Will a China Labour Contract End at Statutory Retirement Age?
According to Item (2) of Article 44 of the Labour Contract Law of the PRC, a labour contract ends when the employee begins to enjoy basic pension benefits, while according to Article 21 of the Regulation on the Implementation of the Labour Contract Law of the PRC, a labour contract ends when the employee reaches the statutory retirement age. These two provisions may seem contradictory. In fact, in China’s judicial practice, there are different understandings concerning whether a labour contract is terminated when the employee reaches the statutory retirement age but has not begun to enjoy the basic pension benefits.
The first point of view is that the labour contract is terminated or not should be determined in accordance with Item (2) of Article 44 of the Labour Contract Law of the PRC, i.e., whether the employee begins to enjoy the basic pension benefits.
The second point of view is that a labour contract is terminated when the employee reaches the statutory retirement age, regardless of whether he or she has begun to enjoy the basic pension benefits, according to Article 21 of the Regulation on the Implementation of the Labour Contract Law of the PRC. For example, the High Court of Guangdong Province and Guangdong Labour Dispute Arbitration Commission issued a guideline in 2018, which clearly specify that the labour relationship shall be terminated when the employee reaches the statutory retirement age or begins to enjoy basic pension benefits.
Based on the judicial precedents published by different courts throughout China, some of them hold the first point of view, while some hold the second one. However, after a careful study of the trial basis and reasons involved, it seems that the second point of view is more reasonable and legitimate.
Although Item (2) of Article 44 of the Labour Contract Law of the PRC stipulates that a labour contract ends when the employee begins to enjoy basic pension benefits, but at the same time, Item (6) of the Article also stipulates that a labour contract ends under other circumstances stipulated by laws and administrative regulations. The Regulation on the Implementation of the Labour Contract Law of the PRC is an administrative regulation promulgated by the State Council. Article 21 of the said Regulation clearly stipulates that a labour contract ends when the employee reaches the statutory retirement age. That is to say that if the employee reaches the statutory retirement age, the labour contract shall be terminated regardless of whether he or she begins to enjoy the basic pension benefits or not. This provision is made under the authorization of Item (6) of the Article 44 of the Labour Contract Law of the PRC and does not conflict with the superior law.
In conclusion, a China labour contract shall be terminated under the two circumstances, i.e., the employees reach the statutory retirement age or begin to enjoy the basic pension benefits in accordance with the law. The two circumstances are in parallel relationship and not contradictory.
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