Answer: Article 43 of the Employment Contract Law stipulates that employers must notify trade union if they intend to unilaterally terminates an employee’s employment contract. The terminations include the terminations under Article 39 of the Employment Contract Law, for serious violation of company rules, invalid contract, multiple employment relationships, termination in probation period, gross negligence and corruption, employee’s crime, the terminations under Article 40, for ability incompetence, health incompetence, and major changes in objective situation, and the terminations under Article 41, economic redundancy. Employers’ failure to comply with this procedural requirement of notifying trade union may result in illegal termination of employment contract.
The first issue is how to implement the procedure for notifying the union. According to aforementioned Article 43 of the Law, a compliant procedure of notifying trade union is that the employer shall notify the trade union of the details of the termination of the employment relationship, including the ground(s) for the termination (such as ability incompetence provided in Article 40 of the Employment Contract Law or serious violation of company rules in Article 39), factual basis, and relevant evidence, and the employer must reply to the objection of the trade union in writing. Although the wording of the statutory provision does not indicate that the first notice must be in written form, the current judicial decisions around the country do not recognize oral form of the first notice to the trade union. For example, in the case of Wan Guoqiong in 2022, the Beijing First Intermediate Court found that the employer had notified the chairman of the trade union orally and submitted audio recording evidence, but the court still held that the employer had not fulfilled the procedure requirement of notifying the trade union.1Beijing Zhongnong Dadi Science and Technology Development Co., Ltd. Jinma Hotel and Wanguoqiong Labor Dispute Civil Judgment of Second Instance Beijing First Intermediate People’s Court Civil Judgment (2022) Jing 01 Min Zhong No.5649.
In practice, if an employer fails to notify the trade union in the process of terminating an employee, it may be able to take remedial measures. The judicial interpretation of the Supreme People’s Court on labor disputes in 2020 provides a corrective procedure for employers who terminated an employee without notifying the trade union, under Article 39 and Article 40 of the Employment Contract Law. For example, an employer terminated an employee’s employment contract on the ground of serious violation of company rules and did not notify the trade union. The employment arbitration committee found that the employer did not fulfill the procedural requirement, finding illegal dismissal and ordering punitive damages, even though the employee substantively seriously violated the company rules. However, if the employer notifies the trade union before appeal to the court, the court shall consider that the employer has corrected the procedural defect and shall crash the arbitration order, ruling the dismissal as lawful. 2 However, the Supreme Court’s Interpretation does not mention whether the correction measure is applicable for the termination under Article 41 of the Employment Contract Law, the economic redundancy.
The second issue is how employers, who have no trade unions in place, can implement the procedure. Currently, courts around the country adopt two different practices. The first practice is that these employers are exempted from the procedural obligation, and the other is that these employers must notify their local trade union organization.
Courts in most parts of the country take the first practice that employer without trade union are not subject to this procedural requirement and that they do not have to notify any trade union for the unilateral terminations. At present, the courts of Guangdong Province, including Shenzhen, Guangzhou, Beijing, Shanghai, Chongqing, Hunan and Jilin, hold this attitude. Referable court cases are 2021 case of Panlong Eco-agricultural Demonstration Park of Xiangtan before Chu Yongfeng of Hunan Provincial High Court, 2020 case of Jingbangda Logistics Company before Chongqing High Court, 2019 case of Hu Jingyan before Shanghai High Court, and 2014 case of Zhejiang Hengdian Baiya Clothing before Jinhua Intermediate Court.3Inscom IT (Shenzhen) Co., Ltd., Qu Sumei Labor Dispute Civil Judgment of Second Instance Civil Judgment of Guangzhou Intermediate People’s Court of Guangdong Province (2021) Yue 01 Min Zhong 27685 No. Wang Guofeng and Shenzhen West Bus Co., Ltd. and Other Companies Labor Dispute Appeal Case Civil Judgment of Shenzhen Intermediate People’s Court of Guangdong Province (2016) Yue 03 Min Zhong No.7136. Civil Judgment of Second Instance of Labor Dispute between Chen Chen and Beijing Founder Apabi Technology Co., Ltd. Civil Judgment of Beijing First Intermediate People’s Court (2022) Jing 01 Min Zhong No.4823.
