(By Luo Yanjie) Abstract: “where a laborer is unqualified for his work and remains unqualified even after receiving a training or an adjustment to another work post”, the employer may terminate a labor contract. The employer shall, if terminates a labor contract with an unqualified laborer, prove the employer to be incompetent from many aspects not just based on a bad performance.

Pursuant to the Labor Contract Law, there are many conditions for termination of a labor contract with laborers. Among these conditions, the most used one is that a labor is unqualified for his work. This means, the employer may not consider rescinding a labor contract unless a laborer is unqualified for his work. During the process of termination, among many disputes between laborers and employers, we would like to introduce a typical cases regarding termination of an unqualified laborer from Case Guidance of the Supreme People’s Court.

Introduction to the Case:

In July 2005, Wang Peng, the defendant, was engaged in the sale in ZTE Tech (Hangzhou) in accordance with his labor contract with ZTE Tech (Hangzhou). According to the regulations of ZTE Tech (Hangzhou), there are four grades of laborers, i.e, S, A, C1 and C2, over annual assessment or half a year assessment with the proportion of 20%, 70% and 10%. If one got a grade of C2, it means he or she is unqualified for his or her work. At first, Wang Peng was engaged in the sale in distribution department of ZTE Tech (Hangzhou). Then, due to the close-down of the distribution department, Wang Peng was rotated to do sale in Huadong District and received a grade of C2 in assessment. ZTE Tech (Hangzhou) terminated the labor contract upon the payment of economic compensation because of his unqualified for his work after rotation.

Subsequently, Wang Peng filed a labor dispute to an arbitration commission which decided that ZTE Tech (Hangzhou) was obliged to pay extra economic compensation for illegal cancelation of a labor contract. Dissatisfied with the decision made by the arbitration commission, ZTE Tech (Hangzhou) brought a case to the court, alleging that there is no illegal cancelation of a labor contract. The court heard the case and affirmed the judgment of the decision made by the arbitration commission, determining that, even though Wang Peng received a grade of C2 in assessment which means not to be unqualified for his work, ZTE Tech (Hangzhou) do not conform to the criteria of terminating a labor contract unilaterally on the grounds of insufficient evidence ZTE Tech (Hangzhou) had to prove Wang Peng to be incompetent with his work only dependent on the result of assessment and to be unqualified for his work after a rotation.

Lawyers’ Comment:

1. The criteria of terminating a labor contract for “unqualified for his work”

To protect the legal interests of laborers, the Labor Contract Law had a clear stipulation regarding an employer’s unilaterally termination of a labor contract. This case was related to the article that the employer may rescind a labor contract where a laborer is unqualified for his work and remains unqualified even after receiving a training or an adjustment to another work post.

Of special note is that there must be a rotation for an unqualified laborer only dependent on his incompetent for his previous post, not due to other objective reasons. In this case, even though there is a rotation for Wang Peng, the reason of his rotation was the close-down of distribution department. Therefore, the court decided that ZTE Tech (Hangzhou)’s termination was invalid in accordance with its termination procedure.

2. How an employer proves a labor to be unqualified for his work?

In this case, the court may not recognize the labor as a unqualified for his work in accordance with the afore-said article even if the labor made a bad performance for his work. In practice, however, how an employer proves the labor to be unqualified? Generally speaking, we recommend the employer may start with the following:

1). Employer’s regulations shall stipulate specific conditions about incompetence.

If an employer could make a specific stipulation about unqualified for work through objective data based on this actual situation, it may, in judicial practice, be of great help.

2). Recording laborers’ bad performances served as an evidence

Ultimately, an unqualified labor of his work was considered on the grounds of daily performance. Therefore, employers shall record laborer’s daily performance. Where there is a bad performance, employers may record the facts of bad performance through taped conversations, signed transcripts, labor’s self-criticism and customer’s complaint and others.

3). Validity and relevance of a rotation procedure

First, before a rotation, the employer shall have a record of evidence for his incompetence and make a clear interpretation for his rotation, so as to avoid terminating a labor contract with legal rotation procedure.

 

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