Answer: Whether employers are entitled to impose a fine, or economic penalty, on their employees is a controversial issue in the judicial practice. At present, courts around the country have two completely different practices.
One practice is to consider that employers have the right to impose fines. These courts have held that the right to impose fines is part of employers’ management autonomy, but that fines should usually be limited so as not to affect their employees¡¯ subsistence. Some courts, such as the Guangdong Provincial High Court, the Jiangsu Provincial High Court, the Jilin Provincial High Court, courts in Jiaozuo City in Henan Province, Baiyin City in Gansu Province, and Chengde City in Hebei Province, held that as long as company rules include provisions for fines and the company rules are valid, imposing fines is legal, if the 20% limit of wage deduction under the Regulations on Rewards and Punishments for Enterprises¡¯ Employees,1Article 17 of the repealed the Regulations on Rewards and Punishments for Enterprises¡¯ Employees. Hebei Iron and Steel Group Mining Co., Ltd. Chengde Mining Branch, Zhao Zhenfeng Labor Dispute Second Instance Civil Judgment Hebei Chengde Intermediate People’s Court Civil Judgment (2018) Ji 08 Min Zhong No.2116. The court held that the key to the legality of the fine lies in the validity of the company rules on the fine. Labor Dispute Appeal between Wang Guangen and Xuzhou Qiangsheng City Gas Co., Ltd. Civil Judgment of Xuzhou Intermediate People’s Court of Jiangsu Province (2010) Xu Min Zhong Zi No.2118. Nanjing Jiangnan Bus Passenger Transport Co., Ltd. and Zhang Ling Labor Dispute Appeal and Application Civil Ruling Jiangsu Provincial People¡¯s High Court Civil Ruling (2019) SuminShen No.943. The court held that effective company rules were the basis for the fine. Appellant Guo Dongjun and Appellant Gansu Liuhua (Group) Co., Ltd. Civil Judgment of the Second Instance of Labor Dispute Civil Judgment of Baiyin Intermediate People’s Court of Gansu Province (2015) Bai Zhong Min Yi Zhong Zi No.347. Henan Jinkai Group Wuzhi Luyu Chemical Co., Ltd. and Zhang Hongxia Labor Dispute Appeal Case Civil Judgment of Jiaozuo Intermediate People’s Court of Henan Province (2017) Yu 08 Min Zhong No.1421. Deng Chao and Jilin Gongzhuling Rural Commercial Bank Co., Ltd. Labor Dispute Retrial Review Civil Ruling Jilin Provincial People¡¯s High Court Civil Ruling (2018) Ji Min Shen No.1460.and the remnant wages after deduction of fines being no less than local minimum wage standard, 2Article 16 of the Provisional Regulations on Wage Payment.are observed. In accordance with its local regulations, Shenzhen city stipulates that total fines imposed on an employee must not exceed 30% of their monthly wages.3 Article 16 of 2019 Regulations on the Promotion of Harmonious Employment Relations in Shenzhen Special Economic Zone.
Another practice is that employers have no right to impose fines at all. Courts in some regions, including the High Court of Hubei Province, Chenzhou City of Hunan Province, Xinjiang, Chengdu of Sichuan Province, Shizuishan of Ningxia, Fuyang of Anhui Province, Changsha of Hunan Province, Chongqing Municipality, Ordos of Inner Mongolia and other courts, have decisions ruling that since the foundation for the right to impose fines, the Regulations on Rewards and Punishments for Enterprises¡¯ Employees has been repealed, imposing fines by employers on employees is unlawful.4Hubei Tianliqi New Materials Co., Ltd. v. Wei Chunyan Labor Dispute Civil Ruling of Hubei High Court (2016) E Min Shen No.806. Civil Judgment of the Second Instance of the Labor Dispute Case between Li Jianchun and Chenzhou Kailong Hotel Co., Ltd. and Chenzhou Yuquan Hotel Co., Ltd. Civil Judgment of Hunan Chenzhou Intermediate People’s Court (2018) Xiang 10 Min Zhong No.939. Civil Judgment of the Second Instance of Labor Dispute between Liu Houping and Changqing Transportation Branch of China Petroleum Transportation Co., Ltd. Civil Judgment of the Intermediate People’s Court of Ordos City, Inner Mongolia Autonomous Region (2018) No.1818. Appeal Case of Labor Dispute between the Second Social Welfare Institute of Wanzhou District of Chongqing and Pan Zhongyu Civil Judgment of the Second Intermediate People’s Court of Chongqing (2010) Yu Er Zhong Fa Min Zhong Zi No.1208. Hunan Caixin Global International Travel Service and Tian Rong Labor Dispute Appeal Case Changsha Intermediate People’s Court Civil Judgment (2012) Chang Zhong Min Si Zhong Zi No.1734. Fuyang Guomao Hotel Investment Management Co., Ltd. and Liu Liying, etc. Civil Judgment of Fuyang Intermediate People’s Court of Anhui Province (2013) Fu Min Yi Zhong Zi No.00041. Labor Dispute Appeal Case between Wang Mingjiang and Pingluo Chiyu Mechanical Engineering Co., Ltd. Civil Judgment of Shizuishan Intermediate People’s Court of Ningxia Hui Autonomous Region (2015) Shi Min Zhong Zi No.724. China Railway 23rd Bureau Group No.4 Engineering Co., Ltd. and Hu Qiaochu Labor Dispute Civil Judgment of Second Instance Chengdu Intermediate People’s Court of Sichuan Province Civil Judgment (2020) Chuan 01 Min Zhong No.7845. Civil Judgment of the Second Instance of Labor Dispute between Zhu Sen and Xinjiang Kunlun Iron and Steel Co., Ltd. Civil Judgment of the Intermediate People’s Court of the Sixth Division of Xinjiang Production and Construction Corps (2020) Bing 06 Min Zhong No.312.
