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China Employee Terminations and the Importance of Getting It Right Beforehand
Our China employment lawyer, Grace Yang has been writing often of late regarding the finer points of China employment law, in large part because Chinese downturn has led to a substantial increase in ill-conceived employee terminations. See e.g., Grace’s relatively recent posts on China Employment Laws and Lifetime Employment, China Employee Vacation Law, China Employee Probation, Dealing with Pregnant and Nursing Employees, and China Employee Mass Layoff Laws.
Today, I am going to reveal an email I sent to a potential client, a company that had messed up on many of China’s employment law technicalities in large part because it had simply not realized that the applicable local employment rules were different from the national rules. This company had shut down an office and terminated a number of employees in a number of different China cities, without any regard for how those cities differed with respect to their local employment laws. The below email has been modified so as to make it impossible for anyone to know the company involved.
I think it important that I be upfront on how we view China employment arbitration cases. We view them as nearly unwinnable and, more importantly, almost never worth the money to fight. Your case is no different, especially since it appears that your company’s termination violates local laws.
Take the Qingdao matter. For us to sort through all of the legal issues would likely cost you close to what it will likely cost you to strike a deal with this employee. And once we sort through all of the legal issues, the best we could probably tell you is that you have somewhat of a chance to prevail on a few of them, virtually no chance to prevail on most of them, and absolutely no chance to prevail on some of them. I say this based on having briefly discussed your factual situation with our China employment attorney.
Employers very seldom win against their employees in China employment arbitration, foreign employers even less so. And with the recent downturn in China’s economy, the odds for employers have gotten even worse. And if you did anything wrong in shutting down your Qingdao office (and the odds are good that you did), your chances will be even lower. Even foreign employees (and I see some of those were involved here) nearly always win at these arbitrations.
And then there is the cost of preparing for the arbitration and the cost of arbitrating.
What we do on cases like yours is try to settle, with all employees. Generally, Chinese employees want quick money and want to get on with their lives, believing that they can (and often already have) get another job. The down economy may impact this thinking somewhat, but interestingly enough, past downturns have really not. So if you were to retain us, the first thing we would do is some quick and relatively inexpensive additional research on the issues; just enough to be able to have a really good idea of the employee’s weak points that we can highlight in settlement talks. And then we work to settle and then when we settle we document the settlement in such a way as to ensure that the settling employees never assert any claims against your company again.
We would also want to look into the issues with your other (non-terminated) employees as well, to try to nip potential problems there in the bud. The earlier you can resolve these sorts of issues with employees the better. We have handled a number of office closings, including in Shenzhen, and we like to settle with the employees before the closing even happens, when they have a few more months even to work and are feeling safe.
If you agree with the above approach, we should talk some more. If you do not, well then you should not retain us.
How do you handle your employee arbitrations?
The post China Employee Terminations and the Importance of Getting It Right Beforehand appeared first on China Law Blog.
We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.
Source: http://www.chinalawblog.com/2016/05/china-employee-terminations-and-the-importance-of-getting-it-right-beforehand.html
