Restricted Stock related dispute accepted as labor dispute for the first time in China 中国法院首次将限制性股票作为劳动争议纠纷处理

This bilingual article looks at how disputes relating to stocks or stock options granted to employees may now be treated as a labour dispute rather than a contractual dispute.

To date in China, disputes relating to stocks or stock options granted to employees have normally been deemed to be contractual disputes, rather than labor disputes. Labor dispute arbitration committees or labor courts generally do not accept such cases and the parties are required to file claims with a court hearing contractual disputes.

前在中国,与员工股票或股票期权授予有关的纠纷一般作为合同纠纷处理,而非劳动争议。劳动争议仲裁委员会或审理劳动争议的法院通常不受理该类案件。当事人一般被要求以合同纠纷另行起诉。

However, reports indicate that in September, 2017, a local court in Shenzhen issued a verdict in which it viewed a restricted stocks dispute as a labor dispute and made a decision accordingly. It appears that this is the first time in China for a dispute of this kind to be accepted and heard as a labor dispute.

但据报道,2017年9月深圳一家法院审结一起劳动争议案件,其中涉及到了限制性股票争议。这在全国尚属首例。

A brief background of the case is that an employee had worked in a company for nearly ten years and held an open-end term employment contract. The company had granted restricted stocks to the employee as one of the incentives. The restricted stocks were scheduled to vest in three installments. Subsequently, but before the first vesting date, the employee was terminated by the Company for “serious violation of company rules". After the termination, the company cancelled all entitlements to and de-registered all restricted stocks.

案件的基本背景是原告是在被告公司工作了近十年的员工,与公司签署了无固定期限合同。作为激励之一,公司曾向员工授予限制性股票,并约定分三期解锁。在第一期股票解锁之前,原告被公司以“严重违反规章制度之名”解除了劳动关系。公司在解除合同后,回购并注销了原本授予员工的限制性股票。

The employee filed a labor dispute arbitration and claimed compensation from the company for both “wrongful termination” and “loss caused by the company cancelling and de-registering the restricted stocks.” The labor arbitration committee supported the employee’s claim for wrongful termination, but rejected the claim to recover the purported losses in relation to stock on the basis that this was not a labor dispute.

原告提起劳动仲裁,要求公司赔偿违法解除劳动合同的补偿金,以及因公司回购注销限制性股票的损失。劳动仲裁支持了原告关于违法解除劳动合同的补偿的请求,但是以限制性股票争议不属于劳动争议为由,驳回了该请求。

The employee was not satisfied with the result and filed the case with the local court in Shenzhen. The local court finally determined that the company should compensate the employee for part of the loss of the restricted stock opportunities in addition to the compensation for wrongful termination.

原告不服仲裁结果,向深圳当地法院提起了诉讼。最后深圳法院认定限制性股票属于劳动争议范畴,判决被告公司向原告补偿违法解除劳动合同的补偿金,以及回购注销限制性股票的部分损失。

According to the reports, the court looked at the purposes and nature of the restricted stock when considering whether to accept the claim as a labor dispute. In particular, they took the following three factors into consideration: (i) the reasons for the employee to be granted the restricted stock entitlement; (ii) the conditions for trading of these restricted stocks; and (iii) whether the benefit from the restricted stock should be deemed as part of the employee’s benefits under the employment. The court further added that including such claims into the scope of labor disputes would be helpful for better dealing with this kinds of disputes as well as for protecting the rights of employees.

根据报道,在考虑是否将限制性股票纳入劳动争议范围时,法院考虑了限制性股票的目的和性质,尤其考虑了以下三个因素:(1)员工获得限制性股票的原因;(2)公司规定限制性股票自由流通的条件;和(3)限制性股票收益是否应被认定为员工福利待遇的一部分等。同时法院也考虑了将该类请求纳入劳动争议范畴,有利于规范类似争议纠纷的处理,也更有利于保护劳动者的合法权益。

While China does not have a system of binding case law precedent, and courts in different locations may adopt different approaches, this case has attracted significant attention nationwide. Shenzhen is a city known as a technology and innovation hub in China, with a lot of technology companies having their China headquarters registered there. And issuing stocks or stock options based incentives to employees is increasingly common practice adopted for start-ups and high-tech companies. It is therefore expected that more cases of a similar nature may now be heard by labor courts in Shenzhen. And while the courts in other major cities, such as Beijing and Shanghai, typically have refused to hear employee stock related cases as labor disputes, it is possible that this Shenzhen case may be considered in other places and that courts elsewhere may adopt a similar and more flexible approach.

虽然中国并非判例法国家,各地司法实践也不同,但是该案件仍然引起了广泛的关注。深圳是以技术和创新为中心的城市之一,有很多技术型公司在此建立总部。对于新创公司或高科技公司来讲,授予员工股票或股票期权是越来越普遍的做法之一。可能在深圳,将来会有越来越多的类似案件作为劳动争议来处理。在中国其他主要城市的法院,如北京和上海,暂时还不接受类似案件作为劳动争议。但不排除其他地方的法院会参照深圳做法,采用类似或更为灵活的方式处理此类案件。

The implication of such cases being heard as labour disputes is that the overall process generally is much quicker than for hearing a contractual dispute. Hearings are scheduled sooner and the courts tend to issue their decisions more quickly. This gives less time for companies to prepare evidence. In addition, the judges tend to take a pro-employee approach when deciding labor disputes and the employer normally bears a heavier burden of proof in labour cases. Fact patterns may differ from case to case, but we believe that employees generally will have a better chance of success in stock plan related claims if these are heard as labour disputes.

该案的另一个需要考虑的影响是,一般来讲,劳动争议的审理期限要比合同争议的审理期限短,案件的排期与判决也比较快。这使得公司只有比较少的时间来准备证据。另外,在劳动争议中,法官相对会对劳动者提供一定倾向性保护,且雇主一方承担相应比较重的举证责任。具体案件事实可能不同,但是若员工股票案件作为劳动争议处理的话,员工方面得到支持的概率可能要大于该类案件作为合同案件进行审理的情形。

Stock plans can be an important incentive for employees. However, companies are advised to review their stock plans or stock options plans from time to time and see whether any necessary changes are required or desirable. For example: to consider whether to change the issuing entity of the stocks from a PRC company to the overseas parent company; and whether to adjust or tighten the terms and conditions of stock plans so that the company has more rights and flexibility in case it chooses to withdraw entitlements for specific reasons, such as in the context of termination.

员工股票对于员工来讲是一种很重要的激励方式。但是,我们也建议公司要不时审核一下他们的员工股票或股票期权授予方案,看一下是否有必要进行更新或变更。举例来讲,考虑一下授予的主体是以中国公司还是以海外母公司的名义更为合适;或者考虑是否需要调整授予的条件和条款,以确保公司在选择因特定原因,如劳动合同解除时,而需要撤销授予的股票时,保留一定的权利或灵活性。

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This document is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document. Simmons & Simmons is registered in China as a foreign law firm. We are permitted by Chinese regulations to provide information on the impact of the Chinese legal environment and also to provide a range of other services. We are not admitted to practise in China and cannot, and do not purport to, provide Chinese legal services. We are, however, able to co-ordinate with local counsel to issue a formal legal opinion should this be required.