Dominic Hui
Ribeiro Hui, Shanghai
d.hui@ribeirohui.com

Interpretation on the Application of Law in the Trial of Labor Dispute Cases (II)

On 31 July 2025, the Supreme People's Court of China issued the ‘Interpretation on the Application of Law in the Trial of Labor Dispute Cases (II)’ (the Interpretation), which came into effect on 1 September 2025.

We outline some of the key provisions of the Interpretation:

1. The Interpretation clarifies that when an employee works for affiliated entities alternately or simultaneously, the employment relationship shall be governed by the written contract, if one exists. In the absence of a contract, the relationship will be determined based on actual practices, and the affiliated entities may be held jointly liable for the employee’s wages and benefits.

2. It explicitly provides that any agreement between an employer and an employee, or any commitment made by an employee, to exempt the employer from paying social insurance contributions shall be deemed invalid.

3. If an employer fails to pay social insurance contributions in accordance with the law, the employee may request termination of the employment contract and claim severance compensation.

4. The Interpretation clarifies that non-compete obligations are only enforceable against employees who have actual access to trade secrets. A non-compete clause will not be binding on an employee who has no access and exposure to the employer's trade secrets or intellectual property-related confidential information.
   
   For employees subject to a valid non-compete, the scope, region and duration of the non-compete clause should be proportionate to the degree of the trade secrets and confidential matters related to intellectual property that the employee is aware of or exposed to, and anything beyond that will be invalid.

5. Where a permanent representative office of a foreign enterprise is a party to a labour dispute, an application may be filed to involve the foreign enterprise in the litigation.

People’s Republic of China (PRC) Anti-Unfair Competition Law

On 27 June 2025, China published the revised PRC Anti-Unfair Competition Law (2025 AUCL), which took effect on 15 October 2025.

Major developments:

1. Article 8 of the revised AUCL explicitly prohibits not only the offering of bribes by businesses but also the acceptance of bribes by employees, agents and third parties capable of influencing a transaction. This dual focus reflects China’s broader anti-corruption strategy of targeting both sides of bribery transactions.

2. The revised law increases the maximum administrative fine for commercial bribery from RMB 3m to RMB 5m. Furthermore, supervisory authorities are now granted with additional powers, including the powers to seize assets, inspect accounts and summon individuals.

3. A pivotal change in the 2025 AUCL is the introduction of personal liability for legal representatives, key personnel and those individuals directly involved in commercial bribery. They may face fines of up to RMB 1m and confiscation of illegal gains. This establishes a dual-penalty system, holding both the entity and the individuals accountable.

4. A different focus is about online environment. Article 13 of the 2025 AUCL retains its prohibitions against traditional cyber-sabotage tactics (eg, forced redirects, service disruption, malicious incompatibility) and critically expands its reach to address modern digital threats. It explicitly stipulates that methods leveraging data, algorithms or platform rules to disrupt market order constitute unfair competition. The article also specifically identifies data scraping and the unauthorised use of data in possession of a third party as unfair competition behaviours.

5. The amendment explicitly categorises specific deceptive online practices, including the generation of fake orders, fake reviews and malicious returns of products, as unlawful acts of unfair competition.

6. Article 40 introduces extraterritorial reach, stating that acts of unfair competition committed outside China which disrupt market order within China or harm the lawful rights and interests of Chinese business operators or consumers fall within the scope of the AUCL. This provision aligns with global trends in cross-border enforcement and has significant implications for multinational corporations.