Chapter 16 Employment lawChapter 16 Employment law

1 1 Overview

2 2 Employment promotion

3 3 Employment contract and collective agreement

4 4 Labor standards

5 5 Social insurance and welfare

6 6 Labor supervision

7 7 Labor disputes resolution

1 Overview

1.1 Employment relation

1.1.1 Employment v agency relation

Employment v agency relation Employment v agency relation

Employment Agency

Authority

Employer: direct, control and supervise employee’s work

Principal:

Employee: obedience Agent: discretion

Reward Salary Commission

Liability Employer bears wider scope of liabilities Principal < Employer

1.1.2 Employment v independent contractor relation

Employment v independent contractor relation Employment v independent contractor relation

Employment Independent contractor

Independence Employee: ╳ √

Liability Employer’s vicarious liability Self liability

Reward Employee: salary Profit

Reward Employee: √ ╳

1.1.3 Employment v labor service relation

1.2 Sources of law Scope of labor law’s application to employment relations Scope of labor law’s application to employment relations

Applicability of labor law

Employment relation Personnel relation

Enterprises

SOEs √

Collective enterprises √

FIEs √

CLS and LLC √

Private enterprises √

IICHs √

State organs √ ╳

Institutions √ ╳

Social organizations √ ╳

Serviceman ╳

Rural economic entities ╳

Family nurses ╳

2 Employment promotion

2.1 Active policy of increasing employment 2.1.1 Rationalizing employment structure 2.1.2 Market-oriented employment mechanism 2.1.3 Employment service system 2.1.4 Overall plans for urban and rural employment

2.2 Promoting reemployment of the laid-off and unemployed 2.2.1 Active reemployment services 2.2.2 Preferential reemployment policies

2.3 Women’s employment guarantee

2.4 Employment guarantee for the disabled and other special groups

3 Employment contract and collective agreement

• Must be in writing• Fixed term and indefinite contracts, and contract for particular

job assignment• If an employee has completed services for 10 years or more for

the employer, and both parties intend to renew the contract, employer must execute indefinite employment contract.

3.1 Employment contract 3.1.1 Formation 3.1.1.1 Form

3.1.1.2 Minimal terms (1) period of time (2) assigned job (3) labor protection and working conditions (4) remuneration and pay (5) discipline (6) conditions of termination (7) liabilities for breach of contract

3.1.2 Validity

Zhang Xuezhen as the IICH successfully won the bid to demolish the workshop of Tianjin Alkali Factory. In order to complete the demolition project she recruited a few farmers including Zhang Guosheng. When handling the recruitment she expressly told the employees she would not responsible for their injury or death. The recruitment registration form had statement to this effect, which Zhang Guosheng agreed on. In the course of the demolition exercise Zhang Guosheng fell from the girder of the workshop on which he was undertaking demolition exercise due to the disjunction of the girder. Zhang Guosheng was severely injured and sent to the hospital for cure where he died fifteen (15) days later. Zhang Guosheng’s father sued the Zhang Xuezhen for damages, who defended on the excuse of the deceased’s consent to the exemption of injury or death liability. The trial court held that Zhang Xuezhen should provide safe working conditions for the employees and the foregoing exemption clause in the employment contract violated the mandatory provisions, thus should be nullified. Therefore the trial court ordered Zhang Xuezhen to compensate Zhang Guosheng’s father the deceased’s medical expenses, lost incomes of the deceased’s dependents, and the living subsidy for the deceased’s dependents.

Invalid: conclusion by fraud or coercion of either party

Illustration:Illustration: Contract exempting liability of employee’s death nullified Contract exempting liability of employee’s death nullified

3.1.3 Termination

3.1.3.1 Consensual termination  

3.1.3.2 Employer's unilateral decision

(1) unsatisfactory performance of the employee during probation period (2) serious breach of labor discipline or rules and regulations of the employer (3) serious neglect of duties, obtaining personal benefits but causing grave damage to the employer (4) be imposed criminal punishment

3.1.3.3 Employer's prior notice5

(1) unable to perform the original work due to sickness or non-industrial injuries after cure period (2) incompetent to perform duty despite re-training or re-allocation of job (3) objective conditions have changed dramatically rendering the perform

ance of the contract impossible, and the parties fail to reach agreemen

t to modify terms of the contract.  

