The case involves Zhang Tingzhen, a 26-year-old engineer who had nearly half his brain surgically removed after surviving an electric shock in October 2011.
His plight came to light after Reuters reported that Taiwan firm Foxconn had sent telephone text messages to his family telling them it would cut off funds for his treatment and other expenses if they did not remove him from hospital in Shenzhen city and submit him for a disability assessment 70 km (43 miles) away in Huizhou, where the company says he was hired.
His father, Zhang Guangde, took Foxconn to the arbitration office in October this year insisting that his son was hired in Shenzhen and not Huizhou, where factory wages and compensation levels are substantially lower.
Foxconn has said that wages for engineers are the same in Huizhou and Shenzhen, but since compensation for injuries varies between locations, the company would make up any difference.
In official documents seen on Friday by Reuters, the Shenzhen labour dispute arbitration committee ruled against the father. It said the company had produced a contract dated Aug 4, 2011, showing that the young engineer was hired by its Huizhou facility.
It added that at the time of the injury, the young Zhang was an employee of the Huizhou facility who had been sent to its Shenzhen facility for training.
The elder Zhang is preparing to appeal the decision, according to the family's lawyer Zhang Xiaotan.
Asked for its comment, Foxconn Technology Group said:
"As we have reassured the family in the past, the place of Mr. Zhang's employment has no impact on the level of support that our company will be providing Mr. Zhang and his family during his current rehabilitation or as part of any long-term care."
Since the case came to light, the company has stated that the government said that Zhang can have his disability assessment conducted in Shenzhen.
Labour activists say Zhang's case highlights a common practice among large companies in China, which sign work contracts with employees in inner Chinese cities, where wages and compensations levels are relatively low, and then deploy them to work in more expensive cities.
Doctors removed half Zhang's brain to keep him alive and he remains in hospital under close observation, unable to speak or walk properly.
His case has raised fresh questions over the labour practices of Foxconn, one of the biggest and most high-profile private employers in China, after a series of suicides among its workforce of about 1.5 million and recent labour unrest.
© Thomson Reuters 2012
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