44.Is the employment contract I signed invalid?

Answer: Article 26 of the Employment Contract Law stipulates the circumstances for which an employment contract is invalid. If either party to the employment contract commits fraud, coercion, or vulnerability-advantage-taking, so that the other party signs the employment contract against its true intention, the employment contract shall be invalid. Any party can legally dissolve the invalid employment contract.

The most common dispute arises when employees provide false certificates of academic and/or professional qualifications during the recruitment process. If the employee’s behavior causes the employer to recruit the employee against its true intention, it shall constitute fraud in principle, and the employer shall have the right to terminate the contract accordingly. Having examined numerous current cases nationwide, we summarize the following factors that may affect the court’s determination of whether an employer can terminate the contract due to the employee¡¯s fraud.

The first factor is the materiality of false qualifications provided by the employee. Employees who have provided only non-substantive false information do not necessarily commit fraud that leads to invalidation of the employment contract. For example, in the case of Xu Hongqi before Beijing High Court in 2022, the court held that the employee only concealed a period of work experience, and the employer did not prove that this led to the hiring of the employee against its real intention, so that the employer¡¯s claim that the employment contract was invalid because of academic qualification fraud was not made out.¹

In the 2018 case of Sui Yongjie, as another example, the court found that the employee had committed fraud by providing a false special-equipment-operation certificate during the contract negotiation process. Although the employee later obtained a genuine operation certificate, the court determined that the fraud had reached a level sufficient to cause the employer to violate its true intention. Therefore, the court found that the employer was entitled to legally terminate the employee. ²

The second factor is the length of time that the employee has served the employer after a recruitment fraud. There are conflicting practices in courts around the country. Cases from the Intermediate People’s Court of Suzhou City, Jiangsu Province, and the Intermediate People’s Court of Hangzhou City, Zhejiang Province hold that there should be a reasonable time limit for fraud investigations of false academic and professional qualifications, and that the employer should not terminate the employee’s employment contract for fraud after a long period of implementation of the employment contract.³ However, cases from the Guangdong Provincial High Court, Shenzhen Intermediate Court, and Guangzhou Intermediate Court assert that employers are still entitled to terminate the employment contract based on recruitment fraud even after the employee’s long-time service.⁴

The third factor is relevant provisions of the employer’s company rules. If the company rules clearly stipulate that any false information of academic or professional qualifications provided by an employee is dishonest and thus constitutes a serious violation of company rules, it would be more legitimate for the employer to terminate the employee in question on this ground. For example, in the case of Jiekun before Guangzhou Intermediate People’s Court of Guangdong Province in 2020, the employee had worked for 16 years with false academic qualifications. The company rules clearly stipulated that providing false academic qualifications was a serious violation of the company rules, and the court ruled that it was legal to establish fraud and to terminate the employee’s employment relationship.⁵Of course, it must be noted that the company rules must be documents binding on employees through legal procedures. Please refer to Is it legally permissible for my employer to discipline me?

Another common phenomenon is establishing employment relationship with employer in the name of others. Courts usually find that this situation constitutes fraud and leads to the invalidity of the employment contract. The legal consequence of this invalidity is that the employer has the right to legally terminate the employment contract. However, the impostor has had a factual employment relationship with the employer, and has the right to receive wages, overtime wages, other employment remunerations, work injury entitlements, and other entitlements that all employees should receive.⁶The employee can also request the employer to pay double-wage damages in the absence of a written employment contract.⁷But if the employer have signed an employment contract with the impostor in other¡¯s name, it shall be deemed that the employment contract has been signed, and there is no liability of double-wage damages.

Accordingly, when an employee is terminated by the employer on the ground of an invalid employment contract, the employee should check the reasons for the invalidity specified on the termination notice, and determine which type of the invalidity it is and whether the employer has a factual basis for it, in order to assess whether the termination is lawful or not.

