Answer: The company rules of employers are the institutional documents for the company’s production and operation, and are the basis for disciplinary actions against employees’ misconduct. It should be noted that in addition to company rules, employment contract and professional ethics may also be the norms that can restrict behavior of employees.
What kind of company rules, employment contract provisions, and professional ethics can effectively bind employees?
Firstly, the content of labor discipline in company rules and employment contracts should be legal, and the content that violates the law is invalid. For example, the following provisions in a company rules or employment contract are illegal and consequently invalid: the length of the employee’s working hours exceeding the maximum time allowed by the Labor Law,1In the case of Zhang Mou and a courier company in the second batch of typical cases of labor disputes issued by the Supreme Court in 2021, the length of working hours of employees stipulated by the unit exceeded the working hours permitted by the Labor Law, and the court ruled that the rules and regulations of the unit were illegal and could not be used as a basis for punishing employees.the provision of poorest-performance-out system, 2In the case of Zhang Chenye of Nanjing Intermediate Court of Jiangsu Province in 2018, the court held that the pooreat-performance-out system stipulated in the employer¡¯s company rules was invalid due to violation of the law.and restricting the employee’s right to resign,3Liu Yongzhi, Guangdong Yu’an Industrial Co., Ltd. Civil Judgment of Second Instance of Labor Dispute Civil Judgment of Meizhou Intermediate People’s Court of Guangdong Province (2022) Yue 14 Min Zhong No.1966. ¡°Article 32 of the above-mentioned Employment Contract restricts Liu Yongzhi’s right to terminate the contract and excludes Liu Yongzhi’s legitimate rights, rendering it invalid.¡± monthly deduction limits of employee compensating the employer exceeding the national or local regulations or that an employee must pay a deposit as a guarantee for the employment relations.4Civil Judgment of Second Instance of Labor Dispute between Pan-China Innovation (Beijing) Monitoring Instrument Co., Ltd. and Sun Wence Civil Judgment of Beijing First Intermediate People’s Court (2022) Jing 01 Min Zhong No.10829. The court found that the provisions of the company rules on the collection of employee risk deposits violated the provisions of the Employment Contract Law that employers must not collect guarantees or property from workers, so they were not binding.Of course, if the contents of company rules or labor contracts are invalid, only the illegal parts are invalid, not affecting the validity of other legal parts.
Secondly, the company rules of the employer should be formulated through legal procedures so as to be binding on the employees. The Employment Contract Law requires employers to publicize or inform employees of the company rules they have formulated.5Article 4 of the Employment Contract Law: ¡°The employer must publicize the company rules and decisions on major matters directly related to the vital interests of the workers, or inform the workers.¡±In practice, employees signing on training forms related to the company rules,6Li Minggeng, Shenzhen Hengfeng Property Management Co., Ltd. Labor Dispute Civil Application for Retrial Review Civil Ruling Guangdong Provincial Higher People’s Court Civil Ruling (2021) Yue Min Shen No.5784. ¡°Although Li Minggeng claims that the company rules of Hengfeng Company have not gone through democratic and publicity procedures, Li Minggeng has signed the Training Sign-in Form, and thus Hengfeng Company has completed the publicity and training procedures.¡±sign on the text of the company rules or their notices, employer sending or informing the company rules by mass e-mail or in management software, evidence of study or discussion of the company rules at employee congress, and even provisions mentioning the company rules in employment contracts signed by employees,7Application for retrial of labor dispute between Zhang Machao and Henan Youqi Human Resources Management Co., Ltd. Civil Ruling of Henan Higher People’s Court (2022) Yu Min Shen No.3832. The court held that the employment contract between the two parties had stipulated that the employee should abide by the company rules. The 32nd batch of guiding cases of the Supreme Court, the case of Zheng v. Honeywell of the First Intermediate Court of Shanghai in 2021.may all constitute evidence that the employer has publicized or informed the company rules to the employees, thus fulfilling its obligation to formulate company rules through legal procedures. As for the provisions of employment contract on labor discipline, of course, employment contracts must be signed by employees so as to produce binding force.
