January 2025
A Discussion on Compensation in Cases of Work-Related Injuries Caused by Third-Party Torts (Mainland China)
December 2024
Diwu and Teresa Huang
In recent years, there has been an increasing trend of cases where work-related injuries are caused by third-party torts. In such cases, because there are overlapping compensation items between workers' compensation insurance and third-party tort compensation, as well as differences in fault principles, the basis for liability, and payment methods, there are ongoing debates in both theory and practice about how to handle the relationship between workers' compensation and third-party tort compensation. This article will explore how to handle such cases based on relevant legal provisions and case studies.
I. Forms of Work-Related Injury Caused by Third-Party Torts
The most common form of work-related injury caused by third-party torts occurs when workers are injured in traffic accidents that are not primarily their fault during their commute. According to Article 14 of the Regulations on Work-related Injury Insurance, a work-related injury is recognized when a worker is involved in a traffic accident, urban rail transit, ferry, or train accident during their commute if they are not primarily at fault. This means that if a worker is injured during their commute for reasons unrelated to their work, such as in a traffic accident, it can still be recognized as a work injury.
Two conditions must be met to recognize a work injury in these cases: 1) The injury must occur during the worker's commute, and 2) The worker must not be primarily at fault. First, the accident must occur on the worker's commuting route. Article 6 of the Provisions of the Supreme People's Court on Several Issues in Handling Administrative Cases Involving Work-related Insurance specifies that the following situations should be supported by the courts as part of a“commute”:
A. Commuting within a reasonable time between the workplace and the worker’s residence or the employer’s dormitory.
B. Commuting within a reasonable time between the workplace and the home of a worker’s spouse, parents, or children.
C. Commuting for activities necessary for daily work or life within a reasonable time and route.
D. Other reasonable commuting routes within a reasonable time.
This includes commuting during regular work hours as well as during overtime. Additionally, a reply from the former State Council Legal Office (Guo Fa Mi Han [2005] No. 315) clarified that if a worker is injured in a traffic accident during their commute, as indicated in Article 14, Paragraph 6 of the Regulations on Work-related Injury Insurance, the injury should be recognized as a work injury, regardless of whether the worker violated internal company rules.
The second condition is that the worker must not bear primary responsibility for the accident. Traffic authorities typically issue a Traffic Accident Responsibility Determination Report that outlines the fault of the parties involved in general traffic accidents. “Non-primary responsibility” is determined based on the percentage of fault assigned to the worker in this report. However, if the worker caused the accident through illegal actions, such as driving without a license or under the influence of alcohol, this would not qualify as a work-related injury.
II. Competition Between Workers' Compensation Claims and Third-Party Tort Compensation Claims
As mentioned earlier, according to Article 14 of the Regulations on Work-related Injury Insurance, if a worker is involved in a traffic accident during their commute and is not primarily at fault, the injury is recognized as a work injury. When third-party torts cause a work-related injury, two types of claims arise: workers' compensation claims and third-party tort claims. These two claims have different legal bases—the former is a social insurance benefit governed by public law, while the latter is based on tort law and governed by private law. In practice, these two claims often overlap.
Under the Regulations on Work-related Injury Insurance, workers' compensation includes the following items: medical expenses, hospitalization subsidies, transportation expenses, accommodation expenses, rehabilitation costs, assistive device costs, life care costs, one-time disability subsidies, disability allowances, one-time work injury medical subsidies, and one-time disability employment subsidies. In the case of death, compensation items include funeral subsidies, one-time death subsidies, and dependent family member compensation.
On the other hand, the Supreme People's Court's Interpretation of Several Issues Regarding the Application of Laws in Personal Injury Compensation Cases includes items for compensation in the case of personal injury caused by a tort case (including traffic accidents): medical expenses, hospitalization costs, rehabilitation costs, follow-up treatment costs, lost wages, nursing care expenses, transportation costs, hospitalization meal allowances, nutrition costs, disability compensation, and assistive device costs. If the worker dies, the compensation items include funeral expenses, death compensation, and living expenses for dependents.
Since many of these items overlap, disputes often arise about how to handle these overlapping claims when a worker seeks compensation.
