By You Yunting

Recently, following a disputed labor case I have noticed an inadequate protection of the unit by the existing laws and regulations, and such inadequacy has made an unfaithful employee gain immoral advances from such inadequacy in the case, and on the other hand, hundreds of innocent labors may suffer losses from this. So, we would like to put the case in discussion now:

A senior employee asked for sick leave of 1 year (it was found afterwards that the hospital has never prescribed medicine after the issuance of the medical certificate, yet the hospital also refuses to admit involvement in the false sick leave), contrary to this the employer later found that the employee was actually running her own company then entrusted lawyers to investigate it. After the check of the registered information of the suspected company, the employee was proven to be the general manager. Meanwhile, the lawyer also contacted the employee in the name of business contact through the contact telephone number on the home page of the company, which further confirmed the employee’s service with the company. The call was notarized.

Following the collection of the evidence, the employer dismissed the employee, who later filed labor arbitration against the employee, claiming the determination of the illegal dismissal. In the final adjudication by the court, the illegal termination of the labor contract was judged, but the business operation by the staff in her sick leave was also decided to be unfaithful. In the mean time, the employee otherwise filed an arbitration for demanding the employee to pay back her sick salary.

In the arbitration and the first instance of the court, the employee’s claim of the compensation was denied both by the judge for not supporting legal basis hereby to the demands. The employer chose to appeal, yet to much surprise, the prior-hearing mediator of the court should called the lawyer to withdraw the lawsuits, and said, “No precedence for units’ victory in such cases, you shall contact your client and ask them to withdraw the lawsuit, yet surely the case will be arranged hearing soon shall no consent from your client.” As a lawyer practicing IPR, the labor cases handled by myself are relatively less; yet it is still prominent to my awareness that the existing labor law should share less effort to protect the employees.

To take the case as an example, the employee appears to be immoral as she still received the payment from the employee while still made money through her business outside. Nonetheless, the only thing the employee could do is to terminate the contract while as to the compensations on the losses hereby suffered, the employer seems to have little chance to get that payment, since the compensation is only applicable in the liabilities for the training fee and confidentiality. The legislation has led to an awkward situation: there is no law to be referred! Although the employer was defeated in the arbitration and the first instance, it does suffer the following losses:

I. To investigate the employee’s surreptitious business in her sick leave, the employee engaged a lawyer and thereby brought forward the expenses of the lawyer’s fee, notarization fee and registered information inquiry fee.

II. As the senior manager and major technical personnel, the employee was paid RMB 15, 000 each month. For her leave, the employer had to arrange other staff to take her place, however thus delayed both the employee and other men’s work in the company. Despite the losses thereby occurred this could not be defined as direct losses, there is no way to deny that invisible losses exist.

III. The balance of the sick payment. By the regulations in Shanghai, the sick payment shall be calculated on the average annual salary in the last year, approximately over RMB 3, 000 monthly. However, in accordance with the inner articles of the employer in the case, the actual sick payment was 80% of the employee’s remuneration, namely as high as RMB 12, 000. To the employee’s opinion its high standard sick pay is to care for the faithful staff, yet the bad faith of the employee in the case has led to the losses of the company, and therefore, then it shall follow the municipal regulation to make the payment.

Without speaking of the issue of law, do you feel reasonable for these three claims? I believe it would not be difficult for you to notice the losses suffered by the employer and all these losses are resulted by the unfaithful conduct of the employee. However, as seen, these proper demands have failed to own support from the court or arbitration tribunal just because the law is partial to the labor. It makes no sense in our view. A main function of the law is to alert, and when the employer could not demand compensation from the unfaithful employees, such a function could no longer exist as it should have. Whereas it could be the award for other similar misconducts, and the continuance of it may produce the disorder of the whole labor market.

To put aside the long-term effect, Gresham’s law could also be found in the case: thousands of innocent men could suffer from one’s bad faith. The employee in the case is a medium scale company with more than a thousand staff members, who have been caring with a good sick leave system. In spite of this, the good inner policy may be changed to the consideration of senior management after the failure to claim the “deserved” compensation:

Since there is regulation in municipal laws of Shanghai to calculate the sick payment in accordance with the RMB 3, 000 per month, the company’s 80% of the agreed wage seems to be unfairly high, and what is worse, the overpaid part could not be collected back. So, I foresee the “good policy” would be soon amended, and then we could only see a “dried up” payment. That is the losses suffered by the innocent men from other’s bad faith. However, I believe once the law makes the employee liable for her bad faith, the sound policy of the company could survive longer.

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Lawyer Contacts

You Yunting

86-21-52134918

youyunting@debund.com, yytbest@gmail.com

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