The judicial determination of whether the number of times labor contracts are signed is combined for calculation - in the case of being assigned to a new employer "not due to one's own reasons"

PART.01 Introduction

With the continuous changes in China's economic environment and the gradual normalization of enterprise organizational structure adjustment and business reorganization, the situation where one is assigned to a new employer "not due to personal reasons" (hereinafter referred to as "this situation") has become increasingly common. In complex employment environments such as personnel transfer, enterprise mergers and acquisitions, and labor dispatch, the calculation of workers' years of service has been clearly stipulated by law. However, regarding the inheritance of the number of times labor contracts are signed, there are currently no clear legal norms.

The number of times a labor contract is signed directly affects whether the employee has the right to request the employer to enter into an open-ended labor contract with them. This article aims to conduct a detailed study on the issue of whether the number of times a labor contract is signed for a new employer not due to one's own reasons can be inherited, by combining the latest judicial precedents, relevant laws and regulations, and real cases, and thereby put forward compliance operation suggestions for enterprises and employees in the process of employment changes.

PART.02 The intrinsic relationship between the years of service and the number of signed contracts in this situation

Article 14 of the Labor Contract Law of our country stipulates the conditions for the conclusion of open-ended labor contracts. One of its core requirements is that "two fixed-term labor contracts are concluded consecutively." Article 10 of the Implementing Regulations of the Labor Contract Law clearly stipulates that if a worker is assigned to a new employer for reasons not attributable to himself/herself, the years of service in the original employer shall be combined for calculation, thereby providing protection for the worker when calculating economic compensation and other employment security measures.

Although years of service and the number of signed contracts are different legal evaluation indicators, they often occur simultaneously in situations such as changes in the employer, large-scale mergers and acquisitions, and the conversion of labor dispatch to direct signing. Even if the worker continues to perform the same job in the same position, the number of times contracts are signed between the original unit and the new unit may be interrupted due to "subject change". The issue of the number of times a contract is signed is related to whether the employee meets the continuous signing requirements stipulated in the open-ended labor contract. If an employee has signed multiple fixed-term labor contracts in a row, they have the right to request the signing of an open-ended labor contract. At this point, the issue of how to determine the succession of the number of times labor contracts are signed needs to be analyzed in combination with judicial practices in different regions.

PART.03 Analysis of Judicial Practice and Recognition Criteria for the Succession of Signing Times

3.1 Case Studies on Judicial Practice

There are differences in judicial practices across various regions regarding the combined calculation of the number of times labor contracts are signed. The following summarizes the key points of refereeing in combination with the refereeing rules of major cities and regions across the country:

I. Referee Rules in Beijing Area

Case One: Jia Mou successively signed two fixed-term labor contracts with Company A and Company F (A wholly-owned subsidiary of Company A). The job content and location remained unchanged. The court ruled that Company F's termination of the labor contract was illegal.

Key points of the referee:

When an affiliated company changes the subject of a labor contract, if the employee is not assigned for their own reasons and there is an investment relationship between the original company and the new company (such as a wholly-owned subsidiary), the number of consecutive contracts should be combined for calculation.

The court focuses on reviewing the control relationship of the affiliated company, the continuity of the workers' work, and whether the reasons for the change are reasonable. It can determine the merger without proving the subjective intention to circumvent.

Case Two: Yu Mou successively signed labor contracts with the affiliated companies J Company and G Company. The court did not support the number of mergers.

Key points of the referee:

If the affiliated company is an independent legal entity and does not show malicious evasive intentions (for example, Company G was established earlier than the signing time of the labor contract between a certain company and Company J), the number of contracts will not be combined.

Workers need to provide evidence that the affiliated company has engaged in "malicious circumvention" behavior (such as alternating contracts and reset the length of service to zero); otherwise, the subjectivity of an independent legal person takes priority.

The rules in Beijing can be summarized as follows: The circumstances supporting mergers are: the affiliated company has a controlling relationship (such as a wholly-owned subsidiary), the job content/location of the employee remains unchanged, and the change is not due to the employee's reasons. The situations that do not support mergers are: independent operation of affiliated companies, no evidence of evasive intent, and the failure of employees to prove work continuity or malicious behavior.

Ii. Comparison of Referee Rules in Other Regions

The rules for this issue in the Shanghai area tend to require that affiliated companies have a relationship of inheritance of rights and obligations (such as mergers and divisions), otherwise the number of contracts will not be merged (Case No. 4338 of Shanghai 01 Civil Appeal), and more emphasis is placed on reviewing the independence of the employment subject, requiring a substantive inheritance relationship.

Zhejiang Province has a specific adjudication standard for this issue, which is relatively clear across the country. The regulations on this matter are rather strict. The rule is as follows: If an employee is assigned to an affiliated company not due to the employee's reasons, the length of service in the original unit and the number of contracts are combined for calculation. If the conditions are met, an open-ended contract can be claimed. It shows the characteristic of emphasizing the protection of workers' rights and interests, and does not require proof of the employer's subjective malice.

Jiangsu, on the other hand, tends to examine whether there is malicious subjectivity. If there is no malicious collusion to circumvent (such as case Su 02 Min Zhong 1615), the number of contracts is not combined and the legality of the agreement must be strictly reviewed. It can be seen from this that Jiangsu's approach places more emphasis on the freedom of contract, with the agreement's stipulations taking priority. Guangdong Province and Jiangsu Province have similar standards, both tending to review malicious circumvention behaviors and strictly cracking down on such behaviors by listing the types of malicious consolidation behaviors. For instance, when circumventing open-ended contracts through alternating signing with affiliated enterprises, the number of times is combined and calculated (such as maliciously setting up affiliated companies and setting the length of service to zero).

