Be Dismissed for Discipline Violations, whether a Lump-sum Disability Employment Subsidy shall be Paid?

Chen’s toes were bruised while operating a machine in the workshop, and he was ascertained to have suffered from work-related injury. After the treatment, Chen returned to work. Later, he was dismissed for discipline violations. Chen required the company to pay the lump-sum disability employment subsidy (“Subsidy”), the company refused to pay with the excuse that he had violated the discipline. Is the company, right?

Item 2 Article 37 of the “Regulation on Work-Related Injury Insurance” (hereinafter refers to “Regulation”) stipulates that if a labor or employment contract is terminated upon expiry, or an employee himself requests for rescinding the labor or employment contract, a lump-sum work-related injury medical subsidy shall be paid to the employee from the work-related injury insurance funds, and the employer shall pay to the employee the “Subsidy”. There are different opinions on the interpretation of this item.

From a literal point of view, there are only two preconditions for the employer to pay the “Subsidy”: a) the labor contract expires; b) the employee resigns. Since the circumstance that the employer dissolves a labor contract according to Article 39 of the “Labor Contract Law” does not belong to the 2 preconditions, it seems that the employer should not have to pay the “Subsidy”. In the judicial practice, some labor arbitration committees and courts would support the employer for not paying the “Subsidy”.

However, the majority labor arbitration committees and courts hold the opinion that even if an employee is dismissed due to discipline violations, he shall still obtain the “Subsidy”. The main reasons include: a) the “Subsidy” belongs to the treatment of work-related injury insurances which is a remedy and compensation to the employee for his injury related to work, such treatment should be suspended only under the statutory circumstances. Article 42 of the “Regulation” stipulates 3 statutory circumstances, such as, the employee has lost the conditions to enjoy the treatment; the employee refuses to accept the work capability assessment; or the employee refuses to be cured. In view of this, an employee is dismissed due to discipline violations has not been listed in the statutory circumstances. In addition, some judgments have pointed out that an employee has been punished for the dissolution of the labor contract by the employer for his violation of discipline, so there shall not be any more punishment. b) Item 3 Article 39 of the “Social Insurance Law” stipulates that the employer shall pay the “Subsidy” when the labor contract is terminated or dissolved. In view of this, the precondition for paying the “Subsidy” is the termination or dissolution of a labor contract, and the reason for the dissolution is irrelevant. c) Article 38 of the “Regulation” stipulates where an employee who suffered from a work-related injury but recrudesces from the past injury, and is confirmed to be in need of cure, he shall enjoy the treatment of work-related injury. Since an employee might recrudesce before or after the dissolution of a labor contract, and the precondition for enjoying the treatment of work-related injury is that the employee is confirmed to be in need of cure. The work-related injury insurance would not be terminated due to the dissolution of a labor contract.

In 2015, the Supreme People’s Court issued the “Summary of the Supreme People’s Court 11th Issue 2015”, in which it has demonstrated the aforementioned reasons a) and b) in the case “Hou Hongjun v. Shanghai Longmao Building and Decoration Co., Ltd. Labor Contract Dispute”, and pointed out that the “Subsidy” is the treatment that an employee shall be entitled to enjoy where an labor contract is terminated or dissolved.

After the Supreme People’s Court has shared its opinion, local courts have tended to order the employer to pay the “Subsidy” even if the employee is dismissed for discipline violations.