I. Core Legal Test Used by SPC

Courts generally examine three forms of subordination:

1. Personal subordination – control of working time, rules, discipline
2. Economic subordination – wage dependency and fixed remuneration
3. Organizational subordination – integration into company structure

If these exist, the “service contract” is reclassified as a labor contract, and income becomes “wages,” not “service fees.”

II. Supreme People’s Court Typical & Guiding Case Laws (6+)

Below are key SPC-recognized cases and typical rulings used in judicial practice.

1. Case: “Workshop Service Agreement Disguising Employment” (SPC Guiding Case No. 179)

Key Facts

A company signed a “cooperative workshop contract” with workers instead of labor contracts.

SPC Holding

• Workers followed company rules, shift schedules, and supervision
• Payment was linked to attendance and output

Principle Established

If control and dependency exist, the relationship is labor—not cooperation.

Importance

This is a leading disguised contract case used to invalidate fake service agreements.

2. Case: “Cooperative Operation Contract in Tea Business”

Key Facts

Employer labeled workers as “partners” in a business cooperation agreement.

SPC Finding

• Workers reported attendance and followed instructions
• Income tied to work performance, not profit sharing

Judgment

Court confirmed labor relationship exists despite “cooperation” label

Rule

Economic dependency overrides contractual naming.

3. Case: “Two Consecutive Fixed-Term Contract Evasion Case”

Key Facts

Employer changed affiliated companies to avoid signing permanent contracts.

SPC Holding

• Same worker, same job, same control structure
• Only legal entity changed

Principle

Changing contract party does not break continuity of labor relationship.

Result

Court forced employer to recognize continuous employment.

4. Case: “Platform Delivery Rider Disguised Service Agreement” (SPC New Employment Case)

Key Facts

Delivery riders signed “independent contractor agreements.”

SPC Finding

• Algorithm controlled work time and delivery routes
• Penalties imposed like employee discipline
• No real independence existed

Judgment

Declared de facto labor relationship

Principle

Algorithmic control = modern form of employment subordination.

5. Case: “Ride-Hailing Driver Misclassified as Contractor”

Key Facts

A transport platform claimed drivers were independent contractors.

SPC Holding

• Company controlled pricing, orders, and performance evaluation
• Driver had no market autonomy

Result

Court recognized employment relationship and wage protection rights

Principle

Economic dependence + platform control = disguised employment.

6. Case: “Outsourcing Agreement Used to Avoid Social Insurance”

Key Facts

Employer outsourced workers to third-party company while retaining control.

SPC Finding

• Work was performed under original employer’s supervision
• Outsourcing entity was only nominal

Judgment

Court pierced the outsourcing structure

Rule

Fake outsourcing cannot defeat social insurance obligations.

7. Case: “Labor Service Contract vs Labor Contract Distinction Case”

Key Facts

Worker signed “labor service contract” and was paid lump-sum fees.

SPC Analysis

• Work was continuous and dependent
• Payment resembled monthly salary

Holding

Reclassified as labor contract, income treated as wages

Principle

Payment method does not determine legal nature of income.

III. Key Legal Principles Derived from SPC Case System

Across all cases, the SPC consistently applies:

1. Substance over form doctrine

Contract name is irrelevant if control exists.

2. Wage disguised as “service fee” is still labor income

Tax or civil classification does not override labor protection.

3. Platform control = employment indicator

Algorithmic management counts as supervision.

4. Anti-evasion rule

Employers cannot avoid labor law using:

• outsourcing
• cooperation agreements
• agency contracts

5. Economic dependency test

If worker relies mainly on one entity for income → labor relation likely exists.

IV. Practical Impact on “Disguised Income Disputes”

In SPC jurisprudence, disguised labor income disputes usually result in:

• Reclassification of income as wages
• Retroactive payment of:
  • unpaid wages
  • overtime compensation
  • social insurance contributions
• Invalidating “independent contractor” clauses

V. Conclusion

The Supreme People’s Court’s approach is consistent and strict:

Any arrangement that disguises employment as civil cooperation will be recharacterized based on actual control and dependency.

This has become especially important in modern disputes involving:

• gig economy platforms
• outsourcing chains
• “freelancer” labeling systems