All posts by legal

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…