Legal Issues Concerning Foreign Workers' Labour Claims in Chinese Corporate Bankruptcies

In the context of globalization, the confluence of China's national strategy to attract international talent and the market reality of normalized corporate bankruptcies highlights a systemic risk within the current legal framework for protecting the rights of foreign workers. The bankruptcy of "Wall Street English" and similar cases are a stark manifestation of the vulnerability this group faces due to their unique status within bankruptcy proceedings. Consequently, analyzing the institutional causes of this dilemma and constructing a systematic path for legal reform has become an urgent issue. The statutory priority status afforded to labour claims by the China's Enterprise Bankruptcy Law is rendered largely illusory for foreign workers, nullified by both procedural exclusion and substantive erosion. Procedurally, the invalidation of visas following an employer's collapse compels their "in absentia" enforcement of rights, while inefficient cross-border judicial service of process makes effective participation in proceedings nearly impossible. Substantively, the law's narrow definition of "wages" frequently excludes internationalized remuneration elements such as housing and education allowances from the scope of priority, while the judicial practice of requiring a valid work permit as a precondition for recognizing an employment relationship shifts the employer's legal non-compliance costs onto the worker, stripping them of the foundational protection of labour law. At its root, this predicament is embedded in three structural deficiencies: a relatively conservative legislative philosophy regarding cross-border insolvency; a lack of authoritative judicial guidance on the recognition of foreign-related labour claims; and institutional disconnects, wherein labour claims are substantively subordinated to secured debt and a socialized wage guarantee fund is absent. To resolve this dilemma, a tripartite reform framework encompassing "macro-level legislation, meso-level judicial intervention, and micro-level implementation" is proposed. At the macro level, this involves adopting the Model Law on Cross-Border Insolvency and aligning with key International Labour Organization conventions. At the meso level, the Supreme People's Court should clarify the substantive standards for "wages" through judicial interpretation and issue guiding cases. At the micro level, a wage guarantee fund covering foreign workers should be established, coupled with the introduction of a limited "super-priority" for labour claims. Perfecting bankruptcy protection for foreign workers is no longer a mere technical legal issue; it is a critical strategic imperative that serves as a barometer for China's rule-of-law-based business environment and a key determinant of its competitiveness in the global talent landscape.