How an Employer Terminates a Labor Contract with an Unqualified Laborer in China?

(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.


Essential points on Writing Noncompetition Clauses In a China Labor Contract

(By You Yunting) In today’s post, our website would like to introduce some essential points in writing noncompetition clauses in a labor contract in accordance with relevant Chinese laws and regulations. Pursuant to the Labor Law, the Labor Contract Law and related laws and regulations, combined with the specific conditions of employing units, when writing noncompetition clauses or agreements, we will pay particular attention to the following points:

I. How to determine the scope of the noncompetition clauses?


Why China Supreme Court Agree with Resigned Employees Establishing Competing Businesses?

(By Luo Yanjie) Abstract: The experience an employee gains throughout the course of his employment is regarded as a personal right under the law, and even though an employer may spend a great deal of time and money cultivating the employee and improving their skill set, if there was no noncompete agreement entered into prior to this, the employer will usually not be able to impede or stop a resigned employee from starting another business to compete with his or her previous employer.

For most companies, talent is considered its most valuable asset. With the development of the economy, market competition grows ever more fierce, and many employers find themselves troubled at the prospect of a number of employees “job hopping” to competitors, bringing the benefit of the employers’ training, experience and expertise with them. The case introduced herein is a typical case in which the employee was not bound by a noncompete, nondisclosure, or similar agreement. Facing stiff competition, many employers file suit on the basis of unfair competition, and yet, due to lacking substantial evidence, many employers end up failing in bringing a successful case.


“Do Not Hire Agreements” among Google, Intel, Apple and Other Tech Firms Violates Chinese Laws?


(By You Yunting) As reported, the CEOs of tech giants Apple, Intel, and Google might be forced to go to court to account for mutual unwritten agreements about not soliciting each other’s workers for employment. These cases started due to the dissatisfaction of relevant employees, who believed that such “do not hire agreements” damaged that legal rights and interests. The news has also revealed emails from former Apple CEO, Steve Jobs, threatening Palm and Google and demanding that they stop using headhunters to obtain the email addresses of Apple employees. This news also raised the concerns within the industry.


Solutions to Labor Dispute on the Employment of Foreigners in China

By Albert Chen

A subscriber of our website raised a question to us: what to do when countered a labor dispute for foreigners in China, who shall also be protected by local laws? To this question, you may find your answer in today’s post.

I. Are Chinese laws and regulations applying to labor disputes of foreigners?

The main existing laws regulating the employment of foreigners in China is RULES FOR THE ADMINISTRATION OF EMPLOYMENT OF FOREIGNERS IN CHINA (Rules) issued by police, labor and other two departments. According to Article 26 of the Rules:


How to Respond Employees’ Compensation Claim for Office Relocation in China?

By You Yunting

A subscriber of our website asked that what the company shall reply when the employee hand in his/her resignation for the inconvenience occurred from relocation of the office and as for the employee’s claim of compensation.

We reply as follows: Obviously, it could come to the employee’s consideration that the relocation of the office is the statutory situation of “A major change in the objective circumstances relied upon at the time of conclusion of the employment contract renders it unperformable”, and it is also resulted by the employer, and for this reason, they would claim an extra one month salary and compensation.


How to Pay the Non-compete Compensation in China?

By Luo Yanjie

Restriction of business strife is the restriction clauses agreed in labor contract, IPR contract or confidential agreement between the employer and the employee with confidentiality obligation, which restricts the latter being engaged in the units manufacturing similar products, operating the similar business or competing with the original employer, neither shall the bond employee manufacture the products or operate the business competing with the employer.

Considering the professional division of social labor, the restriction on the future engagement of the employee in the familiar industry will of no question badly damage their interests. Therefore, we see the provision in the Labor Contract Law that the original employer shall pay employee the compensation for the non-compete during the agreed period. Yet what shall be more attentive to the employer is the payment of the compensation shall follow the legal regulation, otherwise the agreement on the non-compete shall be invalid. In this essay, you will see our opinions on it:


Analysis on Legal Risk of Out-of-Account Kickback by Foreign Invested Companies in China

By Luo Yanjie

As the mid-autumn festival is drawing on, the producers and sellers of moon cakes in cities throughout China (note: the link is in Chinese) are keen in the promotion of the snack. And by the investigation of some reporters, some merchants even try to get a big order for the moon cake by risking the kickback, and by one case, the reporter pretended to order 200 boxes of moon cakes in the name of a company, the kickback offered to him is 6% of each 10 thousand purchase, that means a total feedback of RMB 2, 400 will be paid to the reporter for the 200 boxes purchase. And in addition to the official kickback, another part of rebate from the salesman is also available.


Infringement on Privacy? Comment on Enterprise’s Monitoring of Employee’s Chat

Recently, Techweb, a technology website in China interviewed our lawyer for the company’s monitoring on employee’s chat, and the following is the digest of the interview:

Q: For the monitoring on phone call and online chat of the employees by the company, could you share us you opinion on it from the professional view?

A: For the monitoring on employee’s phone call and chat in working time, there’s no corresponding regulation in law, and we usually reply to our clients for such questions like this:


Different Local Regulations on Compensations and the Effect of Non-competition Agreement

The system of noncompetition is regulated in China Labor Contract Law, “If a Employee has a confidentiality obligation, the Employer may agree with the Employee on competition restriction provisions in the employment contract or confidentiality agreement, and stipulate that the Employer shall pay financial compensation to the Employee on a monthly basis during the term of the competition restriction after the termination or ending of the employment contract.” By the article, a financial compensation is demanded for the conclusion of non-competition agreement, while no legal regulation on the effect of such articles when no compensation is paid. Therefore, on the issue, the adjudication or decision made by local courts or labor arbitration committee in China varies much, and today’s post is our analysis on it.


What’s behind Gucci’s elegance?

                       —Gucci faces the allegations of sweatshop

Highlights: Gucci is claimed to maltreat its employees in China, which even leads to miscarriage of pregnant workers, thus not only impedes Italian luxury brand the expansion in China, but also brings the arbitration and demands for huge compensation.

Gucci, the luxury giant, recently becomes the subject of criticism for it being claimed by former employees of Shenzhen flag-store to be a sweatshop, and the maltreating includes overtime work without fair compensation, unethical treatment for pregnant workers, double compensation for stolen goods, etc. (News related)


The Untimely Chinese Labor Contract Law

     ——Layoff Difficulty of Nokia, Groupon and Ku6, the influence of untimely and inappropriate regulations in Labor Contract law

Highlights: The untimely and inappropriate regulations on layoffs in Labor Contract Law fails to meet the current development demands of the company, the legal obstacle deteriorates competitiveness of the company and limits company’s desires on employment.

Recently, four Chinese companies met difficulties due to cuts were brought to our attention., a Chinese deal-of-the-day website jointly invested by and Tencent (SEHK 700), started mass layoff, which raised a concerns and protestations from its employees; someone even chose the suit for the dissatisfaction on the compensation. Shortly after that, Nokia (NASDAQ: NOK) and Nokia Siemens Networks were also doubted due to  its illegal layoff procedure. And what’s more, the earlier layoff of KU6 (NASDAQ:KUTV) led to physical aggression and outbursts.