3.1.3.4 Redundancy If employer is on verge of insolvency, or has great difficulty in production and operation, it may lay off redundancy  

3.1.3.5 Employee's unilateral decision (1) at any time during probation (2) under forced labor by resorting to force, oppression, or false imprison

ment by the employer (3) employer's failure to pay salaries or provide working conditions as per

contract provisions

3.1.4 Illegal dismissal

(1) unable to work due to occupational disease or industrial accident

(2) during the recovery period in sickness or non-industrial injuries

(3) during pregnancy, confinement or nursing period for women workers

(4) other situations as provided by the law

Employees so dismissed may seek compensation from such

employer

3.1.5 Economic compensation upon termination

Standard of economic compensation upon termination Standard of economic compensation upon termination

Causes of termination

Standards of compensation

1 month/ year

Minimum: 1 month

Maximum:

12 months Medical subsidy:

6 months Severe or incurable

disease subsidy

Consensual termination

√ √ √

Illness, non-industrial injuries

√ √ √

Incompetence √ √

Major changes in objective situations

√

Redundancy √

3.1.6 Employee’s non-competition obligation

• Employer must give employee economic compensation for maintaining such secrecy upon terminating the employment contract or the non-competition clause. • Maximum length: 3 years

Reasonableness of non-competition clause Reasonableness of non-competition clause

Sector Position Restraint clause Reasonable-ness

Reason

Attorney Partner Not to work as an attorney within a 5 mile radius for 2 years

√ Necessary to protect its client base and goodwill.

Partner Not to work as attorney for 2 years.

× No region is mentioned.

Typist Not to work as typist for law firm within 5 mile radius for 1 year

× Typist possesses neither goodwill nor trade secrets

Equipment maker

Salesman Not to solicit orders from ex-customer for 2 years

× Fails to limit to the specific goods supplied by ex-employer.

Salesman Not to sell to ex-customer competing with ex-employer for 5 years.

× Restraint longer period than necessary to recover the goodwill.

GM Not to sell to ex-customers for goods competing with ex-employer for 5 years.

√ The GM would justify a period of longer restraint to protect its goodwill and trade secrets.

Illustration:Illustration: Three engineers liable for competing with ex- Three engineers liable for competing with ex-employeremployer 3 software engineers working for the Tongli Computer IT Company quitted job and joined Pujiao Research Institute. They took with themselves the music-composing software developed by them while working as employees at Tongli. The Pujiao Research Institute started to produce similar music-composing software with this software. Tongli had no choice but to sue these persons and their new employer before the court. The Shanghai First Intermediate People’s Court accepted the case and held that the service copyright should belong to the employer, i.e. Tongli Company. The trial court ordered 3 engineers who changed job and took away corporate software to return the source program to its owner and the new employer to pay RMB 300000 as compensation for economic losses.

Illustration:Illustration: GMC Ltd v Horne (1933) GMC Ltd v Horne (1933)

Mr. Horne, MD of GMC. Non-competition clause in the employment contract. After termination, he solicited GMC’s customer order. In order to avoid liability, he formed a company whose sole purpose was to solicit GMC’s customers. GMC sued him. He claimed that the clause was not binding on the company.

Mr. Horne was laible. Injunction: he and the company.

3.2 Collective agreement

• It covers: wages and salaries, working hours, rest and vocation, labor safety and health, social insurance and social welfare, etc.

• Draft agreement: subject to approval by the worker's congress.

• By and between employer and the trade union• Submitted to competent government department for

records• If no objection within 15 days after filing, effective

automatically

• It binds all the employees and the employer

4 Labor standards

4.1 Working hours and rest

• 8 hours/day • Average weekly working hours: 44 hours or less

• Permissible extension: (1) in the event of natural disaster or accident in which life an

d health of employees and the safety of property are endangered, thus the emergent disposal is required

(2) manufacturing equipment, network of transportation and communication and public facilities break down, which affect the interest of the public and require the prompt repair

(3) other circumstances permitted by law

4.1.1 Working hours

4.1.2 Rest

• At least one rest days each week

• Statutory rest days:

(1) new year

(2) lunar new year

(3) international labor day

(4) national day

(5) other holidays as prescribed by law

• Paid annual leave, after completion of service for 1 year

4.1.3 Overtime work

Overtime restrictions and respective allowance Overtime restrictions and respective allowance

Daily

Monthly Rest day Statutory holiday Ordinary Special causes

Maximum overtime

1 hour 3 hours 36 hours

200% 300% Overtime allowance

150% 150% 150%

4.2 Wages • Distribution according to performance, and equal pay for equal work. • Practice diversified distribution system with distribution according to

work as the main form• Give priority to efficiency with due consideration to fairness • Minimum wage standards set by provincial-level governments: (1) the minimum living expenses of the employee and their dependents (2) the average wage level of the society (3) productivity (4) employment situation (5) the disparity of economic development level between regions  • Wages should be paid in cash directly to the employees without unlawful

deduction• Employer should not default payment of wages

• Employees are entitled to wages during statutory rest days, wedding and

funeral leaves and other lawful social activities

4.3 Working conditions

4.3.1 Safe working conditions

4.3.2 “Three-simultaneous” requirement

Labor safety and health facility must be simultaneously designed, constructed and commissioned for operation with the principal project.

