Answer: Under Article 48 of the Employment Contract Law, if an employer unlawfully terminates an employee’s employment relationship, the employee may request to reinstate, e.g., continue performing the employment contract. Reinstatement is often very important for employees who are unlawfully terminated, as it may relate to their basic subsistence.
However, there are exceptions to the employer’s obligation to reinstate. Although the aforementioned legal provision does not specify the application scope for the exception, based on current judicial decisions nationwide, the basic requirement for this exception is that the objective situations render reinstatement impossible. These situations include the employer¡¯s organizational adjustments involving the position, the parties having completely lost basic trust and confidence, and the employee’s position having had a substitute.
For example, in the case of Zhang Zhimin v. Eimer (Beijing) Holding Group Co., Ltd., the Third Beijing Intermediate People’s Court held that the employee’s position had been assigned to another person, that the original employment contract could no longer be performed, and that reinstatement was not upheld.1 Zhang Zhimin v. E-MERCK (Beijing) Holdings Group Co., Ltd. Labor Dispute Appeal Case Beijing Third Intermediate People’s Court Civil Judgment (2017) Jing 03 Min Zhong No. 4680. In the 2023 case of Yang Xuejing v. Swiss Reinsurance Company, the Beijing High People’s Court held that the parties had clearly lost the basic trust to implement the employment contract due to the employee’s complaint of the superior supervisor, eavesdropping, and secretly recording, that the parties having been involved in disputes for five years, and that it was impossible to continue to implement the contract.2 Yang Xuejing v. Swiss Reinsurance Company Limited Beijing Branch, Labor Dispute Retrial Case Beijing High People’s Court Civil Ruling (2023) Jing Min Shen 1496.
Employees can only elect one of reinstatement or punitive damages as the claim. If an employee chooses to continue to implement the employment contract and reinstate the position, they cannot claim for punitive damages for unlawful termination of the employment contract. The court may order the employer to pay punitive damages if the employee claims for reinstatement, which is subsequently found impossible. For the calculation method of punitive damages, please refer to How to calculate punitive damages?
This article is a part of our new book“Employment Law in China: A Practical Guide. A book about “What should I do” with case laws.”Stay tuned, and the book will soon be published as an electronic books!
Mr. Dong Wang has been in practice for over 20 years, specializing in business law, including employment law, commercial law, company law, and intellectual property law. Mr. Wang has earned respect and trust from his clients due to his professionalism, fidielty, and kindness.
Email: wangdong@royalaw.com
- 1Zhang Zhimin v. E-MERCK (Beijing) Holdings Group Co., Ltd. Labor Dispute Appeal Case Beijing Third Intermediate People’s Court Civil Judgment (2017) Jing 03 Min Zhong No. 4680.
- 2Yang Xuejing v. Swiss Reinsurance Company Limited Beijing Branch, Labor Dispute Retrial Case Beijing High People’s Court Civil Ruling (2023) Jing Min Shen 1496.