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?


Trade Secret Litigation Injunction Rulings in China


(By You Yunting) According to media reports (note: the link is in Chinese), Eli Lilly and Company and Eli Lilly (China) sued an employee named Huang in the Shanghai No.1 Intermediate People’s Court. That court recently issued the first trade secret litigation injunction in China’s history, and ruled a litigation preservation that prohibited Huang from disclosing, using, or allowing any third party to use 21 documents that were protected as trade secrets by the plaintiff.

Inductions to the Case:


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.


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.