Withholding wages is a punishable crime

An employer's ability to pay wages is not an element for constituting 'withholding wages', notes Song. Regardless of the employer's ability to pay the wages, the 'withholding wages' crime has been established as long as the employer avoids payment of a relatively large amount via the means described in the Amendment.

From the standpoint of the law, foreign investors, senior managers or board of directors may be held criminally liable for withholding wages if they are responsible for or directly in charge of those culpable of the crime. However, this should not be a huge concern for foreign companies because “in order to commit the crime of withholding wages, the objective harm and an employer's malice will both need to reach a threshold level,” said Song.

This “threshold level” is unclear, as is the “threshold number” that the withheld amount must reach to receive the most severe criminal punishment. “This threshold number still needs more clarification from the Chinese Supreme Court, so that this amendment can be implemented more practically,” said Song.

There are further ambiguities in the Amendment's text. Referring to the amount of withheld wages being “relatively large” or the act of withholding payment causing “severe consequence”, Song says these terms require more detailed judicial interpretations issued by the Supreme People's Court for further clarification.

He believes that the main purpose of this new law is “to punish employers who maliciously withhold the full amount of wages” and notes there are various scenarios that will not be regulated by the Amendment. These include disputes relating to specific wages or wage deduction where the courts have already adjudicated and the employer has lost, where force majeure has impeded the employer from paying wages on time, or if the employer is unable to pay wages due to reasons
such as bankruptcy. –CM

Amendment for the PRC Criminal Law (8), Article 41

Article 276 of the Criminal Law shall be amended to include one more article:

Whoever avoids payment of wages by such means as transferring property or going into hiding, or is able to pay but refuses to pay such wages, and the amount involved is relatively large, and still refuses to pay upon order to correction by relevant authorities of the government, shall be sentenced to fixed-term imprisonment of not more than three years or detention, and shall be also or only fined; in case of causing any severe consequence, such person shall be sentenced to fixed-term imprisonment of more than three years but less than seven years and shall be fined.