Publications

Commission, discount and rebate are commonplace in modern commercial practice. But do you understand their distinctions, and which are lawful or unlawful? First, let us define each term and its applicable scenarios. Commission, discount and rebate are all common promotional tools. Commission is consideration for intermediary services, generally paid to a middleman who facilitates a transaction. It qualifies as a service, issued with a positive-value invoice, and normally subject to a 6% VAT rate. In contrast, discounts and rebates usually arise between the two parties to a transaction and are tied to the underlying transaction, so their VAT rates follow those applicable to…

After an employee is promoted to a new position, he/she may adapt quickly, or underperform due to capability, mindset or other issues. Therefore, some companies set a promotion review period. If an employee fails to meet the employer’s expectations during the review period, they will be typically reverted to their original position and original compensation. Some employers may ultimately terminate the employment contract pursuant to the provisions on incompetence under the Labor Contract Law. Whether such practices are legal or illegal? Let us analyze this layer by layer. There are no statutory provisions governing such “review period”. Therefore, an employer may formulate internal rules or enter…

Paragraph 2 of Article 562 of the “Civil Code” provides that: “The parties may agree on the grounds for termination of the contract by one party. Where the grounds for contract termination occur, the party entitled to the right of termination may terminate the contract.” This provision permits parties to pre‑agree termination grounds, embodying the core value of party autonomy in private law. Nevertheless, some parties seek to terminate the contract upon even trivial missteps by the counterparty, which also undermines contractual stability. To address this issue, Article 47 of the “Minutes of the National Courts’ Civil‑Commercial Trial Work Conference” (Fa〔2019〕No. 254) stipulates:…

Wu suffered a sudden illness while at work and was admitted to hospital at 11:42 a.m. on April 29, 2021. In the early hours of May 1, Wu experienced cardiac arrest. Heartbeat was temporarily restored after resuscitation, yet spontaneous breathing could not be regained. At 11:20 a.m. on the same day, Wu suffered a second cardiac arrest. The hospital continued resuscitation measures including cardiopulmonary resuscitation and electric defibrillation, and clinical death was declared at 12:08 p.m. The time from admission to the declaration of death exceeded 48 hours. The human‑resources and social‑security authority accordingly made a decision not to recognize…

The issuance of the Interpretation (II) on Issues Concerning the Application of Law in the Trial of Cases Involving Disputes over Construction Contracts for Construction Projects by the Supreme People’s Court (hereinafter referred to as the “Interpretation II”) has attracted widespread attention. Most enterprises may act as the owner. Then what are the changes to the owner under the new judicial interpretation? The Impact of Tendering Procedures on the validity of Contracts Article 1 of Interpretation I stipulates that a must be tendered construction project failed to go through the tendering procedures, it shall be invalid. Interpretation II prescribes different circumstances regarding the validity of…

Pursuant to Articles 38 and 46 of the Labor Contract Law, if an employer fails to pay wage in full and on time, an employee may terminate the labor contract and demand the employer to make up the wage difference and pay economic compensation. In practice, employees may terminate the labor contract and demand economic compensation on the grounds of wage issues, such as, late wage payment, non-payment of overtime pay, salary reduction after job reassignment, and so on. Whether an employer shall pay economic compensation due to such wage issues? Let’s see a case. In 2017, Wang joined a company, and his salary consisted…

To maintain unified product market positioning and stable sales channels, many manufacturers adopt control measures in distributor management, such as setting minimum retail prices and imposing penalties for parallel gray-market shipments. However, such practices carry significant risks of being deemed vertical monopolistic conduct. Since China’s first administrative penalty case involving vertical monopoly agreements in 2013 — in which the National Development and Reform Commission imposed fines of over RMB 200 million each on Moutai and Wuliangye for mandating minimum resale prices on distributors — administrative and civil litigation cases concerning vertical monopolistic conduct have remained frequent. The Anti-Monopoly Law, revised…

Let us review three cases concerning this issue firstly. Company A adopted AI for map data collection and resolved to abolish its Navigation Product Department, which previously handled manual data collection. So Company A negotiated with Lau on amending his employment contract, but Lau refused. Company A unilaterally terminated Lau’s contract. The arbitral tribunal and the courts of both instance all held that the dismissal was unlawful. (See (2024) Jing 01 Min Zhong No. 11896). Company B replaced part of Yu’s job responsibilities with AI, and negotiated cutting his monthly salary from RMB 25,000 to 15,000. Yu refused this proposal.…

The revised Company Law (2023) came into force on July 1, 2024. It imposes restrictions on the capital contribution period, triggering a wave of corporate capital reductions. Meanwhile, due to the backdrop of the economic environment in recent years, numerous enterprises have opted for capital reduction for various reasons. Although the Company Law prescribes relevant procedural requirements for capital reduction, specific rules vary across practical scenarios. We have compiled key matters concerning capital reduction for limited liability companies for reference. Firstly, the procedures for capital reduction differ depending on the reasons for such action. Reasons Legal Basis & Key Procedural…

In American TV dramas, a typical scene is that a protagonist carried a cardboard box and walked out of office after being fired. In China, however, this protagonist may carry the box and walk back to the office. According to Article 48 of the Labor Contract Law, if an employer unlawfully rescinds or terminates an employment contract, the employee has the right to request reinstating the contract. The employer may only settle the matter by paying compensation equivalent to twice the statutory severance pay (2N) if the contract is no longer capable of being performed. But no employer would be…