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. Wangdong

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

1
Beijing Shanjie Investment Management Co., Ltd. and Xu Hongqi Labor Dispute Reexamination and Trial Supervision Civil Ruling Letter Beijing High Court Civil Ruling Letter (2022) Jingminshen No. 1161
2
Ba Jingyan, Zhang Douyuan: “The Impact of Failure to Fulfill the Obligation of Truthful Explanation on the Effectiveness of Employment contracts at the Time of Employment”, published in “People’s Justice ¡¤ Cases”, Issue 8, 2018, p.39. ¡°Regarding the appeal case of labor dispute between Civil Aviation Air Traffic Control Technology and Equipment Development Co., Ltd. and Sui Yongjie, the court holds that the invalidity of the employment contract is determined to be due to fraudulent behavior committed by the employee when signing the employment contract. Even though Sui Yongjie obtained a genuine special-equipment-operation certificate after the false certificate was discovered, he cannot deny the fact that he signed the employment contract through fraudulent means. An invalid employment contract has no legal effect since its conclusion, so Sui Yongjie’s claim that the employment contract between both parties is valid lacks factual and legal basis, and the court does not accept it. The scope of the employee’s obligation of explanation should be judged based on both formal and substantive standards. In terms of form, the employer should clearly and fully inform the employee of the information and supporting materials that need to be provided; Substantively, the content required by the employer to be explained by the employee shall not violate the provisions of laws and administrative regulations, and shall have a direct and inevitable connection with the employee’s role. The failure of a worker to truthfully explain does not necessarily constitute fraud. Only where the information that is not truthfully explained is directly related to the employment and where failure to truthfully explain causes the employer to make an expression of intention to enter into the employment contract, a fraud can be established.¡±
3
Civil Judgment of the Intermediate People’s Court of Suzhou City, Jiangsu Province (2017) Su 05 Min Zhong 6577 on the labor dispute appeal case between Xingguang Fine Chemical (Zhangjiagang) Co., Ltd. and Shi Xiaofeng. The Civil Judgment of the Intermediate People’s Court of Suzhou City, Jiangsu Province (2016) Su 05 Min Zhong No. 7008 regarding the labor dispute appeal case between Shi Xiaofeng and Xingguang Fine Chemical (Zhangjiagang) Co., Ltd. Hangzhou Wenqin Shanxiao Investment Management Co., Ltd. and Li Dairan labor dispute appeal case. Zhejiang Hangzhou Intermediate People’s Court Civil Judgment (2015) Zhehang Minzhong Zi No. 1614.
4
In the case of labor dispute review and trial supervision between Zhu Daorong and Guangdong Electronic Vocational and Technical School, Guangdong Provincial People¡¯s High Court Civil Ruling (2015) No.1031. The employee has signed three employment contracts for more than five years with false academic titles. The court found the three employment contracts invalid and that the notice of termination of employment relationship shall not be revoked. Shenzhen Kailu Innovation Technology Co., Ltd., Li Weilan Labor Dispute Second Instance Civil Judgment, Shenzhen Intermediate People’s Court of Guangdong Province Civil Judgment (2019) Guangdong 03 Minzhong 20539. The employee provided false academic qualifications. Four years after the commencement, the employer terminated the employment on the ground of fraud. The court of first instance found academic fraud but considered that pursuit should be within reasonable length of time. The judgment of the second instance set it aside ruling that termination based on fraud was legal.¡±
5
Civil Judgment of Second Instance of Labor Dispute between Qu Jiekun and Guangzhou Seagull Housing Industry Co., Ltd. Civil Judgment of Guangzhou Intermediate People’s Court of Guangdong Province (2020) Yue 01 Min Zhong No.9312.
6
Civil Ruling on Labor Dispute Retrial between the retrial applicant Wu Suoxia and the respondents Hebei Haichuan Human Resources Service Co., Ltd., Yanshan County Haichuan Human Resources Co., Ltd. Tianjin Development Zone Branch and Jiaxing Precision Injection Molding (Tianjin) Co. Ltd. Civil Ruling of Tianjin High Court (2015) JGMSZ No.0701. Shandong Chaowei Ciyao Power Supply Co., Ltd. and Huang Yunzhong Labor Dispute Second Instance Civil Judgment Shandong Tai’an Intermediate People’s Court Civil Judgment (2018) Lu 09 Min Zhong No.1912. The impostor died in a traffic accident after entering the role, and the court found that the impostor had an actual employment relationship with the employer. Civil Judgment of the Second Instance of Labor Dispute between Jiangsu Xinling Construction Labor Engineering Co., Ltd. and Hu Caili Civil Judgment of the Third Intermediate People’s Court of Beijing (2018) Jing 03 Min Zhong No.8761. The court held that the impostor employee was entitled to work injury entitlements.
7
Civil Judgment of Second Instance of Labor Dispute between Beijing Tiezhen Security Technology Service Co., Ltd. and Cheng Guilian, etc. Civil Judgment of Beijing No.2 Intermediate People’s Court (2020) Jing 02 Min Zhong No.4509.

Royal Law Firm

44.Is the employment contract I signed invalid?

Leave a Reply Cancel reply