As a basketball player, can Majian be protected as a laborer according to the law? The lawyer in support of the unit argued that because of his special status as an athlete, the unit signed an Athlete Service Contract with Majian whose legal status is superior. The lawyer in support of Majian insisted that the Labor Law does not exclude athletes, so the parts of the contract that contradict the Labor Law should be invalid. The unit could not dissolve the labor relationship between the two parties based on the provisions of the Athlete Service Contract.

I. Case Playback

Majian was a basketball player in the AoShen Basketball Club of Beijing and then joined the Oriental Sharks team in 2002. The two parties signed an Athlete Service Contract indicating a service term of two years. According to the arrangement, Majian would play basketball for one season from January to April of next year, and the unit would pay RMB 600,000 after taxes for the season. Article 3, Sub-Article 6 of the Athlete Service Contract agreement stated that “If the athlete fails to perform in the match as required by the club due to previous injury or illness, the club can dismiss the athlete immediately in a written notice.”
While a basketball player with the Oriental Shark Club, Majian's performance was not satisfactory. The team later discovered that Majian had not received a physical examination before signing the contract, so the club arranged a physical exam. After receiving the results, the club found that he had a previous injury to his left knee, and it would not be healed in a short time.
On March 3, 2003, the club notified Majian in a written letter that his contract was dissolved because "he failed to live up to the standards of the club." On March 10, Majian submitted a written reply stating that he could not accept the reason for unilaterally dissolving the contract. Even if he agreed to dissolve the contract, the club should still pay his salary according to the contract. In his view, the agreed salary was RMB 600,000 or 50,000 per month. The dissolution of the contract was invalid because it was a unilateral act of the club, so the salary should continue to be paid. In reply to the club’s assertion that he had failed to live up to club standards, Majian applied to the Labor Arbitration Committee, but the Committee did not accept the case on the grounds that the case was not within their scope of jurisdiction.
On May 6, 2003 Majian sued in the Xuhui District Court for a withdrawal of the dissolution notification, the club’s continued performance of the contract, the repeal of the Article 3, Sub-Article 6 of the contract and payment of his salary between March and May that totaled RMB 150,000.
In the Court, the debate had several key questions. First, could the dispute be dealt with according to the Labor Law? Majian thought that the dissolution of the contract violated the Labor Law, but the club considered it a civil contract in accordance with the international transfer system, which made the article of the contract and the dissolution valid. Second, was the dissolution of the contract legal? The agreement article stated that if Majian failed to reach the required performance standards of the club due to any injury or illness, the club had a right to terminate the contract after paying the current month’s salary. The two parties debated about whether the dissolution had a factual and legal basis. The club showed statistics proving that Majian had played in 19 matches for 344 total minutes, 68 total points and a 3 point average per game. He was ranked among the bottom few on the team. Third, Majian did not receive a physical examination before signing the contract so it is a question whether this could lead to the dissolution of the contract. The Court rejected Majian’s initial claim. Majian then appealed to the First Intermediate Court in Shanghai.

