Answer: That the employee abandoned their role on the day of resignation even without conducting any necessary work handover is called urgent resignation. It may cause disruption or even losses to the employer. In contrast to restrictive damages by current employees, the liability caused by employees’ illegal termination in breach of employment contract or law is treated under normal civil law principle.1Article 90 of the Employment Contract Law stipulates that “if a worker terminates an employment contract in violation of the provisions of this Law, or violates the confidentiality obligations or non-competition obligations stipulated in the employment contract, causing losses to the employer, he shall be liable for compensation.” Article 4 of Notice of the Ministry of Labor on Promulgating the Measures for Compensation for Violation of the Provisions of the Labor Law on Employment contracts (Lao Bu Fa (1995) No.223), “Where an employee violates the provisions or terminates the employment contract as agreed upon in the employment contract and causes losses to the employer, the employee shall compensate the employer for the following losses: (1) the expenses paid by the employer for recruiting and employing the employee; (2) the training expenses paid by the employer, which shall be handled according to the agreement if the two parties have agreed otherwise; (3) the direct economic losses caused to production, operation, and work; and (4) other compensation expenses agreed upon in the employment contract.”
Judicial decisions suggest that employee’s liability to compensate for the losses suffered by employer and the amount of the compensation depends on three conditions: whether the resignation of employees violates the employment contract or company rules or statutory provisions, whether the employer has suffered actual losses, and whether there is a causal relationship between the losses and the employee’s resignation.
Whether the employee’s resignation violates the employment contract or company rules or statutory provisions can be preliminarily judged from whether the employee’s resignation is legally notified in advance. In your case, your former employee resigned and left on the same day. This obviously violates the statutory provisions in that resignation notice must be either three days in advance in probation period or one months in advance in formal contractual period. However, your company still needs to continue to examine the reason for the employee’s resignation. If the employee was forced to resign on the grounds that your company had violated the provisions of Article 38 of the Employment Contract Law (for example, your company had illegally deducted the employee’s wages), the employee’s resignation is lawful, and your company therefore is not entitled to be awarded damages against the employee.
The second condition is that the employer has actually suffered a loss. The employer should gather evidence to prove that the loss does exist, not merely the inconvenience and unhappiness caused by the employee’s departure. Judicial decisions show that in numerous instances, employers’claims against employees for compensation for losses were not upheld by the courts simply because they failed to provide evidence of actual losses. If the courts determine that the employee’s illegal resignation has indeed caused losses, they may determine the amount of losses in a discretionary way when the actual losses are difficult to determine.2Beijing Wanquanyuan Taxi Co., Ltd. and Wang Lixin Labor Dispute Civil Judgment of First Instance Beijing Pinggu District People’s Court Civil Judgment (2021) Jing 0117 Min Chu No.3750.
The third condition is a causal relationship between the loss and the employee’s illegal resignation. 3Guangdong Yingdu Law Firm v. Chen Ruimiao Labor Dispute Guangdong High Court Civil Ruling (2017) Yue Min Shen No.5049. The employee (a lawyer) did not resign 30 days in advance, the court held that there was no direct connection between the employee’s resignation and the client’s cancellation of the service relationship, because the service contract did not stipulate that the service must be only provided by the employee. Civil Judgment of Second Instance of Labor Dispute between Liu Jinde and Shenzhen Dingfengda Precision Mould Injection Co., Ltd. Civil Judgment of Shenzhen Intermediate People’s Court of Guangdong Province (2016) Yue 03 Min Zhong No.4325.The judgment of the causal relationship should be based on an objective analysis of whether the contribution of the employee’s illegal resignation to the loss is operating, rather than a possible consequence but for the employee’s illegal resignation. Other factors that need to be considered include the specific background of the employees’ resignation behavior and whether it has the characteristics of high subjective malice and constitutes a serious violation of professional ethics.
Assessing the feasibility of employers claiming damages for employees’illegal resignation shares the same causality assessment as that of employers claiming damages for current employees causing loss to the employer. (Please see Should an employee compensate the employer for the losses caused by their fault?) The distinction between the two lies in the payment method. The employers in the former situation may claim a lump sum damages against the former employee based on principles of civil reparation, while in the latter, it can only be compensated through monthly wage deductions subject to a proportional limit, as employment law tends to strictly protect employees.
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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 90 of the Employment Contract Law stipulates that “if a worker terminates an employment contract in violation of the provisions of this Law, or violates the confidentiality obligations or non-competition obligations stipulated in the employment contract, causing losses to the employer, he shall be liable for compensation.” Article 4 of Notice of the Ministry of Labor on Promulgating the Measures for Compensation for Violation of the Provisions of the Labor Law on Employment contracts (Lao Bu Fa (1995) No.223), “Where an employee violates the provisions or terminates the employment contract as agreed upon in the employment contract and causes losses to the employer, the employee shall compensate the employer for the following losses: (1) the expenses paid by the employer for recruiting and employing the employee; (2) the training expenses paid by the employer, which shall be handled according to the agreement if the two parties have agreed otherwise; (3) the direct economic losses caused to production, operation, and work; and (4) other compensation expenses agreed upon in the employment contract.”
- 2Beijing Wanquanyuan Taxi Co., Ltd. and Wang Lixin Labor Dispute Civil Judgment of First Instance Beijing Pinggu District People’s Court Civil Judgment (2021) Jing 0117 Min Chu No.3750.
- 3Guangdong Yingdu Law Firm v. Chen Ruimiao Labor Dispute Guangdong High Court Civil Ruling (2017) Yue Min Shen No.5049. The employee (a lawyer) did not resign 30 days in advance, the court held that there was no direct connection between the employee’s resignation and the client’s cancellation of the service relationship, because the service contract did not stipulate that the service must be only provided by the employee. Civil Judgment of Second Instance of Labor Dispute between Liu Jinde and Shenzhen Dingfengda Precision Mould Injection Co., Ltd. Civil Judgment of Shenzhen Intermediate People’s Court of Guangdong Province (2016) Yue 03 Min Zhong No.4325.