Changzhou, Jiangsu Province Releases Ten Typical Cases of Labour Dispute in 2019

On 10 December 2019, Jiangsu Changzhou Labour and Personnel Dispute Arbitration Commission ("Arbitration Commission") released ten typical cases of labour and personnel dispute for the first time.* As these cases are of great relevance for practice, we have summarised them below.

Case 1: Determination of employment relationship with couriers: the existence of an employment relationship can be determined even if only a service contract was signed

In this case, a courier and a courier service company signed a “service contract”. However, in the course of actual performance, (1) the courier and the company met the qualification for parties to an employment relationship stipulated by laws and regulations, and (2) the courier was subject to the HR management of the company as well as (3) he was engaged in the paid work arranged by the company as part of its business. Therefore, the Arbitration Commission determined that the courier and the company have established a de facto employment relationship. Thus, all relevant factors should be comprehensively considered in determining the existence of employment relationships under new types of business, for instance:

• whether both parties have agreed to establish an employment relationship;
• the degree of personal dependence and economic subordination between both parties;
• whether the way of obtaining remuneration and of providing work is quite different from that under a regular employment relationship, etc..
  
  

Case 2: Labour disputes regarding early retirees: their contractual relationship with their new employers to be deemed employment relationship

For disputes between early retirees, who have internally retired ahead of statutory age of retirement, and their new employers, their contractual relationship is to be deemed an employment relationship. Such disputes shall be handled as employment disputes in accordance with provisions of Article 8 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Labour Dispute Cases (III).

Case 3: It is reasonable for employers to reduce, in accordance with the law, the salary of employees who fail to fulfil their work-related duties as agreed

To the extent permitted by laws and regulations, employers may determine, at their own discretion and according to the needs of operation and management and the performance of employees, the form, method and quantity of work, working time and conditions, positions, content of duty and etc.. If an employee fails to perform his/her work-related duties according to law and employment contract, the employer may deal with such failure according to law (for example, in this case, appropriate reduction of the employee’s salary).

Case 4: As an employee’s unauthorized absence is deemed a serious violation of the principle of good faith, the employer may clawback the signing bonus

In addition to provisions as agreed in the employment contract, parties to an employment contract shall also abide by the general principle of good faith. Even if there is no clear stipulation or agreement, if the employee severely violates the principle of good faith, causing losses to the employer (for instance, in this case, employee’s unauthorized absence shortly after receiving the signing bonus), the employer is entitled to clawback the signing bonus.

Case 5: If an employee refuses to perform the contract before reaching a consensus with the employer, the employer may terminate the employment relationship for cause

During the negotiation on mutual termination of the employment relationship or if such negotiation fails, an employee is still obliged to continue to perform his/her duties and accept work orders. Otherwise, the employer may terminate the employment relationship for cause according to law.

Case 6: An employer may unilaterally terminate the employment contract with its employee who is on leave without approval

A company has the right to handle, in accordance with its internal management regulations, cases where its employees are absent without approval. Under serious circumstances, the company may even unilaterally terminate the employment contract for cause.

Case 7: In case of serious violation of rules and regulations by a female employee in “three periods”, the employer may unilaterally terminate the employment contract for cause

A female employee in the "three periods" (periods of pregnancy, maternity and lactation) is specially protected by law. However, if such female employee has seriously violated rules and regulations of the employer (such as failure to fulfil the formalities for leave application and consecutive absence in this case), Article 39 of the Labour Contract Law shall still apply, and the employer may unilaterally terminate the employment relationship for cause.

Case 8: As regular induction training is not special training, the agreed service period and liquidated damages in connection with the induction training are null and void

Providing regular vocational training (such as the induction training in this case) is employers' obligation stipulated in the Labour Law, and such training shall not be deemed the special technical training under the Labour Contract Law. Therefore, the agreement by both parties on the service period and liquidated damages concerning such training was determined null and void. The validity of agreements on the service period and liquidated damages related to training provided employees should be determined according to the purpose and content of such training, i.e. whether it is "special technical training" or "regular vocational training". Only in case of special technical training for employees can the service period and liquidated damages be agreed according to law.

Case 9: If an employee’s violation of company regulations is not serious, the employer may not terminate the employment relationship for cause

An employer may unilaterally terminate the employment contract according to law if its employee "has seriously violated the company's rules and regulations". According to the Arbitration Commission, the severity of the violation should be judged according to whether the violation has caused a serious impact on the company's production order or operational management, and whether it has led to any property loss and social impact. If the employer fails to prove that the employee's violation of company regulations (such as the fight between two employees in this case) is serious, it is unlawful for the employer to terminate the employment contract for cause.

Case 10: Employees who violate the obligation of non-compete shall bear the burden of proof if they argue that the liquidated damages are too high

If an employee violates the obligation of non-compete (such as, in this case, by working for the competitor of his/her previous employer during the non-compete period), the previous employer has the right to clawback the non-compete compensation and claim the liquidated damages. If the employee argues that the liquidated damages are too high, such employee shall bear the burden of proof; otherwise, he/she shall assume adverse consequences.

*Source