The case of a certain engineering company in Shenyang being convicted of the crime of refusing to pay wages.

Keywords: Crime of Refusal to Pay Wages; Subject of the Crime; Employment Relationship; General Contractor and Migrant Workers

Counseling Attorney: Zhao Zhihao

Basic Facts of the Case:

In June 2020, Guiyang Evergrande Company signed a construction contract with a certain engineering company from Shenyang for the construction of a certain project within the Guiyang Evergrande Cultural and Tourism City. Guiyang Evergrande Company served as the employer, while the Shenyang-based engineering company was the contractor. Subsequently, the Shenyang-based engineering company entered into a “Cooperation Agreement on Construction of Evergrande Projects” with a certain engineering company from Sichuan, under which the Shenyang-based company subcontracted the project to the Sichuan-based company. The Sichuan-based company was responsible for providing all construction resources—including funding, personnel, machinery, equipment, and materials—on its own for the entire project. The Sichuan-based company also undertook the responsibility of paying wages to the construction workers.

On October 14, 2021, the Labor Inspection Team of Huaxi District, Guiyang City, issued a “Labor Security Supervision Order for Rectification” to a certain engineering company in Shenyang, requiring the company to pay the wages of its migrant workers by October 18, 2021.

On December 1, 2021, the contracting party (the Housing and Urban-Rural Development Bureau of Huaxi District, which took over management) transferred more than 650,000 RMB into the special account for migrant workers' wages. After receiving the funds, a certain engineering company in Shenyang used over 530,000 RMB from this account to make payments on behalf of the migrant workers. As a result, more than 116,000 RMB remained unpaid in the special account for migrant workers' wages.

On June 29, 2022, the Huaxi Branch of the Guiyang Public Security Bureau filed a criminal case against a certain engineering company in Shenyang and its legal representative on suspicion of the crime of refusing to pay labor remuneration. On August 7, 2023, the public security authorities transferred the case to the People's Procuratorate of Huaxi District, Guiyang City, for review and prosecution.

During the review and prosecution stage, after reviewing the case files and hearing the legal representative’s statement on the facts of the case, the defense counsel concluded that the actions of a certain engineering company in Shenyang did not constitute a crime under the law. Accordingly, the counsel had an in-person discussion with the handling prosecutor regarding the characterization of the case and submitted a “Legal Opinion on Non-Prosecution.”

In April 2024, the procuratorial organ returned this case to the investigative authority and recommended that the investigative authority terminate the investigation into a certain engineering company in Shenyang and its legal representative. Subsequently, the investigative authority made a decision to terminate the investigation based on the procuratorial organ’s recommendation.

Case Highlights:

This case involves complex legal issues, including the determination of whether an act constitutes a crime or not, the intersection of criminal, civil, and administrative law, and criminal risks in the construction engineering sector. Drawing on both theoretical knowledge and practical experience, the defense counsel conducted a systematic and structured analysis of the case, ensuring that the arguments for innocence were comprehensive, concise, and well-founded. Ultimately, the defense’s plea of innocence received support from the prosecuting officer, who recommended that the investigative authorities terminate the investigation against the client. This case holds certain reference and guiding significance for the long-standing issue of refusal to pay wages—often arising from disputes over project payments and the payment of migrant workers’ wages—in the construction engineering sector.

Typical significance:

I. Determining the Subject of the Crime from the Perspective of Criminal Law Interpretation—Combining Literal Interpretation with Scholarly Interpretation to Argue That the Subject of the Crime of Refusal to Pay Labor Remuneration Is Limited to Entities or Individuals Who Have Established a Labor Relationship with the Workers.

Article 276-1 of the Criminal Law stipulates that the object of the crime of refusing to pay labor remuneration is “the labor remuneration of workers.” Article 1 of the Supreme People’s Court’s “Interpretation on Several Issues Concerning the Application of Law in the Trial of Criminal Cases Involving Refusal to Pay Labor Remuneration” defines the scope of “labor remuneration of workers” as including “wages, bonuses, allowances, subsidies, remuneration for overtime work, and wages paid under special circumstances.” In his article “Understanding and Application of the ‘Interpretation on Several Issues Concerning the Application of Law in the Trial of Criminal Cases Involving Refusal to Pay Labor Remuneration,’” the presiding judge of the Supreme People’s Court’s “Interpretation on Several Issues Concerning the Application of Law in the Trial of Criminal Cases Involving Refusal to Pay Labor Remuneration” pointed out: “Article 1 of the Interpretation limits the object of the crime of refusing to pay labor remuneration exclusively to labor remuneration; therefore, the perpetrator of this crime and the victim must have a pre-existing employment relationship as a prerequisite.” Furthermore, according to the provisions of the Labor Law, the Labor Contract Law, and other relevant laws, labor remuneration refers to wage income arising from the establishment of an employment relationship between the employer and the employee.