II. Legal Background

The Labor Law stipulates eight situations for dissolving a contract in Articles 25, 26 and 27. Article 26 stipulates three statutory conditions when the unit is allowed to dissolve the labor contract unilaterally without any laborer fault. The conditions are as follows: a laborer is unable to do his original work or any new work arranged by the unit after the medical treatment period initiated by illness or non-work related injury; a laborer is incompetent for his work and remains incompetent after receiving      training or an adjustment of the work position, or the objective situations taken as the basis for the conclusion of the contract have greatly changed so that the original labor contract can no longer be carried out and no agreement on modification of the labor contract can be reached through consultation between the parties involved.
The above reasons for dissolution are not based on laborer fault; the law restricts the dissolution rights of units in both positive and the negative ways.
The Labor Law imposes positive restrictions on units that want to dissolve a labor contract. Based on the articles on dissolving a contract, in order to dissolve the labor contract, the units should first prove certain objective facts. The following Sub-Articles of Article 26 specify the conditions for unilateral contract dissolution: Sub-Article 1, the unit must prove the laborers’ illness or non-work related injury; Sub-Article 2, the unit must prove the laborer’s incompetence for the work; and Sub-Article 3, the unit must prove a great change of objective circumstances which form the basis for the conclusion of the contract. Then, the Law requires that the units must first modify the contract, and only if the modification fails to solve the problem can the units then unilaterally dissolve the contract.
The Labor Law imposes negative restrictions on units that want to dissolve a labor contract. Provisions other than Article 26 also restrict the unit’s right to dissolve the labor contract. For example, Article 29 prescribes several circumstances under which the unit is not able to dissolve the labor contract according to the provisions of Article 26 or Article 27. The circumstances are as follows: the laborer is confirmed to have totally or partially lost the ability to work due to occupational disease or work-related injury; the laborer received medical treatment for the diseases or injuries within the statutory medical treatment period; the laborer is a female staff member or worker who is pregnant, or in the delivery, postpartum or lactation period; or other circumstances laid out in laws, administrative rules and regulations.
The Labor Contract Law tightens both the positive and negative restriction on the unit to invoke the non-fault dissolution conditions. Article 40 stipulates that under three conditions can the unit can dissolve the laborer’s labor contract unilaterally by giving 30 days’ advance written notification or one month pay in lieu of notice. The conditions are: after the regulated period of medical leave for an illness or non-work related injury expires, the laborer is still incapable of engaging in his original work and fails to reach agreement with the unit on the modification of his labor contract; the laborer is proven incompetent and remains incompetent after training or adjustment of his position; or a major change in the objective circumstances relied upon at the time of conclusion of the labor contract hinders continued fulfillment of the original contract and, after consultations, the unit and laborer are unable to reach agreement on amending the labor contract.
It can be seen from these regulations that the positive restrictions on non-fault dissolution in the Labor Contract Law, compared with those in the Labor Law, has no change in terms of laborer illness or non-work related injury but increase the unit’s burden of proof in terms of a laborer’s incompetence and reduce the applicable scope of Article 40, Sub-Article 3 to circumstances of a staff reduction of less than 20 people or 10% (which references Article 41) in terms of the major objective change specified in the labor contract.
As for the negative restrictions, the Labor Contract Law strengthens restrictions of the unit’s adoption of Article 40 by increasing the number of “no dissolution” conditions. Article 42 lists six conditions under which the unit is not allowed to dissolve the labor contract by resorting to non-fault dissolution conditions as stipulated in Article 40. The six ‘no dissolution” conditions are as follows: 1) the laborer is engaged in operations exposing him to occupational hazards and has not undergone a pre-departure occupational health check-up, or is suspected of having contracted an occupational disease and is being diagnosed or under medical observation; 2) the laborer has been confirmed as having lost or partially lost his capacity to work due to an occupational disease or a work-related injury; 3) the laborer has contracted an illness or sustained an injury, and the mandatory medical treatment period has not expired; 4) the laborer is a female employee in her pregnancy, delivery, postpartum or lactation period; 5) the laborer has been working for the unit continuously for no less than 15 years and is less than 5 years away from mandatory retirement age; 6) the laborer finds himself in other circumstances stipulated in laws or administrative regulations.
Furthermore, the Labor Contract Law reinforces the compensation liability when a unit violates the terms of legal dissolution of the contract. Article 85 states that if a Unit dissolves or terminates a labor contract without paying the laborer economic compensation pursuant to Labor Contract Law, then the Labor Administration Department shall order it to pay the economic compensation within a specified period of time. If payment is not made within the determined time limit, the Unit shall be ordered to pay additional damages to the laborer at a rate of no less than 50 percent and no more than 100 percent of the amount payable.

III. Lawyer Debate

It is invalid for the club to dissolve the contract unilaterally.
Lawyer Liulihua from Shanghai Runhua Law Firm in support of Majian

  It is invalid for the club to dissolve the contract unilaterally. First, the so-called ‘service contract’ is, in fact, a labor contract. The contract asked Majian to join the team on behalf of the club, and the club gave him a high salary in return. Since it is a labor contract, this case should be judged according to the Labor Law. The club dissolved the contract based on the clause stating, “if the athlete fails to perform in the match as required by the club due to a previous injury or illness, the club can dismiss the athlete immediately in written form.” This violated the relevant regulations in the Labor Law. According to Article 26 of the Labor Law, if a laborer is unable to take up his original work or any new work arranged by the unit after the termination of his medical treatment period initiated by illness or non-work related injury or if a laborer is incompetent for his work and still remains incompetent after receiving training or an adjustment of the work position, then the unit is allowed to dissolve the contract by written notice thirty days in advance. The club did not offer the athlete a medical leave period and refused to adjust his position, so it violated the basic legal rights of laborers.

The sports profession has particularities.
Xiao Guangming from Shanghai Guangming Law Firm in support of the club

The contract signed between Majian and the club was a labor contract, but the contract had some particularities. The contract, signed for two years, was the declaration of the true will of both sides so it was valid. Although the Athlete Service Contract was a labor contract, it had several special requirements of the laborer. In detail, it required Majian to reach certain practice standards or match performance standards. This is why athletes are different from common laborers, and the contract was also different from that of a common labor contract. The reason why the club spent RMB 600,000 to sign the athlete was because he had qualities others did not have. “Athlete” is a position that entails high professionalism and advanced technique; this case could not be judged according to the Labor Law easily. The Labor Law stipulates that if a laborer is incompetent for the position, the unit should train the laborer or adjust the position. However, the nature of the athlete determines that such a provision in the Labor Law cannot be applied to the club. If Majian was not suitable for playing basketball, how should the club adjust his working position? Is he qualified to be a janitor? It would unfair for the club to spend RMB 600,000 to hire a cleaner. Article 3, Sub-Article 6 of the agreement was reasonable and legitimate.

