Article 39 of the “Labor Contract Law” stipulates that where an employee has committed a serious breach of the employer’s rules and regulations, the employer could unilaterally terminate the labor contract without any compensation. According to this article, if an employer has listed the behaviors which shall be determined as a serious breach, then will the employer unilaterally terminate the labor contract without any risk?
In practice, the answer is negative. In the “Guidance and Reference for Civil Trial” (Volume 1, 2012), the Supreme People’s Court points out that, “on the determination of a serious breach of the employer’s rules and regulations, the court shall not quote the employer’s rules and regulations directly; instead, it shall take the following factors into consideration; and the factors shall include the employee’s subjective situation, the frequency of breach, the relevant losses. In addition, the court shall also review whether the procedures and contents of the employer’s rules and regulations have violated the current effective laws, regulations, policies, judicial interpretations and the relevant labor contract.”
In view of similar cases released by local courts, “a serious breach” could be determined from the following perspectives.
First, normally, the courts tend to determine the behavior which is suspected of endangering the production safety, operation and management order, as a serious breach. For example, an employee brings other personnel into the power distribution room1; an employee has violated the employer’s prohibitive regulations, which prohibit employees from investing other companies as a shareholder, or taking a part-time job2; an employee is unreasonably troublesome, or fights3; continuous absenteeism4; false sick leave5; commercial bribery6, and etc..
Second, the employer could prove that an employee has brought economic losses with a certain amount. The employer’s rules and regulations could stipulate that if an employee has brought economic losses with a certain amount, it shall be deemed as a serious breach. From this perspective, it shall be noted that the employer shall set different certain amounts for the losses caused by fault or negligence, and the certain amount related to negligence shall be smaller than fault; in addition, the certain amount shall be in line with the local economic level, e.g., in Beijing, Shanghai and Guangzhou, normally if the amount related to fault reaches RMB5, 000, the court would tend to determine such behavior is a serious breach.
Third, the particularity of an employer’s industry and the employee’s position would be taken into consideration as well. If the employer’s industry is related to food, chemicals, auto parts and other industries which have special requirements on safety, then the employer could set relevantly strict regulations on safety. If the employer’s industry is related to medical devices and those industries which have special requirements on integrity, then the employer could set relevantly strict regulations on integrity. If the employee’s position shall operate high-speed equipment, then the employer could set relevantly strict regulations on the off-duty without approval. For example, an employee smokes in the workplace, if the employer is a flammable chemicals manufacturer, normally the court could tend to determine such behavior is a serious breach, because such behavior would cause a seriously dangerous consequence; however, if the employer is a trading company, the court is very likely to make an opposite judgment.
Fourth, for those behaviors during working time which could not cause a serious consequence, such as, dozing off, playing mobile games, smoking, and etc., normally the court would determine “a serious breach” based on the frequency of such behaviors and the subjective maliciousness of the employee. The essence of these behaviors is that the employee has violated the duty of diligence, which may not bring visible losses to the employer. The courts would be very strict with employers on hearing the relevant cases. For example, in the case (2016) Er 01 Min Zhong No.2147, the court held that the employee had taken a nape for 5 minutes, which had not brought any loss to the employer, so this should not be deemed as a serious breach. In the case (2018) Yun 0112 Min Chu No.5482, the court held that the employer had only proved the employee had browsed Taobao website, and other non-work related BBS in a certain day, and it failed to prove such behavior had brought a seriously negative effect to the employer, so it should not be deemed as a serious breach. For such behaviors, the court might support the employer when such behaviors happen frequently, and have brought negative effects to the employer. In order to reduce the risks related to the punishment for such behaviors, it is recommended to educate the employee and keep the relevant evidence timely, and terminate the labor contract when the employee has commit such behaviors for the times as stipulated in the employer’s rules and regulations.
 (2020)Jing Min Shen No.772
2 (2019)Su Min Shen No.1105
3 (2018)Yu Min Shen No.2242
4 (2015)Yu Gao Fa Min Shen Zi No. 00583
5 (2017)Jing Min Zai No.65
6 (2020)Yu Min Shen No.1161