Based on the above-mentioned laws, judicial interpretations, and the views of Supreme People's Court judges, the following conclusion can be drawn:

The perpetrators of the crime of refusing to pay labor remuneration are limited exclusively to entities or individuals who have established an employment relationship with the workers. In other words, if no employment relationship has been established with the worker, the entity or individual cannot be considered a perpetrator of the crime of refusing to pay labor remuneration and thus cannot be found guilty of this crime.

II. Clarifying the Determination of Employment Relationships— It should not be assumed that the general contractor has an employment relationship with migrant workers simply because the general contractor has opened a dedicated account for paying migrant workers’ wages and has fulfilled the relevant procedures for proxy payment.

Chapter 4 of the State Council’s “Regulations on Guaranteeing Payment of Wages to Migrant Workers” (State Council Order No. 724) Special Provisions for the Engineering Construction Sector Article 26 of the [document] stipulates “ The general contractor shall, in accordance with relevant regulations, open a dedicated account for migrant workers’ wages, specifically for the payment of migrant workers’ wages on this construction project. “In practice, since the special account for migrant workers’ wages is established by the general contractor, when using this special account to pay wages to migrant workers, the general contractor must go through a series of procedures. However, the mere fact that the general contractor legally uses the special account for migrant workers’ wages to make wage payments on behalf of migrant workers and fulfills the relevant procedures for such代payment does not, by itself, establish a labor relationship between the general contractor and the migrant workers. This is because the ‘Regulations on Guaranteeing Payment of Migrant Workers’ Wages,’ as an administrative regulation, stipulates that the general contractor has certain obligations—such as setting up a special account for migrant workers’ wages and making advance payments or advances toward migrant workers’ wages—which are special provisions designed to protect the rights and interests of migrant workers in the construction sector. Yet these provisions merely impose upon the general contractor the responsibility to make payments on behalf of and advance payments to migrant workers; they do not constitute special provisions for determining the existence of a labor relationship. The determination of a labor relationship must still be made in accordance with specific legal provisions, such as the ‘Labor Contract Law’ and the ‘Labor Law.’ In short, the general contractor’s establishment of a special account for migrant workers’ wages and its use of this account to pay wages on behalf of migrant workers represent special provisions under administrative regulations concerning代payment. These provisions are distinct from whether a labor relationship exists between the general contractor and the workers themselves—these are two separate issues governed by different legal frameworks, and the former cannot be used directly to determine the latter.”

In this case, Shenyang Engineering Co., Ltd., as the general contractor for the project in question, established a special account for migrant workers’ wages in accordance with administrative regulations and duly followed the relevant procedures when making wage payments on behalf of the migrant workers through that account. However, this fact alone cannot be taken as evidence that Shenyang Engineering Co., Ltd. has established an employment relationship with the workers. Nor can it be inferred that Shenyang Engineering Co., Ltd. is an employer simply because it has fulfilled the required procedures when making wage payments on behalf of the workers through the designated account. The determination of an employment relationship and the identification of an employer must strictly adhere to the provisions of laws such as the Labor Contract Law and the Labor Law.

III. Adhere to the principle of legality in criminal law—The subject of the crime of refusing to pay labor remuneration under criminal law should not be determined based on administrative obligations such as prior repayment or advance payment responsibilities. The determination of the criminal subject under criminal law must be made solely in accordance with the Criminal Law and its judicial interpretations.

Article 30, paragraphs 3 and 4, of the State Council’s “Regulations on Guaranteeing Payment of Wages to Migrant Workers,” as well as Article 3 of the General Office of the State Council’s “Urgent Notice on Effectively Addressing the Issue of Enterprises’ Arrears in Paying Wages to Migrant Workers” (Guoban Famingdian [2010] No. 4), stipulate that the general contractor’s obligation to make advance payments and provide financial advances is not considered remuneration paid by the employer. Moreover, as can be inferred from the provisions in these articles stating that the general contractor has a right of recovery after making such advance payments and financial advances, the ultimate party responsible for paying laborers their wages is the subcontractor or the actual construction entity that has established a labor relationship with the workers.

As previously explained, under criminal law, the perpetrators of the crime of refusing to pay labor remuneration are limited exclusively to entities or individuals who have established an employment relationship with the workers. Could we then, by going beyond this principle, hold administrative entities that have a prior obligation to settle or advance payment for workers as perpetrators of this crime? No, criminal law is the most stringent and severe branch of public law, and its application should be characterized by restraint and moderation. The principle of legality in criminal law—“no crime without explicit legal provision; no punishment without explicit legal provision”—is the most fundamental principle of criminal law. If we were to depart from this principle of legality and apply criminal law in a way that goes beyond what is explicitly provided for by law, not only might it lead to wrongful convictions and miscarriages of justice, but it could also instill in the public an unpredictable and unwarranted sense of panic.