4.3.3 Special protection for women and minors • Employment of child labor under 16 is strictly prohibited• Minors between 16-18 are prohibited to engage in physical

labor work that are poisonous, hazardous or grade 4 or above strenuous.

• During menstrual cycle, women workers must not work at height, in low temperature, wet conditions, or strenuous work of grade 3 or above.

• During pregnancy women workers may not be ordered to engage in strenuous work of grade 3 or above.

• Nursing period, women workers may not be ordered to engage in strenuous work of grade 3 or above, and work overtime or on nightshift. Women workers are entitled to a maternity leave of least 90 days.

5 Social insurance and welfare

5.1 Overview

5.2 Types of social insurance

5.2.1 Pension insurance

• All enterprises, State administrative organs, institutions and other organizations and their staff members and workers must pay the basic medical insurance premiums.

• About 6% of the wage bill of the employer and 2% of personal wages are paid as part of the medical insurance premiums.

• All enterprises and employees in towns and cities must pay the basic pension insurance premiums.

• About 20% of wage bill and 8% of personal wage go to such insurance.

5.2.2 Medical insurance

5.2.3 Unemployment insurance • All enterprises and institutions and their staff must pay

insurance premiums.

• Unit pays 2% of their wage bill and individual pays 1% of their personal wages

• Conditions for enjoying it:

(1) 1 full year of the insurance premium has been paid

(2) suspension of employment is not voluntary

(3) unemployment has been registered and application for reemployment filed

 

• Period for drawing insurance money depends on the length of period for which one has paid the premiums, the maximum being 24 months

5.2.4 Industrial injury insurance • Industrial injury insurance premiums are paid by

enterprises rather than the employees themselves

• Its rate varies according to different trades, and may fluctuate with the situation of the individual enterprise.

5.2.5 Childbirth insurance

5.3 Social welfare and relief

5.3.1 Minimum living standard guarantee

5.3.2 Social welfare

5.3.3 Special care and treatment

5.3.4 Social relief

6 Labor supervision

Labor administrative organs headed by MOLSS:

• supervise and inspect the implementation of laws and regulations on labor by employer • stop any acts in violation of the laws and regulations on labor • order the rectification • issue disciplinary warnings or impose fines on the violators

Illustration: Compulsory searching naked employees punishedIllustration: Compulsory searching naked employees punished On 6 August 2002 in the factory based in the town of Qigan of Conghua district in Guangzhou municipality, one worker accidentally lost 4 pieces of diamonds. The officers of that workshop took extreme radical measures so as to locate the lost diamonds. They ordered all the 103 employees including boys and girls to take off their clothes completely and took them to the glasses house so as to search their bodies completely. All the girls were asked to take off their circumference and the underwear. The girls in menses were even asked to take off the sanitary towel. Only after such compulsory search could they leave the workshop. Else, they cannot leave. Most of the girls are unmarried. Upon such occurrence they felt extremely insulted but helpless. Many of them cannot stop crying in the course of compulsory search. When this event was covered by the media, the factory’s practices were strongly condemned by the whole society. The town government called for the strict disposition of the event particularly the responsible persons. The district labor bureau requested the factory to make public apology and economic compensation to the employees, and guarantee that such event would never happen again. The district public security bureau investigated into the matter and would arrest and prosecute the responsible persons once the evidences were sufficient.

7 Labor disputes resolution

7.1 Mediation

• By labor disputes mediation commission

• Representatives of the employees, representatives of the employer and representatives of the trade union

• Chair: representative of the trade union

• Parties may submit it to labor disputes mediation commission for mediation

• If agreement is reached in the course of mediation, the parties shall voluntarily perform the mediation agreement

7.2 Arbitration • It is the “must” for resolving such disputes

• It consists of representatives of the competent government agencies, trade unions and employers

• Its chairman should be assumed by the representative of the competent government agencies

• Disputing parties shall apply to the arbitration commission within 60 days from occurrence of the disputes

• It should render the decision within 60 days from acceptance of the case

• If parties do not raise objections against arbitration award, they must voluntarily perform the award.

 

• Party disagreeing with it may file lawsuit in the court, which will make binding.

7.3 Litigation

• The court litigation can only be applied if any of the disputing parties disagrees upon the arbitration award.

• Party dissatisfied with the arbitral award should institute the lawsuit within 15 days from the receipt of the arbitral award.

• Court hears and handles this type of dispute according to the CiPL

• Completion within 6 months from acceptance of the case

• Appeal against trial court judgment is allowed.