Weekly Case丨Employee signed a service agreement for housing purchase, no compensation is needed for breach of contract and resignation

Zhu Xiulin, Lawyer: Deputy Secretary of the Party Branch of the Law Firm, Director of the Marriage and Family Affairs Department.

Lawyer Zhu Xiulin has been practicing for 13 years, handling thousands of cases and accumulating rich experience. Her most specialized areas are: Non-litigation: Company legal counsel. She currently serves as the permanent legal counsel for multiple companies, with several collaborations lasting nearly 10 years. Litigation: She excels in handling marriage, inheritance, and other family disputes, construction engineering disputes, various contract disputes, and criminal defense cases. She has published and won awards for several papers in professional journals. During her career, she has been awarded the title of Excellent Communist Party Member at the municipal and district levels, Excellent Party Worker, Top Ten Public Interest Lawyers, and Excellent Legal Aid Case Lawyer.

Contact Information: Tel: 13588342786 Email: zhuxiulin@htxls.com

Employees signing service agreements for housing purchases do not need to pay compensation for breach of contract and resignation.

【Case Summary】

The defendant, Wang Moumou, started working for the plaintiff, Moumou Company, on July 14, 2006, and terminated their employment relationship with the plaintiff in August 2018. During their employment, in August 2016, the plaintiff and the defendant signed a "Service Agreement for Company Employees Purchasing Fuyang Talent Apartments." The agreement stipulated that "The plaintiff (plaintiff) agrees that the defendant (defendant) may purchase a set of Fuyang talent apartments, but from the date of signing this agreement, the defendant must continue to serve the plaintiff for more than ten years. If less than ten years, the defendant may choose to return the house (return the house to the plaintiff, including garages, storage rooms, and other auxiliary houses), and the plaintiff will return the purchase price (without interest, excluding decoration costs) and bear a penalty of 50,000 yuan. If the defendant does not wish to return the house, the plaintiff will not return the defendant's initial purchase price, and the defendant, in addition to paying a penalty of 50,000 yuan to the plaintiff, will also need to pay the plaintiff the difference between the market value of similar properties in the same area in the year the defendant leaves or terminates their employment contract and the original purchase price of the talent apartment to make up for the plaintiff (excluding decoration costs). The plaintiff approved the defendant's application for housing purchase, and the defendant, Wang Moumou, signed a "Talent Apartment Sales Contract" with the third party, a housing construction investment company, and paid 540,879 yuan. Among them, 80 square meters enjoyed the talent apartment housing price of 4,305 yuan/square meter, and the additional 29.86 square meters were priced at 6,580 yuan/square meter according to the market price. After the defendant's resignation, the two parties failed to reach an agreement on the compensation for the housing price difference, and on November 29, 2018, Moumou Company filed a lawsuit with the People's Court on the grounds of contract dispute, requesting Wang Moumou to pay 693,321 yuan in compensation for the housing price difference and a penalty of 50,000 yuan.

【Agency Strategy】

As the agent for the defendant, Wang Moumou, Lawyer Zhu Xiulin presented the following opinions: First, regarding the cause of action in this case.

The plaintiff claims that this is a contract dispute; however, the defendant's agent believes that this case should be classified as a labor dispute. First, from the perspective of the parties' identities, this case is a dispute between an employee and a company. The legal status of both parties is unequal; it's a management and managed relationship, not a relationship between equal parties as governed by civil law. Second, the dispute arose because the defendant purchased a talent apartment and signed a "Service Agreement for Company Employees Purchasing Fuyang Talent Apartments" with the plaintiff. This agreement was signed based on the existence of an employment contract between the two parties, and the service period is related to the provisions of the Labor Contract Law. Therefore, the relevant provisions of the Labor Contract Law should be applied to adjudicate this case, which should thus be considered a labor dispute.

Second, regarding the validity of the "Service Agreement" involved in this case.

This case does not fall under the circumstances stipulated in the Labor Contract Law where a service period can be agreed upon. Article 22 of the Labor Contract Law stipulates the service period. Here, "service period" specifically refers to "When an employer provides specialized training funds to an employee for professional and technical training, it can enter into an agreement with the employee to stipulate a service period." In this case, there is no such situation between the plaintiff and the defendant, so the two parties cannot agree on a service period for other matters. The intention behind this legislation is not only because the employer has paid material costs for the employee, but more importantly, the training is specialized training aimed at enabling employees to use the professional knowledge gained through the training in their work for the benefit of the employer. However, if the service period agreement is abused, it will deprive employees of their right to terminate the labor contract early, even if the employees have received unfair treatment in the company; the high compensation required for early termination prevents employees from daring to terminate their contract early. This clause restricts the employee's right to leave their job and choose employment.

The difference compensation stipulated in this clause is actually a breach of contract penalty for leaving employment. According to Article 25 of the Labor Contract Law, except for the situations stipulated in Articles 22 and 23 of the Law, where employees violate agreements on service periods and non-competition, employers shall not agree with employees to have the employees bear the penalty for breach of contract. Therefore, this clause violates the above-mentioned laws and regulations and should be considered invalid. Similarly, the clause in the service agreement stipulating the payment of a penalty of 50,000 yuan is also invalid.

Third, the plaintiff, Moumou Company, did not suffer any losses and should not demand compensation from the defendant.

The housing in question was built with government funding. However, after the completion of the housing, in order to quickly recover construction funds and effectively control financial costs, the government required enterprises such as the plaintiff to advance the payment. After the defendant and others paid the money, the government returned the funds to the enterprise. Therefore, the defendant's departure has not caused any loss to the plaintiff. Although the defendant occupied a housing quota, the plaintiff did not provide evidence that the defendant's failure to serve for ten years caused any significant loss to the company, or that another employee could serve for ten years and bring more profits to the company.

【Judgment Result】

In this case, after the first instance, the second instance, the retrial, and the second instance procedures, the court adopted Lawyer Zhu Xiulin's arguments. The judgment dismissed all the plaintiff's claims, and the defendant, Wang Moumou, did not need to pay more than 690,000 yuan in housing price difference compensation and a penalty of 50,000 yuan.

【Analysis】

The focus of the dispute in this case: 1. Whether the case is a contract dispute or a labor dispute; 2. Whether the defendant Wang Moumou needs to pay a large amount of housing price difference compensation and liquidated damages as agreed in the service agreement. These two points of contention had different opinions within the court at the time. The agent mainly argued from the aspects of the identities, status, and rights and obligations of the parties that this case should be considered a labor dispute. Since it is a labor dispute, this case should naturally be judged according to the relevant provisions of the Labor Contract Law. It further proves that the housing price difference compensation stipulated in the service agreement involved in this case is essentially a penalty for breach of contract, which violates the relevant provisions of the Labor Contract Law and should be considered invalid. Therefore, the defendant does not need to pay a large amount of housing price difference compensation and liquidated damages as agreed.

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