Therefore, whether an employer has the right to impose fines on employees depends on the specific practices of the courts of different provinces and municipalities where the employer is located or where the employment is performed.
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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
- 1Article 17 of the repealed the Regulations on Rewards and Punishments for Enterprises¡¯ Employees. Hebei Iron and Steel Group Mining Co., Ltd. Chengde Mining Branch, Zhao Zhenfeng Labor Dispute Second Instance Civil Judgment Hebei Chengde Intermediate People’s Court Civil Judgment (2018) Ji 08 Min Zhong No.2116. The court held that the key to the legality of the fine lies in the validity of the company rules on the fine. Labor Dispute Appeal between Wang Guangen and Xuzhou Qiangsheng City Gas Co., Ltd. Civil Judgment of Xuzhou Intermediate People’s Court of Jiangsu Province (2010) Xu Min Zhong Zi No.2118. Nanjing Jiangnan Bus Passenger Transport Co., Ltd. and Zhang Ling Labor Dispute Appeal and Application Civil Ruling Jiangsu Provincial People¡¯s High Court Civil Ruling (2019) SuminShen No.943. The court held that effective company rules were the basis for the fine. Appellant Guo Dongjun and Appellant Gansu Liuhua (Group) Co., Ltd. Civil Judgment of the Second Instance of Labor Dispute Civil Judgment of Baiyin Intermediate People’s Court of Gansu Province (2015) Bai Zhong Min Yi Zhong Zi No.347. Henan Jinkai Group Wuzhi Luyu Chemical Co., Ltd. and Zhang Hongxia Labor Dispute Appeal Case Civil Judgment of Jiaozuo Intermediate People’s Court of Henan Province (2017) Yu 08 Min Zhong No.1421. Deng Chao and Jilin Gongzhuling Rural Commercial Bank Co., Ltd. Labor Dispute Retrial Review Civil Ruling Jilin Provincial People¡¯s High Court Civil Ruling (2018) Ji Min Shen No.1460.
- 2Article 16 of the Provisional Regulations on Wage Payment.
- 3Article 16 of 2019 Regulations on the Promotion of Harmonious Employment Relations in Shenzhen Special Economic Zone.
- 4Hubei Tianliqi New Materials Co., Ltd. v. Wei Chunyan Labor Dispute Civil Ruling of Hubei High Court (2016) E Min Shen No.806. Civil Judgment of the Second Instance of the Labor Dispute Case between Li Jianchun and Chenzhou Kailong Hotel Co., Ltd. and Chenzhou Yuquan Hotel Co., Ltd. Civil Judgment of Hunan Chenzhou Intermediate People’s Court (2018) Xiang 10 Min Zhong No.939. Civil Judgment of the Second Instance of Labor Dispute between Liu Houping and Changqing Transportation Branch of China Petroleum Transportation Co., Ltd. Civil Judgment of the Intermediate People’s Court of Ordos City, Inner Mongolia Autonomous Region (2018) No.1818. Appeal Case of Labor Dispute between the Second Social Welfare Institute of Wanzhou District of Chongqing and Pan Zhongyu Civil Judgment of the Second Intermediate People’s Court of Chongqing (2010) Yu Er Zhong Fa Min Zhong Zi No.1208. Hunan Caixin Global International Travel Service and Tian Rong Labor Dispute Appeal Case Changsha Intermediate People’s Court Civil Judgment (2012) Chang Zhong Min Si Zhong Zi No.1734. Fuyang Guomao Hotel Investment Management Co., Ltd. and Liu Liying, etc. Civil Judgment of Fuyang Intermediate People’s Court of Anhui Province (2013) Fu Min Yi Zhong Zi No.00041. Labor Dispute Appeal Case between Wang Mingjiang and Pingluo Chiyu Mechanical Engineering Co., Ltd. Civil Judgment of Shizuishan Intermediate People’s Court of Ningxia Hui Autonomous Region (2015) Shi Min Zhong Zi No.724. China Railway 23rd Bureau Group No.4 Engineering Co., Ltd. and Hu Qiaochu Labor Dispute Civil Judgment of Second Instance Chengdu Intermediate People’s Court of Sichuan Province Civil Judgment (2020) Chuan 01 Min Zhong No.7845. Civil Judgment of the Second Instance of Labor Dispute between Zhu Sen and Xinjiang Kunlun Iron and Steel Co., Ltd. Civil Judgment of the Intermediate People’s Court of the Sixth Division of Xinjiang Production and Construction Corps (2020) Bing 06 Min Zhong No.312.