Can the statute of limitations for arbitration be interrupted in cases of mixed employment?

Employer confusion, as a complex phenomenon in the field of labor relations, has long posed challenges to judicial practice and to workers’ efforts to protect their rights. With the entry into force on September 1, 2025, of the Interpretation (II) of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Adjudication of Labor Dispute Cases (hereinafter referred to as “Interpretation (II)”), Article 3 thereof provides specific provisions on the allocation of liability for employer confusion among affiliated enterprises, thereby offering clear guidance for the resolution of related disputes. This article will take this new regulation as its central focus and, drawing on the existing legal framework and judicial precedents, systematically examine the impact of employer confusion on the interruption of the statute of limitations for labor dispute arbitration.

I. Alignment of the Identification of Parties and Conduct in Mixed Employment with the New Regulations

“Mixed employment” generally refers to a form of employment in which two or more employers exhibit a high degree of integration—in terms of organization, personnel, business operations, and financial management—and mutually utilize the same employees. Although Article 3 of the Interpretations (II) does not directly define mixed employment, the scope of its regulation—namely, situations where “a worker has overlapping or intersecting employment relationships with one or more employers, making it difficult to distinguish between work tasks, workplaces, and remuneration”—substantially encompasses the core characteristics of mixed employment.

Key points for determination from the perspective of the new regulations:

1. Overlapping and Concurrent Employment Relationships: Interpretation (II) explicitly establishes “overlapping or concurrent employment relationships” as the normative premise, requiring courts, in making such determinations, not to be confined to a single employment contract but instead to examine whether the employee is subject to the labor management of multiple employers either concurrently or alternately.

2. Difficulty in Distinguishing Employment Elements: The “work tasks, workplace, and remuneration” listed in the new regulations are the key factors for determining labor misclassification. In practice, if wages are paid by Company A, social security contributions are made by Company B, and work instructions are issued by Company C, this constitutes a typical case of labor misclassification.

3. Proof of Affiliation: Although the new regulations do not explicitly state this, “multiple employers” generally refers to affiliated enterprises that are linked through equity control, familial ties, or a common ultimate controller.

Trend in Judicial Determinations: Under the guidance of the new regulations, courts will place greater emphasis on factual evidence such as employment management, economic dependence, and the intermingling of business operations. As long as a worker can prove that their labor is simultaneously performed for multiple related entities and that there is commingling of management, they may invoke the provisions of Article 3 of the Interpretation (II).

II. Determination of Liability in Cases of Confused Employment and Breakthroughs under the New Regulations

With regard to liability, Article 3 of the Interpretation (II) represents a significant breakthrough. The article provides: “Where a worker has overlapping or concurrent employment relationships with one or more employers, such that it is difficult to distinguish between work tasks, workplaces, remuneration, and other relevant matters, the employers concerned shall bear joint and several liability.”

The principle of joint and several liability established by the new regulations:

1. Clarification of Statutory Liability: Previously, joint and several liability in cases of labor‑employment confusion was typically determined by courts on a case‑by‑case basis, based on the theories of corporate personality confusion under the Company Law or joint torts. The new rule, however, directly establishes such statutory joint and several liability through a judicial interpretation, substantially reducing the burden of proof for workers. Once it is proven that “labor relationships overlap and are difficult to distinguish,” the affiliated employers shall be held jointly and severally liable.

2. Confirmation and Strengthening through Judicial Practice: The new regulations are consistent with the spirit of existing case law. For example, in Case No. (2019) Jing 01 Min Zhong 1234, the court held affiliated companies jointly and severally liable on the basis of identity confusion. Following the implementation of the new regulations, such judgments will have a more direct legal foundation, and the standards for judicial discretion will be more uniform.

III. Determination of the Interruption of the Arbitration Statute of Limitations under Mixed Employment and the Impact of the New Regulations

The statute of limitations for arbitration is designed to encourage right holders to exercise their rights in a timely manner. Under the new framework of joint and several liability arising from mixed employment, the rules governing the interruption of the limitation period also require reevaluation.

Article 3 of the Interpretation (II) on the substantive effects of the interruption of the limitation period:

The liability system established under the new regulations has the following impact on the determination of the interruption of the statute of limitations for labor arbitration:

1. The generalized effect of the parties to whom claims may be made: Because affiliated entities bear statutory joint and several liability, they are treated as a single entity for liability purposes. Consequently, when a worker asserts rights against any one of the affiliated entities—such as demanding payment of wages, lodging an objection, or engaging in conciliatory negotiations—such assertion shall be deemed to have been made against all jointly and severally liable entities, thereby triggering the legal effect of a collective interruption of the limitation period. This reform eliminates the previously complex assessment required to determine whether the worker’s claim was directed at a specific party.

2. Expansion of the Effect of Interruption of the Statute of Limitations: Under the doctrine of joint and several liability, the interruption of the statute of limitations extends to all debtors. Under the new regulations, if a worker files for arbitration or brings an action against one company, the interruption of the arbitration statute of limitations automatically extends to other employers that are jointly and severally liable for the same employment relationship. This facilitates the worker’s subsequent addition of additional respondents.

Risk Warning and Exceptions: Despite the strengthened protections under the new regulations, employees should still take note of the following:

·Preserving evidence is crucial: all notices, letters, emails, chat logs, and other communications asserting rights must be properly retained.

·Clearly assert your rights: The content of your claim should be as specific and detailed as possible (e.g., the exact amount of unpaid wages, overtime pay, etc.), avoiding vague or general statements.

·The one-year limitation period remains unchanged: The new regulations do not alter the one-year arbitration limitation period stipulated in Article 27 of the Mediation and Arbitration Law on Labor Disputes, and right holders are still required to exercise their rights in a timely manner.

Conclusion

The implementation of Article 3 of the Interpretation (II) represents a robust response by China’s labor law system to the rampant phenomenon of mixed employment practices. By elevating the joint and several liability for such practices from a matter of judicial discretion to an explicit statutory rule, the provision significantly strengthens protection for workers. Under this new regulation, the determination of the interruption of the arbitration limitation period in cases of mixed employment is now clearer and more lenient: asserting one’s rights against any one of the affiliated entities will trigger the interruption of the limitation period as to all entities bearing joint and several liability. This approach not only aligns with the legal rationale underlying joint and several liability but also reflects the judiciary’s preferential protection of vulnerable workers in their efforts to safeguard their rights.

For employers, the new regulations sound a clear warning: they must standardize employment management, clearly define labor relationships, and avoid falling into unpredictable joint liability risks arising from the blurring of employment boundaries. For employees, the new rules provide more robust tools for safeguarding their rights; however, promptly, proactively, and systematically documenting and preserving evidence when asserting one’s rights remains the most effective way to protect legitimate interests. With the new regulations set to take effect on September 1, 2025, they are expected to promote uniformity in judicial rulings, standardize employment practices, and strike a better balance between labor and management rights and interests.