The Supreme People’s Court has introduced a new judicial interpretation on labour disputes that raises the stakes for employer compliance and risk management. Interpretation (II) of Issues Concerning the Application of Law in the Trial of Labour Dispute Cases, which took effect on 1 September 2025, targets long-running trouble spots such as subcontracted and re-subcontracted labour, intermingled employment relations among affiliated companies, non-compete clauses, and agreements to skip social insurance payments.
Drawing on the guidance and related court practice, this article examines the key provisions and what they mean for companies navigating China’s evolving labour regime.
A: Interpretation II significantly expands the range of entities that may be held liable as employing entities. It provides that when an organisation or individual without lawful business qualifications conducts operations under the business credentials of a legally qualified company and hires workers, courts shall uphold claims by those workers seeking to hold that qualified company responsible for wages, work injury compensation, and other employment related obligations.
The key change is that such arrangements, where an unlicensed operator conducts business through a licensed company, now fall within the scope of employing entity liability.
Before Interpretation II, article 4 of the Ministry of...
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