In this case, even if, from an administrative perspective, Shenyang Engineering Co., Ltd. as the general contractor is deemed to have the responsibility to first pay and advance labor remuneration to workers, this responsibility is purely administrative in nature and cannot, by itself, establish that Shenyang Engineering Co., Ltd. qualifies as the perpetrator of the crime of refusing to pay labor remuneration, since no employment relationship was established between the company and the workers.

Fourth, the characterization of a case should adhere to a structured approach based on the elements constituting the crime—specifically, “failure to pay despite being ordered to do so by the relevant government authorities” is one of the objective elements of the crime of refusing to pay labor remuneration; it is not an element pertaining to the subject of the crime. Therefore, it should not be assumed that any entity found to have “failed to pay despite being ordered to do so by the relevant government authorities” necessarily qualifies as the perpetrator of this crime. Moreover, given that the order to pay, which imposes upon the general contractor the responsibility for prior repayment and advance payment, carries only administrative legal significance and not criminal legal significance.

According to the Criminal Law, the objective elements of the crime of refusing to pay labor remuneration are: “‘evading payment’ or ‘failing to pay when able to do so’ + a relatively large amount + failure to pay despite being ordered to do so by the relevant government authorities.” These constitute the objective behavioral manifestations of this crime as stipulated by the Criminal Law, but they do not serve as conditions for identifying the perpetrator of the crime. If one were to assume that any entity or individual that fails to pay despite being ordered to do so by the relevant government authorities would automatically be considered a perpetrator of the crime of refusing to pay labor remuneration—without taking into account the requirement that the perpetrator must be an entity or individual that has established a labor relationship with the worker—then this would represent an erroneous application of the law, confusing the “subjective elements” of a criminal offense with its “objective elements.”

Furthermore, in the field of construction projects, the labor inspection authorities’ order requiring general contractors to pay or advance wages to migrant workers—based on provisions such as the “Regulations on Guaranteeing Payment of Wages to Migrant Workers”—does not carry criminal legal significance. The only orders for payment that have criminal legal significance are those issued on the basis of labor relations and aimed at the payment of labor remuneration. In this case, the labor inspection authority’s order requiring Shenyang Engineering Co., Ltd. to pay labor remuneration was grounded in the company’s responsibility as a general contractor to make advance payments and provide financial support. This order for payment differs in nature from the element of “refusal to pay despite being ordered to do so by the relevant government authorities” required for the crime of refusing to pay labor remuneration.

In short, the labor inspection authorities’ order to pay wages cannot directly substitute for or exempt the public security and judicial authorities from their review of the subjects convicted of the crime of refusing to pay labor remuneration. The administrative actions taken by government departments and the criminal law’s standards for conviction are issues at two different levels.

Lawyer's Insights ：

In handling criminal cases, defense attorneys should fully apply the presumption of innocence mindset when determining the nature of the case and deeply understand the principle of legality in criminal law. In the specific application of the presumption of innocence and the principle of legality in criminal law, attorneys must develop the ability to analyze cases in a systematic and structured manner. In other words, when analyzing a case, attorneys may choose to apply the “four-element” theory, the “three-tier” theory, or the “two-tier” theory—or even combine these theories—but regardless of which theoretical framework they select, they must always remain firmly anchored within the framework of the elements constituting the crime. They should never deviate from analyzing the case solely based on these elements; otherwise, it will be extremely difficult to identify and effectively articulate key, decisive defense arguments.

In this case, it is easy to determine—based on the “four-element” theory—that Shenyang Engineering Co., Ltd., as the general contractor, is not the employer of the migrant workers involved in the case and therefore should not be considered the perpetrator of the crime of refusing to pay labor remuneration. Consequently, regardless of whether Shenyang Engineering Co., Ltd. is obligated under relevant administrative regulations to make payment on behalf of others or to settle debts on their behalf, it cannot possibly constitute the crime of refusing to pay labor remuneration, as it fails to meet the requirements for being a criminal subject. The principle of legality in criminal law has always been the “emperor principle” of criminal law.

Moreover, as Professor Zhou Guangquan pointed out: “In cases involving the coordination between criminal and administrative enforcement, it is indeed necessary to pay attention to the preceding laws; however, this does not mean that the preceding laws impose a fundamental or substantive constraint on the determination of criminal offenses. The principle of legality in criminal law clearly stipulates that both the elements of a crime and the corresponding penalties must be determined solely by criminal law itself—not by the preceding civil, commercial, or administrative laws. If we were to assume that the preceding laws are responsible for defining the nature of the offense while criminal law merely makes quantitative assessments, we would inevitably diminish the significance of the illegality judgment under criminal law and unduly expand the scope of punishment.” Regarding the issues we often discuss—such as “the intersection between criminal and civil law” or “the intersection between criminal and administrative law”—the author believes that whether it’s “the intersection between criminal and civil law,” “the intersection between criminal and administrative law,” or even “the intersection among criminal, civil, and administrative law,” as long as we fully apply the presumption of innocence mindset, the principle of legality in criminal law, and a structured, systematic approach to analyzing cases, we can accurately identify the key points for defense.