III. Handling the Competition Between Workers' Compensation Claims and Third-Party Tort Claims
Workers' compensation claims and third-party tort claims are two distinct types of claims, each based on different legal principles. Workers' compensation is a social insurance benefit provided without fault, while tort claims are based on fault and belong to the private law domain. Therefore, in cases where third-party torts cause work-related injuries (i.e., when a worker is injured during their commute and is not primarily at fault in a traffic accident), the worker can claim both workers' compensation and tort compensation.
However, due to the overlap between these claims and compensation items, there are significant variations in how courts handle these situations in practice. There are three primary approaches:
A. Deducting all overlapping items: This method subtracts the amount received from the third-party tort claim from the workers' compensation.
B. Deducting only the medical expenses: This method involves only subtracting the medical expenses already compensated by the tort claim from the workers' compensation.
C. Dual compensation: In some cases, workers may be allowed to receive compensation for both workers' compensation and the tort claim without any deductions.
According to Article 42 of the Social Insurance Law, if a work injury is caused by a third party, and the third party does not pay for medical expenses or if the third party cannot be identified, the workers' compensation fund will pay the medical expenses in advance, with the right to recover from the third party. In other words, if a worker has already received medical compensation from the third party, those expenses should be deducted from the workers' compensation claim.
In practice, the most common and reasonable approach is to deduct the medical expenses that have already been compensated by the tort claim from the workers' compensation. This article analyzes the legal rationale underlying this approach by examining a relevant case.
Case Study: Wujiang Jiafan Textile Co., Ltd. v. Zhou Fukun Work Injury Insurance Dispute (2019) Su 05 Min Zhong 10330
In October 2015, Zhou Fukun joined Wujiang Jiafan Textile Co., Ltd. (hereinafter referred to as Jiafan Company) and became an employee of the company. In July 2018, while driving a regular two-wheeled motorcycle on his way home from work, Zhou Fukun collided with Zhang Lingmei, who was riding an electric bicycle. The collision resulted in damage to both vehicles, and both Zhou Fukun and Zhang Lingmei were injured. Subsequently, the Traffic Police Brigade of the Wujiang District Public Security Bureau in Suzhou issued a “Road Traffic Accident Report,” which determined that Zhang Lingmei was primarily responsible for the accident, and Zhou Fukun bore secondary responsibility. In the same month, through mediation by the traffic police department, Zhou Fukun and Zhang Lingmei reached an agreement: Zhou Fukun would bear the cost of Zhang Lingmei's medical expenses (600 yuan) and lost work wages (1,900 yuan); Zhang Lingmei would pay 4,800 yuan of Zhou Fukun's medical expenses (totaling 8,000 yuan), with Zhou Fukun himself covering 3,200 yuan. In addition, Zhang Lingmei would compensate Zhou Fukun for lost work wages, nutrition expenses, and other costs totaling 3,800 yuan.
In April 2019, Zhou Fukun filed an arbitration application with the Wujiang District Labor and Personnel Dispute Arbitration Commission of Suzhou City (hereinafter referred to as the “Arbitration Commission”), requesting the termination of his labor contract with Jiafan Company. He also sought the payment of a lump-sum disability subsidy of 30,571.8 yuan, a lump-sum medical subsidy of 30,000 yuan, a lump-sum employment subsidy of 15,000 yuan, medical expenses of 239.4 yuan, and wages for the period of leave with pay amounting to 7,028 yuan. In May of the same year, the Arbitration Commission ruled that Jiafan Company should pay Zhou Fukun a lump-sum disability employment subsidy of 15,000 yuan and wages for the period of leave with pay totaling 7,028 yuan, amounting to 22,028 yuan in total. The Arbitration Commission rejected Zhou Fukun's other arbitration claims. Jiafan Company filed a lawsuit with the first-instance court within the statutory period.
The first-instance court held that: First, after the implementation of the Regulations on Work-related Injury Insurance, employees who suffer injuries due to work accidents and are recognized as work-related injuries should, in accordance with the provisions of the Regulations on Work-related Injury Insurance, enjoy the corresponding work injury insurance benefits. Second, if an employee is injured in a work-related accident and needs to suspend work for medical treatment, during the period of suspension with pay, the original salary and benefits remain unchanged and should be paid monthly by the employer. The suspension pay during this period should be determined based on a medical leave certificate issued by the medical institution with which the employee has signed a service agreement. Third, suspension pay and lost wages are based on different legal relationships and can be received concurrently by the injured employee. In conclusion, the first-instance court ruled that Jiafan Company should pay Zhou Fukun a suspension pay of 7,028 yuan for the leave period, as well as a one-time disability employment subsidy of 15,000 yuan, totaling 22,028 yuan. Jiafan Company is not required to pay for Zhou Fukun's medical expenses, one-time disability subsidy, or one-time work injury medical subsidy.
