Answer: China’s Employment Contract Law allows employers to take disciplinary actions against employees. Disciplinary action is a measure taken by employer to punish employee’s misconduct according to the company rules, the employee’s employment contract, and professional ethics, so as to maintain the order of company¡¯s management, punish and warn the employee and help the employee correct. In practice, disciplinary actions usually include warnings, demerits, fines, dismissals and other measures.
The employer shall examine the legality of the company’s punishment rules and the legality of the punishment.
On the one hand, employers should impose disciplinary actions on employees in accordance with effective company rules, employment contract provisions, and professional ethics. Please refer to ¡°What kind of company rules are binding on employees?¡±
On the other hand, the employer’s disciplinary actions against employees must be fair and reasonable.
The fairness and reasonableness of disciplinary actions first require employers to follow reasonable procedures in the implementing disciplinary actions. When an employer knows that an employee may have violated the company rules, the first step is to start the investigation reasonably, that is, starting the investigation for disciplinary action should base on plausible evidence rather than hearsay. The second step is to inform the employee of the decision of the investigation and the reasons for the investigation, and to solicit the employee’s opinions and explanations. Asking questions frankly is the basis of communicating in good faith and solving problems. The third step is that employees should be given an appropriate time to respond. There are also specific things that the employer should be aware of if the investigation of an incident requires suspension of the employee (please see Is it legal for my company to suspend an employee for a performance investigation?). The fourth step is to carefully consider the employee’s explanation before disciplinary action is decided, and if necessary, multiple rounds of communication can be conducted to find out the relevant facts.
The fairness and reasonableness of disciplinary actions should also require the employer to follow the principles of objectivity, non-repetition of punishment, and timely punishment. Employers should impose disciplinary actions on employees objectively and should not subjectively exaggerate the improper nature of employees’ behavior. For example, if an employee is unable to ask for leave in time because of illness, the employer should consider the specific situation of the employee objectively, instead of simply and roughly identifying the employee as absent from work. The employer shall not repeatedly punish the employee in different ways for the same violation of discipline. For example, in the case of Beijing Shider Automobile Parts Co., Ltd. in 2023, the Beijing High Court held that the employer had given a verbal warning to the employee for violation of company rules, but dismissed the employee three months later, and that this was a repeated punishment and therefore an illegal dismissal.1Civil Ruling on Labor Dispute Retrial Review and Trial Supervision between Beijing Shider Automobile Parts Co., Ltd. and Lin Yasen Civil Ruling of Beijing Higher People’s Court (2023) Jing Min Shen No.1024. Civil Ruling on Labor Dispute Retrial Review and Trial Supervision between Beijing Shider Auto Parts Co., Ltd. and Lin Yasen Civil Ruling of Beijing Higher People’s Court (2023) Jing Min Shen No.1024.Employers should also reasonably promptly punish employees for violations of company rules. A disciplinary action that exceeds a reasonable time may result in a disciplinary action that the court finds to be unlawful.2Yan Zhihong and State Grid Shanxi Electric Power Company Taiyuan Power Supply Company Labor Dispute Second Instance Civil Judgment Shanxi Taiyuan Intermediate People’s Court Civil Judgment (2020) Jin 01 Min Zhong No.2923. The court held that the employer did not punish the employees for their long-term absence from work in a timely manner and did not strictly abide by the company rules, so it was illegal termination of the employment contract.
Finally, employers can consider the cumulative effects of employee¡¯s misconducts. Sometimes, an employee’s violation of company rules, employment contract, or professional ethics alone may not be enough to constitute a disciplinary action, but if the cumulative factors are taken into account, the employer may have the right to discipline them. For example, in the case of Li Huasen before the Guangdong Provincial Higher People’s Court in 2018, the employee had already taken a number of disciplinary actions but did not reach the level of a serious violation of discipline, and later his violated professional ethics. The court found that the accumulation of these factors was enough to mount to serious violation of company rules and that the dismissal 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.
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- 1Civil Ruling on Labor Dispute Retrial Review and Trial Supervision between Beijing Shider Automobile Parts Co., Ltd. and Lin Yasen Civil Ruling of Beijing Higher People’s Court (2023) Jing Min Shen No.1024. Civil Ruling on Labor Dispute Retrial Review and Trial Supervision between Beijing Shider Auto Parts Co., Ltd. and Lin Yasen Civil Ruling of Beijing Higher People’s Court (2023) Jing Min Shen No.1024.
- 2Yan Zhihong and State Grid Shanxi Electric Power Company Taiyuan Power Supply Company Labor Dispute Second Instance Civil Judgment Shanxi Taiyuan Intermediate People’s Court Civil Judgment (2020) Jin 01 Min Zhong No.2923. The court held that the employer did not punish the employees for their long-term absence from work in a timely manner and did not strictly abide by the company rules, so it was illegal termination of the employment contract.