Does a labor relationship come into existence where an employer arranges an employee to report for duty in advance for on-the-job shadowing and work handover? If the employer denies the existence of such a labor relationship on the ground that the employee has not completed formal onboarding procedures, will the people¡¯s court uphold such denial?

[Case Review]

NI applied for the position of Assistant Housekeeper at a property management company via a recruitment app. The two sides agreed that her official employment commencement date would be May 1, 2024. Subsequently, the company¡¯s human resources staff suggested that NI report for duty two days in advance to complete work handover with the departing employee. NI was required by the company to submit photos for attendance clock-in, and was informed that no remuneration would be payable for those two days and compensatory leave would be granted in lieu. NI agreed and accepted such arrangement. On April 29 and 30, NI went to the workplace for handover and on-the-job familiarization, and submitted attendance photos as directed. Unfortunately, she had an accidental injury on her way off work on April 30. NI then initiated labor arbitration, seeking a ruling confirming that a labor relationship existed between her and the property management company for those two days. Dissatisfied with the arbitral award, the property management company brought an action before the people¡¯s court, requesting confirmation that no labor relationship existed between it and NI. The property management company contended that the two parties had agreed on the official commencement date of employment. The period from April 29 to 30 merely served as a ¡°preparatory phase¡± for pre-employment handover, and they had agreed that no wages would be paid. NI came to the workplace of her own volition and had not completed formal onboarding procedures; therefore, no labor relationship had been established. NI argued in response that she reported for duty ahead of schedule at the company¡¯s request to perform work handover and was subject to the company¡¯s attendance management. Accordingly, a labor relationship should be deemed to exist.

[Ruling of the People¡¯s Court]

After hearing the case, the people¡¯s court held that the date of employment marks the starting point for the establishment of a labor relationship. At the very beginning of employment, the relationship between an employee and an employer cannot immediately exhibit all characteristics of a labor relationship. Accordingly, the determination of the date of employment shall be based on the fundamental substantive elements rather than the standard of a complete set of employment conduct. Where an employee performs labor under the management and direction of the employer, employment shall be deemed to have commenced. In this case, NI reported for duty in advance at the company¡¯s request to conduct work handover and on-the-job shadowing. The purpose was to get familiar with the job position and requirements as soon as possible. Such activities were directly relevant to the performance of the labor contract and demonstrated that the employee was subject to the employer¡¯s management and direction. The existence of employment shall not be negated merely on the ground that formal onboarding procedures had not been completed. On that basis, the people¡¯s court rendered a judgment confirming that a labor relationship existed between the two parties from April 29 to 30, 2024. After the first-instance judgment, the company filed an appeal as it was dissatisfied with the ruling. The second-instance court affirmed the original judgment.

(NI is a pseudonym; the party¡¯s real name has been withheld.)

[Judge¡¯s Insights]

I. Employment Commences with Substantive Control, Not Formal Procedures

The legal essence of a labor relationship lies in subordination. Where an employer issues instructions regarding the employee¡¯s working hours, workplace, and specific activities and requires the employee to comply therewith, the legal relationship of management and subordination comes into being, and corresponding rights and liabilities arise accordingly.

In this case, the property management company¡¯s acts, including proposing an early handover, instructing attendance by a specified method, and promising subsequent compensatory leave, constitute acts of a managerial and directive nature. This means the employee has transferred the management right over her labor power for a period of time and placed it under the employer¡¯s control. Employment in the legal sense commences upon the occurrence of such substantive direction and control, rather than at formal milestones such as the signing of a labor contract or issuance of an employee ID card. A lack of formalities such as incomplete onboarding procedures or non-payment of wages must not place the employee in a vacuum of legal protection.

II. Exercise of Employment Management Rights Triggers Concomitant Legal Obligations

The principle of good faith requires that all parties to a legal relationship bear corresponding obligations while exercising their rights, namely the reciprocity of rights and liabilities. Specifically in the employment context, once an employer starts exercising its autonomous employment management rights, the corresponding legal obligations take effect concurrently.

In this case, through a series of managerial acts, the property management company has in substance obtained practical operational benefits and conveniences. For instance, it ensured seamless handover for key positions during personnel turnover and avoided management risks and efficiency losses arising from work gaps; it completed necessary training and business familiarization for the new recruit in advance, cutting adaptation costs after formal onboarding. By having the employee participate ahead of schedule, the company effectively incorporated her labor power into its own production and organizational system and began reaping managerial benefits. The property management company¡¯s attempt to evade attendant statutory obligations¡ªparticularly potential work-related injury determination and occupational injury insurance liabilities¡ªon grounds of incomplete procedures and voluntary learning runs clearly counter to the legal principle of reciprocity of rights and liabilities and violates the principle of good faith.

III. Clarify Employment Rules and Foster Harmonious Labor Relationships

Judicial adjudication always balances the protection of employees¡¯ rights and interests and the sound development of enterprises, and pursues an equilibrium of interests between employers and employees. The judgment in this case clarifies the legal boundaries of transitional employment such as pre-employment handover and advance training, and dispels the one-sided perception that ¡°no employment liabilities arise where onboarding procedures are not completed.¡± On the one hand, it closes the ¡°gap¡± in the protection of employees¡¯ rights and interests for labor rendered during the pre-employment period, safeguarding the bottom line of livelihood protection. On the other hand, it guides enterprises to adopt compliant employment practices, promotes the extension of employment management to cover the full process of pre-employment handover and induction training, and reduces labor disputes at the source.

Harmony and stability in labor relationships require both employers and employees to perform their respective duties. Only when enterprises employ staff in accordance with regulations and take initiative to assume liabilities, and employees perform their duties in good faith and work diligently, with mutual respect and reciprocal rights and liabilities between the two parties, can employment disputes be effectively resolved and a stable, orderly, mutually beneficial, and win-win employment environment be jointly built.

[Comments from a Deputy]

A standardized and orderly employment environment constitutes the basic prerequisite for employees to work with peace of mind. Nevertheless, in practice, some employers create pretexts such as ¡°preparatory period¡± or ¡°trial period¡± to cut employment costs and reduce termination risks, and shirk liabilities that they ought to bear on the ground that a formal labor relationship has not yet been established. Such practices not only seriously infringe upon employees¡¯ legitimate rights and interests, but also plant legal risks for the enterprises themselves and undermine the fair and orderly employment environment.

The judgment in this case accurately captures the core essence of the subordination of labor relationships. It establishes the substantive criterion for determining the commencement of employment based on whether labor is provided under the employer¡¯s management, piercing through the formal veneer of unfinished onboarding procedures. This adjudicative rule is clear and well-oriented. It effectively protects employees¡¯ legitimate rights and interests during the ¡°preparatory period¡± and also serves as a warning to employers: the exercise of employment management rights must be matched with a commensurate level of accountability. Only when all parties perform their respective duties under clear rules can a healthy, sustainable, and win-win employment ecosystem be established.

[Relevant Laws]

Labor Contract Law of the People¡¯s Republic of China

Article 7 An employer establishes a labor relationship with an employee as of the date of employment. An employer shall maintain an employee roster for inspection.

Article 10 Where a labor relationship is established, a written labor contract shall be concluded. Where a labor relationship has been established but no written labor contract has been concluded concurrently, a written labor contract shall be concluded within one month as of the date of employment. Where an employer and an employee conclude a labor contract prior to the commencement of work, the labor relationship shall be established as of the date of employment.