Author: Erex Chen
In the process of dismissing the employees by the company, many companies believe that as long as the ground for dismissal is sufficient, the validity of dismissal shall be recognized. Is it true?
Strictly speaking, it is no doubt to attach importance to the validity of the ground for dismissal. However, if the legal requirement in terms of dismissal procedure is ignored, it may lead to the result the dismissal is declared as illegal.
In this article, we would like to discuss the role of trade union in dismissing the employees. The fat is that many companies don’t notice the role of the trade union, and many of them even don’t have trade union in the company. Under such circumstances, what is the impact if the dismissal happens without involvement of trade union?
Case Study: Dismissal is declared illegal as the company fails to inform the trade union of the fact of dismissal
In the court decision regarding the labor case Shanghai Jinxing Shoe Co. Ltd vs. Mr. Ma Yuhuan, the Shanghai No. 1 Intermediary court pointed out that according to the Employment Contract Law, the company unilaterally terminated the employment contract but it shall inform the reason of dismissal to the trade union. In this case, regardless of the fact if Mr. Ma has any misconduct, according to the evidences provided by Mr. Ma, the company has set up its trade union in 2008 which was approved by the general trade union in Hangtou Town, and no evidence indicated that the company has informed the trade union by the company before the dismissal was made. Thus, the dismissal by the company is an illegal one.
In above case, the legal basis for declaring illegal dismissal by the court due to failure of informing the trade union includes:
- According to Article 43 of the Employment Contract Law, in case of unilateral termination of the employment contract, the company shall inform the reason of termination to trade union in advance. If the company breaks the laws and regulations, or the employment contract, the trade union is entitled to request to rectify. The company shall take the opinion of the trade union into consideration and inform the trade union of the result in writing.
- According to Article 12 of Interpretation of the Supreme People’s Court on Several Issues about the Application of Laws for the Trial of Labor Dispute Cases (IV), in the event the company with established trade union terminates the employment contract according to Article 39 & 40, but fails to inform the trade union in advance according to Article 43 of the Employment Contract Law, it shall be supported by the court if the employee requests for compensation due to illegal termination by the company. However, the company is allowed to made remedy prior to filing to the court.
1. Under which circumstances the procedure of informing the trade union shall be followed in dismissing the employees
According to the above regulations, a prior notice to trade union is required only in case of unilateral termination by the company. The unilateral termination by the company under the Employment Contract Law includes:
- It has been proved that the employee does not satisfy the recruitment requirements during the probation period;
- The Employee is in serious violation of the bylaws of the employer;
- The employee causes any severe damage to the employer due to his grave negligence to his duties or seeking private benefits;
- The employee establishes a labor relationship with other employers at the same time and may seriously influence his completion of the works in this entity, or he refuses to make a correction even though the employer has pointed it out
- The employee concludes or modifies a labor contract by way of deception or coercion, or taking advantage of the other party’s difficulties, to force the employer to conclude an employment contract, or to make an amendment thereto, that is contrary to the employer’s true will, which leads to the labor contracts invalid;
- The employee is subject to criminal liabilities according to law;
- The employee falls ill or is injured for a non-work-related reason, who is not able to bear the original post after the expiration of the medical treatment period as prescribed, nor can he assume any other position as arranged by the employer;
- The employee is incapable of doing his job and remains so upon training or upon adjustment to his post
- The objective circumstance has altered significantly, on which the conclusion of the labor contract is based, which results in that the labor contract is unable to be performed. And no agreement concerning the modification of contents of the labor contract is reached after consultations between the employer and the employee.
In addition, for lay-off, as the law has made it clear the company shall inform the trade union or all employees 30 days in advance, so the lay-off proceedings has already included the procedure to seek opinion from the trade union.
2. What if no trade union exists?
In fact, no trade union exists in many small and medium-sized companies. So in this case, if the company needs to dismiss employee, does it still need to notify the trade union?
To this question, so far it seems the practice of various areas is different.
- According to Jiangsu Employment Contract Regulation, if the company terminates the employment contract, it shall notify the trade union of the reason of termination. If no trade union has been established, it shall notify the trade union where the company is located.
- According to Reply to Several Questions in Handling Employment Dispute Case issued by Zhejiang Ningbo Intermediate Court III, if the company has not established its trade union, it can also fulfill its obligation of notice by informing employee representatives and seeking their opinion, or seeking opinion from the local trade union organization (industrial trade union organization).
In Shanghai area, due to the fact that no local regulation has clarified this issue, the judicial practice seems not consistent:
- It is believed that as the notice of termination is not sent to trade union, the termination is illegal from the procedure perspective
In the court decision regarding the labor case Shanghai Gexing Filter Material Factory vs. Ms. Ma Yanhui, Shanghai Qingpu Court is of opinion that according to the law, when the company terminates the employment contract unilaterally, it shall notify the trade union of the reason of termination. The claim for compensation by the employee due to the fact the company does not go through such procedure shall be supported. Now the company has clarified that it has no trade union within the company, and did not report to the upper-level trade union for the termination, then the termination is illegal due to defect in procedure.
- It is believed that as no trade union exists, then the company is not required to notify the trade union.
In the appeal court decision regarding the labor case Mr. Wang Yue and Shanghai Tangma Advertising Co. Ltd., the court is of opinion that the trade union is a voluntary organization set up by the employees and the company is under no liability to set up the trade union. According to the document provided by the company, the company does not have any trade union. Mr. Wang does not object to this fact. As no trade union exists, the argument by Mr. Wang that the termination is illegal as no notice was sent to the trade union in advance is not correct. Thus, the termination by the company is a legal one.
3. Shall the termination require consent from the trade union?
It’s true unilateral termination by the company requires the procedure to inform the trade union. However, the fact whether the trade union agrees with the termination or not, and whether a written opinion to the termination is issued or not, will not affect the legal effect of termination.
Therefore, from the perspective of evidence, as long as the company is able to submit the written letter to the trade union to the court, it shall have completed the requirement of proof.
4. Several issues in procedure correction
According to the law, even if the company fails to notify the termination to the trade union in advance, the company is still allowed to make remedy latest the litigation is filed so that to avoid illegal termination procedure.
In the process of procedure correction, please note:
- The date of letter to the trade union shall be one which is earlier than the date of litigation filed to the court;
- Litigation means the legal proceedings filed to the court, instead of labor arbitration.
In order to avoid risk of illegal termination due to failure of notifying the trade union of the termination by the company, our suggestions are as below:
1. The company shall set up trade union if the conditions are permitted;
2. Before the notice of termination is sent to the employee, the company shall have already notified the trade union and kept the proof of such notice;
3. If no trade union exists within the company, the company shall notify to the upper-level trade union or the trade union where the company is located regarding the fact of termination.
article is published solely for the interest of friends and clients and
should not be relied upon as the legal advice of any kind from us.
Should you have any questions about this article, please contact the
partner of Mylink Law Office.
Erex Chen, Managing Partner
This article is published solely for the interest of friends and clients and should not be relied upon as the legal advice of any kind from us. Should you have any questions about this article, please contact the partner of Mylink Law Office.
Erex Chen, Managing Partner