If the employer and the employee agree on the service period, can they agree on the liability for liquidated damages?

If the employer and the employee agree on the service period, they may agree on the liability for damages for breach of contract.

It is ok to stipulate liquidated damages during the service period of the labor contract, but it needs to be agreed by both the laborer and the employer. If both parties to the labor contract want to stipulate the service period in the labor contract, they need to reach an agreement through negotiation, and then specify the terms of liquidated damages for the service period in the labor contract.

The general principles applicable to liquidated damages stipulate that:

1. If there is an actual agreement on liquidated damages in the contract, it shall be settled according to the agreement; If there is no agreement on liquidated damages or the agreement is unclear, the settlement shall be made in the absence of agreement;

2. The calculation basis of liquidated damages is the total contract price;

3. Under normal circumstances, the agreed amount of liquidated damages shall not exceed the total amount of unfulfilled contracts.

The role of liquidated damages is as follows:

1, the penalty is subordinate to. Liquidated damages are different from paying liquidated damages. The former is generally produced according to the terms of liquidated damages, and is subordinate to the contractual debt, while the latter is only the subject matter of the debt. The debt that is the penalty due to contract payment is the collateral debt of the contract, and the penalty has its guarantee function. Because the traditional civil law guarantee methods, such as guarantee, deposit, mortgage, pledge, etc., are also established to realize the main debt, there is guarantee;

2, the establishment of liquidated damages can make the parties predict the consequences of non-performance. After the conclusion of the contract, the parties can know in advance the possible losses caused by breach of contract and the scope of their responsibilities. In order to avoid the responsibility of paying liquidated damages, the parties must correctly perform the contract. It is in this sense that liquidated damages can urge the parties to strictly perform the contract and ensure the realization of creditor's rights. This is also the place where liquidated damages are the same as traditional guarantee methods;

3. The second view is generally based on the actual result after the debtor of liquidated damages loses the solvency, which is not enough to deny the nature of liquidated damages as security. Guarantee is not insurance, it can only protect the interests of creditors to a certain extent, even the traditional guarantee method in civil law can not guarantee the debtor to fulfill the due debts;

4. Due to the large amount of punitive liquidated damages, it has nothing to do with the losses caused by breach of contract, so it is more effective to urge the parties to perform the contract.

To sum up, the liquidated damages arising from the liquidated damages contract are the collateral debts of the contract, and the liquidated damages only play its guarantee role.

Legal basis:

Article 585 of the Civil Code of People's Republic of China (PRC)

The parties may agree that when one party breaches the contract, it shall pay a certain amount of liquidated damages to the other party according to the situation of breach of contract, and may also agree on the calculation method of the amount of compensation for breach of contract. If the agreed liquidated damages are lower than the losses caused, the people's court or arbitration institution may increase the liquidated damages at the request of the parties; If the agreed liquidated damages are excessively higher than the losses caused, the people's court or arbitration institution may appropriately reduce them at the request of the parties.

If the parties concerned pay liquidated damages for delayed performance, the breaching party shall also perform the debt after paying the liquidated damages.