Based on the above case, the court, when making its judgment, held that, on the one hand, current laws do not prohibit employees injured in work-related accidents from simultaneously receiving both work injury insurance benefits and personal injury compensation. On the other hand, work injury insurance benefits and civil liability compensation are of different natures. The former belongs to the public law domain and arises from social security legal relationships, while the latter belongs to the private law domain and arises from civil legal relationships. Regarding suspension pay and lost wages during the suspension period, they should not be directly substituted for one another.
Conclusion
In conclusion, if a third party outside the employer causes personal injury to an employee through a traffic accident, and this injury is recognized as a work-related injury, the employee holds a dual identity. Specifically, the employee is both the injured worker in the work-related injury accident and the victim of personal injury in the traffic accident. Based on this dual identity, the employee has the right to claim work-related injury insurance compensation and benefits from the employer, as well as the right to claim personal injury compensation from the third party responsible for the traffic accident. This means that the employee is entitled to receive dual compensation for aspects such as suspension pay and lost wages during the suspension period.
The contents of all newsletters of Shanghai Lee, Tsai & Partners (Content) available on the webpage belong to and remain with Shanghai Lee, Tsai & Partners. All rights are reserved by Shanghai Lee, Tsai & Partners, and the Content may not be reproduced, downloaded, disseminated, published, or transferred in any form or by any means, except with the prior permission of Shanghai Lee, Tsai & Partners.
The Content is for informational purposes only and is not offered as legal or professional advice on any particular issue or case. The Content may not reflect the most current legal and regulatory developments. Shanghai Lee, Tsai & Partners and the editors do not guarantee the accuracy of the Content and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the Content. The contributing authors' opinions do not represent the position of Shanghai Lee, Tsai & Partners. If the reader has any suggestions or questions, please do not hesitate to contact Shanghai Lee, Tsai & Partners.
Diwu and Teresa Huang
In recent years, there has been an increasing trend of cases where work-related injuries are caused by third-party torts. In such cases, because there are overlapping compensation items between workers' compensation insurance and third-party tort compensation, as well as differences in fault principles, the basis for liability, and payment methods, there are ongoing debates in both theory and practice about how to handle the relationship between workers' compensation and third-party tort compensation. This article will explore how to handle such cases based on relevant legal provisions and case studies.
I. Forms of Work-Related Injury Caused by Third-Party Torts
The most common form of work-related injury caused by third-party torts occurs when workers are injured in traffic accidents that are not primarily their fault during their commute. According to Article 14 of the Regulations on Work-related Injury Insurance, a work-related injury is recognized when a worker is involved in a traffic accident, urban rail transit, ferry, or train accident during their commute if they are not primarily at fault. This means that if a worker is injured during their commute for reasons unrelated to their work, such as in a traffic accident, it can still be recognized as a work injury.
Two conditions must be met to recognize a work injury in these cases: 1) The injury must occur during the worker's commute, and 2) The worker must not be primarily at fault. First, the accident must occur on the worker's commuting route. Article 6 of the Provisions of the Supreme People's Court on Several Issues in Handling Administrative Cases Involving Work-related Insurance specifies that the following situations should be supported by the courts as part of a“commute”:
A. Commuting within a reasonable time between the workplace and the worker’s residence or the employer’s dormitory.
B. Commuting within a reasonable time between the workplace and the home of a worker’s spouse, parents, or children.
C. Commuting for activities necessary for daily work or life within a reasonable time and route.
D. Other reasonable commuting routes within a reasonable time.
This includes commuting during regular work hours as well as during overtime. Additionally, a reply from the former State Council Legal Office (Guo Fa Mi Han [2005] No. 315) clarified that if a worker is injured in a traffic accident during their commute, as indicated in Article 14, Paragraph 6 of the Regulations on Work-related Injury Insurance, the injury should be recognized as a work injury, regardless of whether the worker violated internal company rules.
