A Thesis On Preferential Payments Of Labor Claims Based On The Bankruptcy Law

During the bankruptcy liquidation process, the realization of labor claims hasgreat significance on the protection of vulnerable groups and the overall interests ofsociety. Globally, bankruptcy law has conferred labor claims with legal status aspreferential payments. Implemented formally in1st June,2007, the “EnterpriseBankruptcy Law of the People’s Republic of China”has officially confirmed the priorstatus of labor claims through its first section of Article113. Based on the Article, thispaper adopts the empirical method, value analysis method as well as the comparativeresearch method. It tends to analyze the concept of labor claims, the validity, historyand problems considering the preferential payments of labor claims. In the end, theauthor presents his own thoughts and suggestions on the basis of the previousargumentation. The primary coverage of this paper is as follows:The concept of labor claims is not a unique idea of bankruptcy law, but a generalnotion of civil law. It has been characterized with personal nature, survivability,vulnerability and sociality, etc. The “Enterprise Bankruptcy Law of the People’sRepublic of China”has enumerated the situations of preferential payments clearly asfollows: the wages, the medical expense as well as the pension owed by the bankrupt,the basic retirement security and the basic medical insurance expenditure whichshould be credit to individual account, the compensation which should be paid toworkers according to the law. In bankruptcy law, the validity of the preferentialpayments is first rest on the legal attributes of its priority. This has determined by thefeatures of its obligatory right. An obligatory right with finical guarantee also has thepriority of payments. Whether in theoretical field or legislation, there are twoopposing views when comparing it with the priority of labor claims in bankruptdistribution: one is that the secured obligatory right is prior to the labor claims. Theother is contrary to it. Through comparing and analyzing these two views, the authorprovides his views about the priority between labor claims and secured obligatoryright. Besides, the validity of the preferential payments also lies in its great effect onprotecting human rights, realiziation of social justice as well as balance between public and private interests.The preferential payments of labor claims in Chinese bankruptcy law has wentthrough three periods. During the time, labor claims always taken the priority ofpayments when comparing with normal obligatory right. While in contrast with thesecured obligatory right, it has experienced from inferiority to superiority whilemoving back to inferiority again. This was caused by China’s special economicreform and reflects as the improving process of China’s bankruptcy law system. In theend, by learning the advantages and features of foreign bankruptcy law system on thisaspect, this paper makes some suggestions considering the problems of China’spreferential payments system: First, make appropriate restrictions on the range ofpotential preferential payments right. Second, subdivide the levels of preferentialpayments. Third, enhance government roles in balancing public and private interests.Through these proposals, the author aims to coordinate the relationship among laborclaims, obligatory rights with property guarantee and other obligatory rights.Moreover, hope this can end with a great balance among interests of creditor, debtorand society.