Fu was late for more than 70 times within 10 months after he was onboard. The company terminated the employment contract with the reason that Fu had committed a serious breach of the company’s rules and regulations. Fu filed a lawsuit against the company. The court held that the company knew that Fu had been late for work very frequently for a long time, but it had not punished Fu in accordance with the “Employee Handbook”, which indicated that the attendance was not a factor in the evluation of employees’ performance. The court decided that the company had terminated the employment contract illegally. (See (2018) Hu 0104 Min Chu No. 14518)
If you are the HR, you might be furious about the judgment.
In fact, the second paragraph of Article 39 of the “Labor Contract Law” prescribes that where an employee has committed a serious breach of the employer’s rules and regulations (hereinafter referred to as “RULE”), the employer could terminate the employment contract without paying any economic compensation. However, the problem is that if an RULE has defined a specific behavior as a “Serious Breach”, it is still risky to terminate the employment contract.
In Issue 49 of the “Guidance and Reference on Civil Trial”, the first civil division of the Supreme People’s Court has stated its preferred opinion on the determination of a “Serious Breach”, which says that it shall not be defined directly in accordance with the RULE, instead, it shall be defined by considering several factors, such as whether the employer has established and released the RULE in accordance with the “Labor Contract Law”; and whether the content of the RULE has not violated the current laws and regulations, policies, judical interpretations and the employment contract. In judicial practice, the main factors on the determination of an illegal termination include the rationality of the RULE; and the necessary reminders and management on the discpline issues.
Regarding the lateness, most employers stipulate a step by step discpline management system, such as, if an employee has been late for 3 times, a written warning will be issued; if an employee has received 3 written warnings, the employer could unilaterally terminate the employment contract. The written warning is a way to remind. Therefore, normally, if an employer could implement as aforesaid, it would not be decided as an illegal termination.
In order to reduce the relevant risks, employers shall avoid the following situations.
First, the punishment of the lateness is not reasonable. For example, in the case (2019) Xin 01 Min Zhong No.3981, the court held that the punishment on the lateness had extended the employees’ liability, which was not reasonable, and should not be used as the basis for a legal termination. The punishment is that an employee is late or leave early for more than 30mins, he shall be deemed as absenteeism for half-day, if the period is more than 3 hours, he shall be deemed as absenteeism for a whole day.
Second, to abuse three warnings. For example, an employer did not give warning for each lateness timely, however, it gave three warnings in a very short period. Such abusment of three warnings is very risky.
Third, regarding the special lateness behavior, such as an employer asks other colleagues to punch his time card and etc., normally, the employer was cheated, it would skip the step by step discpline management system, and choose the severest punishment directly. For example, in the case (2017) Yue 03 Min Zhong No.477, the “Employee Handbook” stipulates that during the employment, if an employee have commited the same violation for the second time, the employer could give a severer punishment, and even the severest punishment, which is to terminate the employment contract. The employer found an employee had cheated for twice, so it terminated the employment contract directly. However, the court held that the employer did not give two separate warnings, and therefore determined that the employer had terminated illegally. For such fraudulent lateness, in order to reduce the relevant risks, the employer could take actions from the following two aspects: (1) to stipulate those frudulent lateness behavious as a violation of the principle of honesty and credit, which could be deemed as a “Serious Breach” behavior. Normally, the judicial departments would support the employer for such claim; and (2) where there is no special provisions on regulating such frudulent lateness, the employer could terminate the labor contract with the basis of Article 3 of the “Labor Law” which prescribes that employees should observe the labor discipline and professional ethics, and Article 3 of the “Labor Contract Law” which prescribes the principle of honesty and credit.