The second condition is that the worker must not bear primary responsibility for the accident. Traffic authorities typically issue a Traffic Accident Responsibility Determination Report that outlines the fault of the parties involved in general traffic accidents. “Non-primary responsibility” is determined based on the percentage of fault assigned to the worker in this report. However, if the worker caused the accident through illegal actions, such as driving without a license or under the influence of alcohol, this would not qualify as a work-related injury.
II. Competition Between Workers' Compensation Claims and Third-Party Tort Compensation Claims
As mentioned earlier, according to Article 14 of the Regulations on Work-related Injury Insurance, if a worker is involved in a traffic accident during their commute and is not primarily at fault, the injury is recognized as a work injury. When third-party torts cause a work-related injury, two types of claims arise: workers' compensation claims and third-party tort claims. These two claims have different legal bases—the former is a social insurance benefit governed by public law, while the latter is based on tort law and governed by private law. In practice, these two claims often overlap.
Under the Regulations on Work-related Injury Insurance, workers' compensation includes the following items: medical expenses, hospitalization subsidies, transportation expenses, accommodation expenses, rehabilitation costs, assistive device costs, life care costs, one-time disability subsidies, disability allowances, one-time work injury medical subsidies, and one-time disability employment subsidies. In the case of death, compensation items include funeral subsidies, one-time death subsidies, and dependent family member compensation.
On the other hand, the Supreme People's Court's Interpretation of Several Issues Regarding the Application of Laws in Personal Injury Compensation Cases includes items for compensation in the case of personal injury caused by a tort case (including traffic accidents): medical expenses, hospitalization costs, rehabilitation costs, follow-up treatment costs, lost wages, nursing care expenses, transportation costs, hospitalization meal allowances, nutrition costs, disability compensation, and assistive device costs. If the worker dies, the compensation items include funeral expenses, death compensation, and living expenses for dependents.
Since many of these items overlap, disputes often arise about how to handle these overlapping claims when a worker seeks compensation.
III. Handling the Competition Between Workers' Compensation Claims and Third-Party Tort Claims
Workers' compensation claims and third-party tort claims are two distinct types of claims, each based on different legal principles. Workers' compensation is a social insurance benefit provided without fault, while tort claims are based on fault and belong to the private law domain. Therefore, in cases where third-party torts cause work-related injuries (i.e., when a worker is injured during their commute and is not primarily at fault in a traffic accident), the worker can claim both workers' compensation and tort compensation.
However, due to the overlap between these claims and compensation items, there are significant variations in how courts handle these situations in practice. There are three primary approaches:
A. Deducting all overlapping items: This method subtracts the amount received from the third-party tort claim from the workers' compensation.
B. Deducting only the medical expenses: This method involves only subtracting the medical expenses already compensated by the tort claim from the workers' compensation.
C. Dual compensation: In some cases, workers may be allowed to receive compensation for both workers' compensation and the tort claim without any deductions.
According to Article 42 of the Social Insurance Law, if a work injury is caused by a third party, and the third party does not pay for medical expenses or if the third party cannot be identified, the workers' compensation fund will pay the medical expenses in advance, with the right to recover from the third party. In other words, if a worker has already received medical compensation from the third party, those expenses should be deducted from the workers' compensation claim.
In practice, the most common and reasonable approach is to deduct the medical expenses that have already been compensated by the tort claim from the workers' compensation. This article analyzes the legal rationale underlying this approach by examining a relevant case.
Case Study: Wujiang Jiafan Textile Co., Ltd. v. Zhou Fukun Work Injury Insurance Dispute (2019) Su 05 Min Zhong 10330
In October 2015, Zhou Fukun joined Wujiang Jiafan Textile Co., Ltd. (hereinafter referred to as Jiafan Company) and became an employee of the company. In July 2018, while driving a regular two-wheeled motorcycle on his way home from work, Zhou Fukun collided with Zhang Lingmei, who was riding an electric bicycle. The collision resulted in damage to both vehicles, and both Zhou Fukun and Zhang Lingmei were injured. Subsequently, the Traffic Police Brigade of the Wujiang District Public Security Bureau in Suzhou issued a “Road Traffic Accident Report,” which determined that Zhang Lingmei was primarily responsible for the accident, and Zhou Fukun bore secondary responsibility. In the same month, through mediation by the traffic police department, Zhou Fukun and Zhang Lingmei reached an agreement: Zhou Fukun would bear the cost of Zhang Lingmei's medical expenses (600 yuan) and lost work wages (1,900 yuan); Zhang Lingmei would pay 4,800 yuan of Zhou Fukun's medical expenses (totaling 8,000 yuan), with Zhou Fukun himself covering 3,200 yuan. In addition, Zhang Lingmei would compensate Zhou Fukun for lost work wages, nutrition expenses, and other costs totaling 3,800 yuan.
