China Employer Rules and Regulations: Clean Yours Up for the New Year

If you are a China employer, you need a set of Employer Rules and Regulations that are enforceable, up-to-date and appropriate for your specific locale in China. Employer rules and regulations are so important because without them you generally cannot discipline or terminate your employees.

Let’s consider a recent case in Guangzhou City. In this case, the employer required all employees clock in and out with their fingers on a time clock system. An employee made a mold of his fingers and asked a co-worker to clock in and out on his behalf for several days in a row. The employee failed to show up at work during those days without any justification. The employer terminated the employee on the basis of a serious breach of the employer’s rules and regulations and the employee brought a labor arbitration claim.

The employer was able to produce a copy of the employer’s rules and regulations, the employee’s acknowledgement of receipt of the employer’s rules and regulations, witness statements, fingerprint records showing there were clock ins and outs with the employee’s fingerprints, and security footage showing the employee himself was not present at the clock ins/outs, and WeChat screenshots of the employee’s video and phots posts showing the employee was sightseeing at a tourist attraction during the days at issue.

Notwithstanding all of this (granted, the employer failed to produce all of the evidence at once), the employer lost at labor arbitration for failing to produce sufficient evidence proving the lawfulness of its unilateral termination decision. The employer appealed to the court and lost there as well and was ordered to pay the employee a substantial amount in damages to the employee for unlawful termination.

Finally however, the appellate court reversed the lower court’s ruling (and that of the labor arbitration board) and held that the employer did not have to pay any employee damages. The appellate court first emphasized that the employer bears the burden of proof in an employee dispute that arises from the employer’s unilateral termination decision. It further stated that since unilateral termination on the basis of an employee’s wrongdoing is the most severe punishment by an employer and since the employer is usually better positioned to obtain evidence, employers will be held to a high standard in that regard. But in the end the appellate court ruled the employer had come forward with enough evidence to support its claim that the employee was absent from work for days without a proper reason and had used a co-worker to clock in and out for him. Therefore, even though the employer rules and regulations did not specifically list having another employee clock in/out with a finger mold as employee misconduct, the employee’s behavior violated the good-faith principle and the employer was justified in making the unilateral termination decision.

The big lesson from this case is that if you want to minimize future employee problems and avoid costly employee litigation, you should make sure right now that you have comprehensive and enforceable employer rules and regulations and you save all evidence that may be used in any future employment disputes.

Though the appellate court finally ruled in favor of the employer on the basis of the employee having failed to act in good faith, I’m convinced that the employer having a thorough set of rules and regulations and having strived to maintain good employee records was a major factor in the decision. Nonetheless, as a China employment lawyer who spends much of my day helping China employers avoid employee disputes I cannot resist pointing out how the employer in this case would likely have made its life considerably easier had it maintained clearer attendance records and required the employee provide his signature as confirmation of such attendance records, kept the pay stubs that corresponded to the days actually worked and had the employee sign such documentation during the course of the employment relationship. In other words, as a China employer (especially if you are a foreign company), it is critical that you document everything every step of the way as though you are right now preparing for an employee lawsuit down the road.