Source: OT-Team(G), 呈贡政法
A court in Kunming, southwest China’s Yunnan Province, has released details of a labor dispute involving two foreign parties, highlighting how a local mediation mechanism helped resolve the case while addressing the worker’s immigration and employment status.
The case, released on September 23, involved a Pakistani national, identified as Mr. H, who had been employed as a pastry chef by a local catering management company. The company’s legal representative was also a Pakistani national.
The two sides had signed a written employment contract that included a non-compete clause. However, major disagreements later arose over the performance of the contract and the settlement of wages, eventually causing their employment relationship to break down.
Mr. H sought more than RMB 90,000 in unpaid wages, overtime pay and compensation for emotional distress. He also asked the company to assist with obtaining a cancellation certificate for his work permit for foreigners in China and to cooperate with an application for a 30-day stay visa, allowing him to remain legally in China while looking for a new job.
The company rejected all of his demands. It argued that Mr. H had not actually provided effective work and had interfered with its normal operations by coming to the premises. The company also alleged that he had violated the non-compete agreement. It therefore refused both financial compensation and assistance with the relevant administrative procedures.
Several rounds of direct negotiations failed, and the dispute continued to escalate.
Unable to start work with a new employer while his visa was approaching its expiration date, Mr. H sought help from the Comprehensive Governance Center in CHgong District, Kunming.
Given the involvement of foreign parties and the resulting communication and case-handling challenges, the center quickly brought together representatives from the district court, justice bureau and human resources and social security authorities to form a joint working team.
The dispute was then referred to the district's civil and commercial people's mediation committee, with the court providing legal support and the human resources authorities offering policy guidance. The approach was intended to resolve the dispute locally rather than allowing it to escalate into a more complicated cross-border dispute.
The mediation team first conducted a comprehensive compliance review of the foreign employment arrangement. It checked Mr. H's work permit and visa validity, as well as the company's qualifications and filing status for employing foreign workers.
The team also reviewed the applicable provisions of China's Labor Contract Law, Labor Dispute Mediation and Arbitration Law, and Exit and Entry Administration Law, among others, and determined that Chinese law applied to the dispute.
Both sides were then informed of the relevant legal boundaries and potential consequences.
Mr. H was told that under the principle that the party making a claim bears the burden of proof, simply remaining at the workplace would not by itself establish a claim for overtime. He was also informed that a claim for compensation for emotional distress arising from a labor dispute would have limited legal support. At the same time, the mediation team warned him that unlawful residence could result in legal consequences, including fines or deportation.
The company was informed that although the parties had agreed to a non-compete clause, that clause could not be used to negate the worker's lawful rights. The company was also told that assisting with the cancellation of the work permit was a legal obligation of the employer, and refusing to cooperate could lead to other legal consequences.
Rather than having the two sides negotiate face to face, mediators adopted a separate-meeting approach, speaking with each party individually.
The mediators explained the relevant laws, potential legal consequences and responsibilities, while also appealing to both sides to resolve the dispute through mutual understanding.
After three rounds of separate mediation and communication, tensions gradually eased and the two sides were able to re-establish a channel for communication.
The mediation team then developed a three-layer approach to address the parties' remaining concerns: separating the substantive dispute, completing the necessary administrative procedures, and isolating the company's potential liability.
First, the parties agreed to terminate their employment relationship. Neither side would make further claims for wages, economic compensation, liquidated damages or other financial rights arising from the employment relationship. They also agreed not to damage each other's business reputation or engage in malicious competition.
Second, the company agreed to issue the work-permit cancellation certificate and a certificate of employment experience within the agreed timeframe, and to assist with submitting the documents required for the stay-visa application.
Third, the agreement made clear that the company's role was limited to procedural assistance. Whether a stay visa would be approved, and for how long, would be decided by the relevant exit-and-entry administration authorities in accordance with the law. Mr. H would be solely responsible for his conduct and legal obligations while remaining in China, with such matters not attributable to the company.
Because both parties were reluctant to meet directly for fear of reigniting the dispute, the mediation center arranged for mediators to serve as an intermediary in the handover of documents.
The mediator coordinated appointments with the relevant authorities for the work-permit cancellation and visa-related procedures, clarifying the required documents and processing steps in advance.
Once the company completed the procedures, the relevant certificates were first handed to the mediator, who then passed them to Mr. H. This arrangement avoided direct contact between the two parties while ensuring that the document transfer could be tracked and that no materials were lost.
The mediator also prepared a written notice explaining that visa approval was an administrative decision and that the final outcome would depend on the authorities' review. Neither party could use the visa result as the basis for a new dispute.
The notice also reminded Mr. H that he could not engage in paid employment without obtaining a new work permit during his stay in China, or he could face legal liability for illegal employment.
Ultimately, both parties voluntarily signed the mediation agreement and the written notice.
According to follow-up visits by the CHgong District Comprehensive Governance Center, all agreed measures were completed on schedule. The employment relationship was formally terminated, and disputes over wages, overtime pay and economic compensation were settled in full.
The company completed the cancellation of Mr. H's work permit, with the relevant documents transferred to him through the mediator, and cooperated in submitting materials for his stay-visa application.
Both sides also agreed not to damage each other's business reputation or engage in malicious competition, bringing the labor dispute to a formal close.