3.2 Analysis of the Criteria for Identification

When determining whether the number of times a labor contract has been signed is inherited, the judicial authorities often adopt a substantive review method, mainly focusing on the following three elements:

1. Subject correlation

If the new entity has a merger, division, acquisition or holding relationship with the original entity, it is more likely to consider both parties as the same employer, and thus claim that the number of contract signings should be calculated consecutively.

2. Continuity of labor contracts

The review of the continuity between labor contracts not only involves the time connection of the contract signing between the two parties, but also includes whether the employment conditions, salary and benefits, performance systems, etc. remain consistent during the validity period of the contract. Only when these core conditions have not undergone substantial changes can it be considered that the continuous conclusion of labor contracts has been passed down.

3. Subjective intentions and evasive behaviors

If an employer deliberately evades the legal obligation to enter into an open-ended contract by changing the employer or forging the form, judicial authorities generally tend to recognize the number of consecutive contracts as succession. At the same time, the written evidence that the employee can provide (such as meeting minutes, internal public announcements of the enterprise and change process documents) can largely prove the true employment relationship and intention between the two parties, thereby facilitating the employee's claim for continuous succession.

PART.04 Guidance on Enterprise compliance Operations and dispute prevention

4.1 Three-step Method for Enterprise Risk Prevention

In response to disputes over the number of times labor contracts are signed, enterprises should establish a strict compliance management mechanism and take corresponding preventive measures. The following are the operational measures that enterprises should take at each stage before, during and after the change of the employment subject:

1. The stage before the subject change

Risk assessment: Before deciding to change the employment entity, enterprises should prepare a "Report on the Assessment of Changes in Employment Relations", sort out the enterprise structure, equity relations, and historical employment contract records, and comprehensively assess the impact of the change on the continuity of labor contracts, working years, and the frequency of signing.

Evidence collection: Fully collect relevant evidence and materials that prove the continuity of the actual working environment, job responsibilities, and assessment system of the workers, including meeting minutes, organizational charts, internal division of labor adjustment notices, etc., to ensure a reliable chain of evidence when disputes occur.

2. Clearly stipulate during the agreement signing stage

When enterprises sign the "Labor Contract Amendment Agreement", they should clearly stipulate that the amendment does not constitute the inheritance of the number of times the labor contract is signed, or determine the continuity determination standard through mutual consultation between both parties to prevent legal disputes arising from the number of times the contract is signed in the future.

Contract terms optimization: In the new contract, the employee's previous years of service, the number of times the contract was signed, as well as issues related to the connection of salary and benefits should be detailed. Both parties should confirm and sign to form written evidence. At the same time, it is recommended to attach the "Employment Relationship Change Assessment Report" as supplementary materials.

3. Dispute response stage

Emergency response plan: Enterprises should establish an emergency handling mechanism for employment disputes, categorize and file relevant evidence materials, and promptly retrieve relevant evidence during labor supervision, arbitration, and litigation processes.

Professional legal counsel intervention: Before encountering labor disputes, it is recommended to hire a professional lawyer to conduct risk prediction and write legal opinions on the matters of subject change and contract change, ensuring that the hidden risks in the contract text are avoided as much as possible, thereby safeguarding the legitimate rights and interests of the enterprise.

4.2 Optimization plans for special groups

In practical operation, for special groups (such as female employees in the "three periods" and workers with work-related injuries) who have special protection needs, when enterprises implement changes in the employment subject, they can consider adopting a dual solution of "subject change + termination of labor contract (which needs to be judged in combination with the practical standards of different regions)" to ensure the continuity of their length of service and benefits. At the same time, it is to prevent the legitimate rights and interests of employees to request open-ended contracts from being affected due to insufficient signing of labor contracts. In this regard, it can be clearly stipulated in the contract that the job position and responsibilities before and after the change remain unchanged. For consecutive contract formation issues that are prone to disputes, a "separate calculation clause" should be set up, and the evidence materials recognized by both parties should be fixed and archived as contract attachments.

PART.05 Conclusion

The issue of the succession of the number of times labor contracts are signed essentially involves a delicate balance between the protection of workers' rights and interests and the autonomy of enterprises in employment. In cases where one is assigned to a new employer for reasons not attributable to oneself, although there is a clear legal basis for the continuous calculation of working years, whether the number of contract signing times can be continuously inherited still needs to be comprehensively considered in combination with judicial practices and individual circumstances in different regions. Based on the comprehensive analysis of the aforementioned legal theories, real cases and various situations, this paper reaches the following main conclusions:

The correlation of subjects, the continuity of labor contracts and subjective circumvention behaviors are the core factors for judging the succession of the number of contract signings. Only when the new and old employers show continuity in terms of holding shares, business models and employment arrangements, and the actual working environment of the workers remains basically the same, can it be determined that the number of contract signations has been continuously inherited.

Actual cases show that courts often focus on whether employers have the subjective intention to evade legal obligations in their judgments. When the purpose of circumventing is clear or there is internal continuous management within affiliated enterprises, there is a tendency to determine the number of consecutive signings. Otherwise, it shall be regarded as the conclusion of a brand-new labor contract.

Enterprises should reduce risks by improving internal control management, refining contract terms and preserving a complete chain of employment evidence. At the same time, it is recommended to have full consultations with workers before and after the change of the subject to clarify, so that the contract text reflects the true intentions of both parties.