IV. Final Judgment

The Intermediate Court in Shanghai decided that, according to the agreement in Article 3, Sub-Article 6 of the Sports Service Contract, the club could dismiss Majian in written form if he had a previous injury and could not take part in the matches as required by the club. In the agreement article, "Majian has a previous injury" is the reason, and “he could not take part in the match as required by club” is the consequence. So, the grounds for the dissolution of the contract are that he could not take part in the match at the level required by the club. That is to say, he was not qualified for the work. This is not in conflict with Article 26 of the Labor Law. Majian’s claim to repeal the articles of the Athlete Service Contract could not be supported.
Besides, based on Majian’s performance in the match and the relevant statistics, the Court failed to recognize the competence of Majian for his work, so it was fair for the club to dissolve the contract with Majian. Judging from this, the Court did not support any of his claims.

V. Expert Evaluation

If the club had only known more about the Labor Law…
Professor Dong Baohua from East China University of Political Science and Law

This case exposes a collision between legitimacy and reasonability.
First, from the point of view of legitimacy, the act of the club was apparently illegal. The relationship between the Oriental basketball club, which operated according to an enterprise management system, and the athlete, conformed to the definition of a labor relationship and should be regulated by the Labor Law even though it seems to be different from a common labor relationship. In the case, the club dissolved the labor relationship with Majian in accordance with the Athlete Service Contract which was based on an agreement between the two parties. But whether the contract can be legally dissolved according to the rule stipulated in Labor Law in unclear.
According to the Labor Law, there are two ways to dissolve the contract, and the club must obey the relevant legal procedures. One, the unit dissolves the contract with the athlete due to an illness, and the unit can dissolve the contract after the expiration of the medical period when the athlete fails to be qualified for the original job or another job arranged by the unit. Two, because the athlete is unqualified to do the job, the unit must shoulder the burden of proof on three levels: the evidence of incompetence, the evidence of providing training or position adjustment, and the evidence of incompetence a second time. In this case, the club did not go through these procedures. After it found out that Majian did not perform well and was told about his previous injury, then the club dissolved the contract according to provisions in the service contract.
There is a conflict between the agreement and the Labor Law. The fundamental principle in the Labor Law is “an agreement is effective, but the statutory provision takes precedence.” Consequently, it was a violation of the Labor Law for the club to dissolve the contract if the athlete was not in accordance with the requirements of the club. The agreement violated the law so it is invalid. Besides, according to the principle of “an equal right to file a lawsuit,” it is not correct for the Arbitration Committee to refuse the application of Majian.
Second, from the point of view of reasonableness, it is hard and even impossible for the club to operate according to the current Labor Law. The club signed Majian asking him to take part in the team for one or several seasons, and his work would be adjusted in accordance with the schedule of the season so as to ensure that he could engage in fierce competition. But the Labor Law specifies strict conditions for dismissing laborers. The club may take a long time to earn back the costs of hiring injured players, and the club may even become a welfare institution. Take this case for instance. According to the Labor Law, if a laborer is not qualified for the position, then the unit should train him or adjust the position for him. Only then can the unit dissolve the contract when a laborer is proven to be unqualified again. It is difficult for the club to carry out this regulation with sportsmen.
We know that sportsmen are classified by the position they play. A center is quite different from a guard. If a center fails to do the job well, can we afford to let him play guard for a while so as to confirm whether or not he is competent? For another example, if an athlete is ill, the Labor Law forbids contract dissolution during the medical period, and forces the unit to prove that the laborer cannot do the original job or a new position. As far as we know, some sportsmen have extended medical periods which can be even longer than one season; this means the club is required to take a long time to process the loss. It is not reasonable. In fact, the number of sportsmen and the salary structures of certain sports clubs are restricted. Then, the club will confront the embarrassing circumstances of being unable to dismiss senior sportsmen and unable to enroll new freshmen. Consequently, what is legitimate is sometimes not reasonable.
This conflict between legitimacy and reasonability is caused by the mechanism of our country. In foreign countries, there are three ways to deal with the special relationship between sportsmen and their club: one is to deal with it through judicial precedent; the second is to make specific laws excluding these athletes from regulation under the Labor Law and protect them in a special way; the third is to manage by self-discipline, that is to say, a sportsmen joins an organization and accepts management of the organization, and obeys the rules of the organization. But in our country, we do not follow judicial precedents, and we do not make specific laws for these kinds of exceptions. The football and basketball associations have standards of self-discipline that remain at a low level. This leads to the logical application of the Labor Law exclusively. But the Labor Law does not distinguish between different types of laborers or regulate them respectively. This causes the confusion when applying Labor Law to a case like this; it is legitimate but not reasonable.
In the case, we found that the judgment was based on the particularities of the sports profession. Even though the decision was made from a relatively reasonable position, I do not consider it to be correct. The law is serious, and it should be enforced strictly when it comes into effect. The law cannot be denied only because it is unreasonable. If the judge is allowed to go around the law and make judgments by himself, then the Labor Law will be in embarrassing circumstances when it cannot be implemented. Similar disputes will be diverted from the orbit of the law which will give rise to more social problems. From the long-term view, the collision requires legislative resolution.

From LexisNexis