediately higher-tier subcontracting or illegally sub-contracted relationship that is qualified to provide employment services. Relevant laws and judicial interpretations have clearly defined this entity’s liability for work-related injury insurance.
2. Evidence Retention Recommendations: After a worker is injured during construction, they should promptly gather and preserve evidence such as records of the injury’s circumstances, medical treatment records, and documentation related to contracting and subcontracting for the project. They should proactively submit this evidence when asserting their rights. At the same time, they should carefully keep records related to their claims to avoid any adverse impact on their ability to protect their rights due to statute of limitations or evidentiary issues.
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