Can you still regret signing a compensation agreement? This is how the court rules

Case Summary

Li worked for a construction labor services company in Shanghai. While working, he was injured when paint was splashed into his finger, and he was subsequently sent to receive medical treatment.

After that, Li and the Shanghai construction labor services company reached a “One-Time Compensation Agreement,” agreeing as follows: The company will compensate Li for all work-related injury benefits in a one-time payment of RMB 60,000; based on all disputes arising between the two parties due to the employment relationship, this is settled and concluded, the work-related injury matter in this instance ends, and the parties’ rights and obligations also end, with no dispute and no further expenses. After the agreement was signed, the Shanghai construction labor services company had already fulfilled the agreement by paying the plaintiff RMB 60,000.

The plaintiff, Li, has now filed suit in court and claims that during the provision of labor, he suffered personal injury, and the defendant should bear corresponding liability. He requests that the court order the defendant to compensate him for various losses totaling RMB 205,943.80 (including medical expenses, inpatient meal allowance, nutrition expenses, etc., deducting the RMB 60,000 compensation amount already paid by the defendant).

The defendant, the Shanghai construction labor services company, argues that the two parties had long ago reached and fully performed the one-time compensation agreement, and the plaintiff’s lawsuit is a repeated claim; it therefore requests that the court dismiss the suit.

Judgment Outcome

After reviewing the case, the court held that this case concerns liability arising from harm suffered by a person providing labor. When a person providing labor suffers personal injury while carrying out labor activities, the party accepting the labor should bear liability for compensation. While Li was injured during the course of work, compensation liability should properly be borne by the defendant.

The focus of dispute in this case is whether, after the plaintiff and defendant signed the “One-Time Compensation Agreement,” the plaintiff has the right to request compensation again from the defendant. In this case, judging from the time of signing the agreement, before the agreement was signed, the plaintiff’s outpatient and inpatient treatments had already all ended, and he had a clear understanding and expectations of his injury condition and losses. Judging from the process of entering into the agreement, the defendant did not take advantage of its own advantages, nor did it require or coerce the plaintiff to sign the agreement in circumstances such as the plaintiff having no experience or lacking judgment ability. Judging from the contents of the agreement, the parties made clear and specific arrangements regarding the compensation amount, payment method, and legal consequences, with no wording that could create ambiguity; the plaintiff also had no mistaken understanding of the above contents or of his own injury condition. Judging from the consequences of entering into the agreement, in the litigation brought in this case, at the plaintiff’s application, the court commissioned a forensic appraisal institution to conduct an appraisal. Based on the appraisal result, the court determined the plaintiff’s losses to be RMB 60,507.50. The compensation amount agreed upon by the parties was RMB 60,000. Therefore, there was objectively no imbalance of interests in the amount negotiated in the agreement.

In summary, the compensation agreement does not involve material misunderstanding, gross unfairness at the time of formation, or any other circumstances allowing it to be rescinded; and the agreement’s content does not violate the mandatory provisions of laws and regulations. It is genuine and valid, has binding effect on both parties, and the plaintiff’s lawsuit claims requesting the defendant to pay compensation are unsupported by facts or by law and therefore will not be supported. The defendant voluntarily compensated the plaintiff RMB 507.50, which is consistent with the law; the court approved this.

Judge’s View

The core legal reasoning of this judgment lies in the “freedom of intent” principle in civil law. This principle requires the law to fully respect civil subjects’ freedom to freely negotiate within the statutory scope to determine the mutual rights and obligations relationship. After voluntary negotiations, the plaintiff and defendant signed a “One-Time Compensation Agreement” with clearly specified content and complete provisions. This “white paper and black ink” reflects the result jointly chosen by both parties after negotiation and embodies the crystallization of each party’s true intent. The law protects such an agreement based on good faith, endowing it with binding force, so as to maintain transaction safety and the stability of social relations.

Of course, the law does not absolutely prohibit rescinding or modifying an agreement, but it sets strict conditions—like a “safety valve.” Under relevant provisions of the Civil Code of the People’s Republic of China, only when the agreement contains material misunderstanding, is grossly unfair, or when one party commits fraud, duress, or other such circumstances, may the party harmed request the court or an arbitral institution to rescind it. Here is a reminder: the party asserting that the agreement may be rescinded must bear strict evidentiary burdens.

For workers, before signing such an important agreement, it is essential to handle it with caution. First, if possible, negotiate only after the injury condition has stabilized and after having a fairly clear estimate of the worker’s injury disability level and all possible losses. Second, read carefully every clause of the agreement—especially key wording regarding compensation items, amounts, payment methods, and phrases such as “settled once and for all,” “no dispute,” etc.—to ensure you fully understand its legal meaning. Finally, if circumstances allow, consult professional legal personnel to avoid having your rights and interests harmed due to information asymmetry or misunderstandings.

For employers, they should protect workers’ lawful rights and interests in accordance with the law. When negotiating compensation, they should adhere to the principles of good faith and fairness; the compensation plan provided should be able to cover the worker’s reasonable losses.

Source: Chenjiazhen People’s Court, Shanghai Chongming Court

【Source: Jinan Huaiyin District People’s Procuratorate】