Jiangsu and Zhejiang provinces adopt the second approach. The Regulations on Employment Contracts of Jiangsu Province stipulate that an employer who has not yet established a trade union shall notify the trade union where the employer is located of the termination.4The second paragraph of Article 31 of the Regulations of Jiangsu Province on Employment Contracts stipulates that if an employer unilaterally terminates an employment contract, it shall notify the trade union of the reasons in advance; if the employer has not yet established a trade union, it shall notify the trade union of the place where the employer is located.Therefore, Jiangsu Province implements the practice of notifying local trade unions (for example, the case of Zhao Xiaomian before Nanjing Intermediate Court of Jiangsu Province in 2016). In 2016, the Ningbo Intermediate Court of Zhejiang also ordered the employer to notify the local trade union in the case of CITIC Logistics Flying Company.5Tianjin Xinda Automobile Sales Service Co., Ltd. and Chen Yanan Labor Dispute Appeal Case Tianjin First Intermediate People’s Court Civil Judgment (2017) Jin 01 Min Zhong No.6554.
An exceptional case reflects the uncertainty of employment law practice. In the case of Jianhua Building Materials Company before Huizhou Intermediate Court of Guangdong Province in 2019, the court held that the employer with 500 people violated the provisions of the Trade Union Law regarding a trade union must be established in an employer with over 25 employees, which was illegal in itself. Even if the employer notified the local general trade unions, the illegal procedure cannot be remedied. 6 Civil Judgment in the Second Instance of the Labor Dispute Case between Jianhua Building Materials (Huizhou) Co., Ltd. and Liu Wen Cheng – Guangdong Huizhou Intermediate People’s Court Civil Judgment (2019) Yue 13 Min Zhong 6566.
The bizarre regulation and practice of notifying local trade unions, which are unlikely to have connections with the employees, and remedial correction of notifying trade union before the court proceeding, reflects the undeveloped state of trade union’s functionality in China.
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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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- 1Beijing Zhongnong Dadi Science and Technology Development Co., Ltd. Jinma Hotel and Wanguoqiong Labor Dispute Civil Judgment of Second Instance Beijing First Intermediate People’s Court Civil Judgment (2022) Jing 01 Min Zhong No.5649.
- 2However, the Supreme Court’s Interpretation does not mention whether the correction measure is applicable for the termination under Article 41 of the Employment Contract Law, the economic redundancy.
- 3Inscom IT (Shenzhen) Co., Ltd., Qu Sumei Labor Dispute Civil Judgment of Second Instance Civil Judgment of Guangzhou Intermediate People’s Court of Guangdong Province (2021) Yue 01 Min Zhong 27685 No. Wang Guofeng and Shenzhen West Bus Co., Ltd. and Other Companies Labor Dispute Appeal Case Civil Judgment of Shenzhen Intermediate People’s Court of Guangdong Province (2016) Yue 03 Min Zhong No.7136. Civil Judgment of Second Instance of Labor Dispute between Chen Chen and Beijing Founder Apabi Technology Co., Ltd. Civil Judgment of Beijing First Intermediate People’s Court (2022) Jing 01 Min Zhong No.4823.
- 4The second paragraph of Article 31 of the Regulations of Jiangsu Province on Employment Contracts stipulates that if an employer unilaterally terminates an employment contract, it shall notify the trade union of the reasons in advance; if the employer has not yet established a trade union, it shall notify the trade union of the place where the employer is located.
- 5Tianjin Xinda Automobile Sales Service Co., Ltd. and Chen Yanan Labor Dispute Appeal Case Tianjin First Intermediate People’s Court Civil Judgment (2017) Jin 01 Min Zhong No.6554.
- 6Civil Judgment in the Second Instance of the Labor Dispute Case between Jianhua Building Materials (Huizhou) Co., Ltd. and Liu Wen Cheng – Guangdong Huizhou Intermediate People’s Court Civil Judgment (2019) Yue 13 Min Zhong 6566.