In April 2019, Zhou Fukun filed an arbitration application with the Wujiang District Labor and Personnel Dispute Arbitration Commission of Suzhou City (hereinafter referred to as the “Arbitration Commission”), requesting the termination of his labor contract with Jiafan Company. He also sought the payment of a lump-sum disability subsidy of 30,571.8 yuan, a lump-sum medical subsidy of 30,000 yuan, a lump-sum employment subsidy of 15,000 yuan, medical expenses of 239.4 yuan, and wages for the period of leave with pay amounting to 7,028 yuan. In May of the same year, the Arbitration Commission ruled that Jiafan Company should pay Zhou Fukun a lump-sum disability employment subsidy of 15,000 yuan and wages for the period of leave with pay totaling 7,028 yuan, amounting to 22,028 yuan in total. The Arbitration Commission rejected Zhou Fukun's other arbitration claims. Jiafan Company filed a lawsuit with the first-instance court within the statutory period.
The first-instance court held that: First, after the implementation of the Regulations on Work-related Injury Insurance, employees who suffer injuries due to work accidents and are recognized as work-related injuries should, in accordance with the provisions of the Regulations on Work-related Injury Insurance, enjoy the corresponding work injury insurance benefits. Second, if an employee is injured in a work-related accident and needs to suspend work for medical treatment, during the period of suspension with pay, the original salary and benefits remain unchanged and should be paid monthly by the employer. The suspension pay during this period should be determined based on a medical leave certificate issued by the medical institution with which the employee has signed a service agreement. Third, suspension pay and lost wages are based on different legal relationships and can be received concurrently by the injured employee. In conclusion, the first-instance court ruled that Jiafan Company should pay Zhou Fukun a suspension pay of 7,028 yuan for the leave period, as well as a one-time disability employment subsidy of 15,000 yuan, totaling 22,028 yuan. Jiafan Company is not required to pay for Zhou Fukun's medical expenses, one-time disability subsidy, or one-time work injury medical subsidy.
Based on the above case, the court, when making its judgment, held that, on the one hand, current laws do not prohibit employees injured in work-related accidents from simultaneously receiving both work injury insurance benefits and personal injury compensation. On the other hand, work injury insurance benefits and civil liability compensation are of different natures. The former belongs to the public law domain and arises from social security legal relationships, while the latter belongs to the private law domain and arises from civil legal relationships. Regarding suspension pay and lost wages during the suspension period, they should not be directly substituted for one another.
Conclusion
In conclusion, if a third party outside the employer causes personal injury to an employee through a traffic accident, and this injury is recognized as a work-related injury, the employee holds a dual identity. Specifically, the employee is both the injured worker in the work-related injury accident and the victim of personal injury in the traffic accident. Based on this dual identity, the employee has the right to claim work-related injury insurance compensation and benefits from the employer, as well as the right to claim personal injury compensation from the third party responsible for the traffic accident. This means that the employee is entitled to receive dual compensation for aspects such as suspension pay and lost wages during the suspension period.
The contents of all newsletters of Shanghai Lee, Tsai & Partners (Content) available on the webpage belong to and remain with Shanghai Lee, Tsai & Partners. All rights are reserved by Shanghai Lee, Tsai & Partners, and the Content may not be reproduced, downloaded, disseminated, published, or transferred in any form or by any means, except with the prior permission of Shanghai Lee, Tsai & Partners.
The Content is for informational purposes only and is not offered as legal or professional advice on any particular issue or case. The Content may not reflect the most current legal and regulatory developments. Shanghai Lee, Tsai & Partners and the editors do not guarantee the accuracy of the Content and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the Content. The contributing authors' opinions do not represent the position of Shanghai Lee, Tsai & Partners. If the reader has any suggestions or questions, please do not hesitate to contact Shanghai Lee, Tsai & Partners.
