While serving onboard a vessel, Chen was bitten by a dog. During his medical leave and rabies vaccination period, disputes arose over whether his wages during the vaccination period should be deducted, as well as over medical expenses. Subsequent job reassignment and termination triggered further questions. Was Chen entitled to claim compensation?

Basic Facts

On January 5, 2020, Chen signed a written labor contract with Company B. He was then dispatched to serve as the captain aboard a vessel owned by Company A. Prior to this, a labor dispatch agreement had already been executed between Company A and Company B.

On March 27, 2020, an unexpected event disrupted the status quo—Chen was bitten by a dog while onboard. He took a seven-day sick leave to receive rabies vaccinations at a hospital. During this period, Company A appointed a replacement captain and paid that person accordingly. What initially seemed like a minor medical issue became the prelude to a protracted dispute between Chen and Company A.

On April 28, Company A issued a notice officially appointing Chen as the captain of the CHANG. Chen subsequently requested annual leave from May 28 to May 31. This seemingly routine leave request and the associated wage issues gave rise to disagreements, including whether wages should be deducted during his vaccination period and who should bear the medical expenses. After completing a handover with the new captain on May 29, Chen disembarked for his leave.

While Chen was on leave, Company A decided to return Chen to Company B on June 3, citing non-compliance with internal management policies. The situation became more complex. On June 9, Company B issued a notice requiring Chen to promptly report to its Guangzhou office for reassignment training or a new posting. Chen refused, expressing his intent to return to Company A on June 15 and continue working for it and sought to protect his rights through various channels.

The dispute escalated. Chen rejected the reassignment and was issued a disciplinary warning. On June 29, Company B terminated his labor contract on the grounds that his absence constituted abandonment of post due to unauthorized leave.

Chen subsequently filed a lawsuit with the Guangzhou Maritime Court (GZMC), demanding that Company A and Company B jointly pay RMB 20,000 as payment in lieu of notice for termination of contract, RMB 76,000 as double wages for failure to sign a labor contract, RMB 40,000 as compensation for unlawful termination, RMB 3,808.08 in wages during his vaccination period, RMB 8,275.80 for unused annual leave, and wages from the end of his leave until formal notice of dismissal, and from the day after termination until a work injury determination was issued, calculated at his original wage rate.

Both Company A and Company B argued that the labor contract existed solely between Chen and Company B, and thus Company A bore no responsibility. They also asserted that Chen had fully used his annual leave. Company B claimed that Chen had worked 24 days and taken 7 days of sick leave in April, and that it had fully paid his wages for that month. It had also submitted a work-related injury appraisal application on Chen's behalf for the dog bite, though the outcome was still pending. Furthermore, Company B claimed it had paid Chen's full wages from May through June 2. On June 2, Company A returned Chen citing non-compliance with company policies. Company B then instructed Chen to report for reassignment, which he failed to do without formally requesting leave, thereby violating the labor contract and employee handbook. As such, Company B argued, its termination of Chen's contract on June 29 was lawful, and it was not obligated to pay him wages for the period of unauthorized absence from June 3 to June 29.

Court Decision

GZMC held that Company A failed to provide evidence that Chen met any legally valid conditions for being returned to the labor dispatching entity. The act of returning Chen thus violated labor laws and regulations. Company B, as the dispatching entity, was obligated to review whether the return was legitimate. It was also entitled to adjust Chen's role based on mutual agreement without altering existing contract terms. However, without properly consulting with Company A on whether Chen should be returned and reaching mutual agreement with Chen for reassignment or mutual termination, Company B unilaterally terminated the labor contract on the grounds of unauthorized absence, which lacked legal basis and constituted unlawful termination. As such, both Company A and Company B were held jointly liable for the damages caused by Company A's unlawful return of Chen.

The Court ultimately ruled that Company A must pay Chen RMB 20,000 in compensation for unlawful termination, RMB 3,808.08 in deducted wages for April 2020, RMB 20,000 in wages from June 3 to June 30 prior to contract termination, RMB 3,678.16 for unused annual leave in January 2020. Company B was held jointly liable. The Court dismissed Chen's other claims.

Key Significance

This case is representative of seafarer labor contract disputes arising from labor dispatch arrangements commonly handled by maritime courts. In practice, while workers may sign contracts with dispatching entities, the dominant position of the entities receiving the dispatched workers often results in insufficient protection of workers' rights by dispatching entities. This case offered a legal analysis of the irregularities and unlawful conduct of both the dispatching entity and the receiving entity, holding both defendants jointly liable for the wrongful termination. It also clarified the obligations of dispatching entities after a worker is returned. The ruling effectively safeguarded the worker's rights while also rejecting unreasonable claims, providing a valuable reference for handling similar cases.