Thirdly, professional ethics is binding. From the perspective of judicial cases, even if an employee’s violation of professional ethics does not violate the company rules or the provisions of the employment contract, the employer can also impose disciplinary actions on the employee according to professional ethics. Professional ethics can be divided into basic professional ethics and special professional ethics. The former usually includes the honesty and credibility of employees, the duty of loyalty to their employer, and friendly treating colleagues; the latter is related to role responsibilities of employees, and a behavior in some specific positions constituting a serious violation of professional ethics may well not be a violation of professional ethics in other positions. For example, drivers or pilots must not drink alcohol at work, while sales representatives may do it normally at work. Whether an employee’s behavior violates professional ethics needs to be judged under specific circumstances.
In judicial practice, some acts that violate professional ethics may directly constitute the grounds for legal dismissal. These behaviors include the behavior of being absent from work without approval for several consecutive days (the current judicial practice in various places is that being absent from work for three consecutive days is a serious violation of company rules),8In the case of Wang Xiang Octopus Shanghai Zhongshi Chemical Logistics Company of Shanghai First Intermediate Court in 2017, the court held that long-term absenteeism of employees, even not violating the company rules, was a violation of basic professional ethics and serious violations of discipline, and the dismissal was legal.serious misconduct in specific positions (such as the aforementioned driver’s drinking at work), and acts that seriously violate the employee’s duty of loyalty or other basic professional ethics (such as gross negligence and corruption and criminal acts as stipulated in Article 39 of the Employment Contract Law). 9 Jiangxi Zhifang CNC Power Co., Ltd., Chen Liyin Labor Dispute Second Instance Civil Judgment Jiangxi Nanchang Intermediate People’s Court Civil Judgment (2019) Gan 01 Min Zhong No.796. The court held that Article 3 of the Labor Law stipulates the obligations of employees to abide by professional ethics, so even if there are no relevant provisions in the company rules, employees can also be legally dismissed if their behavior seriously violates professional ethics. The labor dispute appeal case between Wang Yuewen and Yida Property Management Co., Ltd. Dalian Branch, Liaoning Province Dalian Intermediate People’s Court Civil Judgment (2017) Liao 02 Min Zhong No.1611. The court held that even though the company rules did not stipulate, the employee’s behavior of buying and drinking alcohol at work seriously violated the basic professional ethics, and the dismissal of the employer was legal. Civil Ruling on Labor Dispute Retrial Review and Trial Supervision of Gaoxianghua and Fujian New Huadu Comprehensive Department Store Co., Ltd. Fujian Provincial People¡¯s High Court Civil Ruling (2020) Min Min Shen No.2157. The court held that although the supermarket employee did not constitute theft under the company rules, the fraud of changing price tags constituted a violation of basic professional ethics, so the dismissal of the employer was legal. Zhang and Ai Dennison (China) Co., Ltd. Tianjin Binhai Branch other labor disputes, personnel disputes retrial Tianjin High Court Civil Ruling (2020) Jin Min Shen No.1689. The court held that the employee’s violation of the privacy of the superior seriously violated professional ethics, and the dismissal of the employer was legal.
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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
- 1In the case of Zhang Mou and a courier company in the second batch of typical cases of labor disputes issued by the Supreme Court in 2021, the length of working hours of employees stipulated by the unit exceeded the working hours permitted by the Labor Law, and the court ruled that the rules and regulations of the unit were illegal and could not be used as a basis for punishing employees.
- 2In the case of Zhang Chenye of Nanjing Intermediate Court of Jiangsu Province in 2018, the court held that the pooreat-performance-out system stipulated in the employer¡¯s company rules was invalid due to violation of the law.
