Introduction: Terminating an employment relationship is a complex process, with legal and practical challenges that employers must navigate. In China, labor termination cases can be especially difficult due to the complex regulations and cultural differences. Here are four common challenges that employers face in Chinese labor termination cases and how to handle them.
- Question 1: An employer has paid severance to an employee who is then terminated, but the employee sues the employer for wrongful termination and seeks to have their employment reinstated. If the employee returns to work, but refuses to return the severance pay. How the employer should handle the situation?
- The employer cannot simply withhold the severance pay from the employee’s wages. Deductions from the employee’s wages are only allowed in cases where the employee has caused damages to the employer, and the deduction cannot exceed 20% of the employee’s monthly wage and must not be lower than the minimum wage.
- Instead, the employer can sue the employee to recover the severance pay under the principle of unjust enrichment. The employer may argue that the employee has received a benefit (the severance pay) but is not entitled to it because they have been reinstated and are now receiving wages from the employer.
- Question 2: An employee resigned based on Article 38 of the Labor Contract Law without notifying the employer, but instead applied for arbitration. The employer only became aware of this when receiving the arbitration notice, and during the arbitration period, the employee continued to work as usual. Later, the employee withdrew the case. In this situation, has the labor contract been terminated?
- Since the employee has applied for arbitration to claim the severance payment, it means that the labor contract has been terminated by mutual agreement.
- The effective time of termination is the date when the employer became aware of the matter, i.e., the date when the arbitration materials were delivered to the employer.
- Starting from the effective date of termination, if the employee continues to work, it should be considered as a “de facto labor relationship.”
- After receiving the arbitration materials, the employer has several options:
- Require the employee to stop working and leave.
- Require the employee to sign a new labor contract within one month to establish a new labor relationship.
- If the employer chooses options (a) or (b) and the employee still wants to claim compensation, the employee must apply for arbitration within one year from the date of termination.
- Question 3: On February 15th, an employee submitted a resignation, which was approved by the employer on February 16th. The employee stopped coming to work after February 17th, but the employer did not provide a certificate of resignation. The employee complained to the labor inspection, and as a result, the employer angrily accused the employee of absenteeism and unilaterally terminated the labor relationship on March 21st. In this situation, when does the termination take effect? What legal claims can the employee make?
- It is necessary to distinguish whether the employee has expressed a desire to resign voluntarily or to negotiate the termination with the employer.
- In this case, the employee simply indicated a resignation, which was subsequently approved by the employer. This situation should not be considered as a mutual agreement to terminate the labor relationship, but rather a voluntary resignation.
- The employee submitted the resignation without specifying the notice period, and the employer did not require a notice period when approving it. Therefore, the termination takes effect on the date of approval by the employer. If the approval is made after the legal notice period of one month, the employee has the right to leave directly when the legal notice period expires. Therefore, the employer’s unilateral termination of the labor relationship based on absenteeism is invalid.
- Question 4: If a flight attendant becomes pregnant during her probationary period and is unable to perform her duties, can she be terminated on the grounds that she does not meet the conditions of employment?
- There are two scenarios that need to be distinguished. In the first scenario, the employer explicitly stated in the employment conditions that pregnant women are not accepted for flight attendant positions (which is a special job requirement and does not constitute employment discrimination). If the flight attendant knew she was pregnant at the time of employment, there may be an act of fraud, and the employer may terminate the contract on the grounds of fraudulent behavior that renders the employment contract unable to be fulfilled.
- In the second scenario, the flight attendant became pregnant or learned of her pregnancy after being employed, and there is no fraud involved. Firstly, not meeting the conditions of employment should refer to inadequate ability or fault, while pregnancy is a relatively short-term natural physiological condition in one’s career, and therefore does not fall under “not meeting the conditions of employment.” In this case, it is not advisable for the employer to terminate the employment unilaterally, and it should be considered to transfer the flight attendant to another position.