- 3Liu Yongzhi, Guangdong Yu’an Industrial Co., Ltd. Civil Judgment of Second Instance of Labor Dispute Civil Judgment of Meizhou Intermediate People’s Court of Guangdong Province (2022) Yue 14 Min Zhong No.1966. ¡°Article 32 of the above-mentioned Employment Contract restricts Liu Yongzhi’s right to terminate the contract and excludes Liu Yongzhi’s legitimate rights, rendering it invalid.¡±
- 4Civil Judgment of Second Instance of Labor Dispute between Pan-China Innovation (Beijing) Monitoring Instrument Co., Ltd. and Sun Wence Civil Judgment of Beijing First Intermediate People’s Court (2022) Jing 01 Min Zhong No.10829. The court found that the provisions of the company rules on the collection of employee risk deposits violated the provisions of the Employment Contract Law that employers must not collect guarantees or property from workers, so they were not binding.
- 5Article 4 of the Employment Contract Law: ¡°The employer must publicize the company rules and decisions on major matters directly related to the vital interests of the workers, or inform the workers.¡±
- 6Li Minggeng, Shenzhen Hengfeng Property Management Co., Ltd. Labor Dispute Civil Application for Retrial Review Civil Ruling Guangdong Provincial Higher People’s Court Civil Ruling (2021) Yue Min Shen No.5784. ¡°Although Li Minggeng claims that the company rules of Hengfeng Company have not gone through democratic and publicity procedures, Li Minggeng has signed the Training Sign-in Form, and thus Hengfeng Company has completed the publicity and training procedures.¡±
- 7Application for retrial of labor dispute between Zhang Machao and Henan Youqi Human Resources Management Co., Ltd. Civil Ruling of Henan Higher People’s Court (2022) Yu Min Shen No.3832. The court held that the employment contract between the two parties had stipulated that the employee should abide by the company rules. The 32nd batch of guiding cases of the Supreme Court, the case of Zheng v. Honeywell of the First Intermediate Court of Shanghai in 2021.
- 8In the case of Wang Xiang Octopus Shanghai Zhongshi Chemical Logistics Company of Shanghai First Intermediate Court in 2017, the court held that long-term absenteeism of employees, even not violating the company rules, was a violation of basic professional ethics and serious violations of discipline, and the dismissal was legal.
- 9Jiangxi Zhifang CNC Power Co., Ltd., Chen Liyin Labor Dispute Second Instance Civil Judgment Jiangxi Nanchang Intermediate People’s Court Civil Judgment (2019) Gan 01 Min Zhong No.796. The court held that Article 3 of the Labor Law stipulates the obligations of employees to abide by professional ethics, so even if there are no relevant provisions in the company rules, employees can also be legally dismissed if their behavior seriously violates professional ethics. The labor dispute appeal case between Wang Yuewen and Yida Property Management Co., Ltd. Dalian Branch, Liaoning Province Dalian Intermediate People’s Court Civil Judgment (2017) Liao 02 Min Zhong No.1611. The court held that even though the company rules did not stipulate, the employee’s behavior of buying and drinking alcohol at work seriously violated the basic professional ethics, and the dismissal of the employer was legal. Civil Ruling on Labor Dispute Retrial Review and Trial Supervision of Gaoxianghua and Fujian New Huadu Comprehensive Department Store Co., Ltd. Fujian Provincial People¡¯s High Court Civil Ruling (2020) Min Min Shen No.2157. The court held that although the supermarket employee did not constitute theft under the company rules, the fraud of changing price tags constituted a violation of basic professional ethics, so the dismissal of the employer was legal. Zhang and Ai Dennison (China) Co., Ltd. Tianjin Binhai Branch other labor disputes, personnel disputes retrial Tianjin High Court Civil Ruling (2020) Jin Min Shen No.1689. The court held that the employee’s violation of the privacy of the superior seriously violated professional ethics, and the dismissal of the employer was legal.