Rehiring China Employees: How to Minimize Your Risks in the Time of Coronavirus

Many foreign companies in China have laid off employees because of the coronavirus and some of these companies will eventually want to bring some or all of their laid off employees back. Our China employment lawyers are already getting inquiries about how to do this. We are also seeing situations where an employee who voluntarily left the company now wishes to return (oftentimes for geographic reasons) and the company wants them to return because it has lost workers in a similar role due to the coronavirus. Like any employee hiring and onboarding, employers should proceed with caution. Doing the following three things, among others, will increase your odds of a successful, lawsuit-free, rehiring.

1. Use an appropriate employment contract. We have seen companies get tripped up for failing to do this, so it is worth repeating here: you need an appropriate employment contract. Regardless of whether you were on good terms with the employee who left and may now be returning, you need to enter into a (new) written agreement that accounts for the rehired employee’s specific situation. Do not skip this critical step by relying on the “mutual trust that the parties have built with each other over the years.” Generally speaking, you cannot set a probation period for a rehired employee. Other things to consider include the employee’s seniority at the organization and how it will affect the employee’s benefits after the rehire and when the employee may be entitled to an open-term contract. Also, do not use an independent contractor agreement unless you have confirmed its legality under the limited circumstances permitted by law.

2. Get your employee handbook in order. To the extent your employee handbook addresses issues concerning rehires, be sure to have it checked prior to implementation as our employer audits almost unfailingly reveal rehiring policies that are problematic for China.

3. Do not repeat the same mistake twice with your rehire. This is another issue our China employment attorneys keep seeing on the ground. Consider this. The employer and the employee got into a dispute over a provision in an employer document and the parties parted ways. The employer hires the employee back. At least consider checking and revising the offending employer document at issue. You do not necessarily have to adopt the precise change the re-hired employee sought, but you should at least consider making some change to make it fairer and clearer from the employee’s perspective. This signals to the re-hired employee (and to your other employees as well) that you are willing to make the effort to implement a positive change. Most importantly, it will help prevent disputes down the road.

From an HR viewpoint, it is crucial to consider the pros and cons of hiring an employee back and that includes analyzing why the employee left and the pros and cons of taking the employee back. Consider this example (based on more than one real life scenario our lawyers have seen). When initially hired years ago for the first time, the employee proposed the common (yet 100% illegal) arrangement where the employer pays cash to the employee to “cover” her own social insurance. The employer went along with this proposal in return for the employee taking a slightly reduced salary. Years later the employer terminates the employee because her role was no longer needed. The employee then threatened to sue the employer for the termination and  threatened to report the employer to the authorities for not having paid her social insurance — even though she was the one who proposed that arrangement. The employer ends up paying the employee a lot of money to get her to agree to a mutual termination and to keep her from running to the authorities. This employee is now reaching out to her former employer regarding getting rehired and the employer now desperately needs someone with her skill set. Not saying it will not work out this second time, but the employer in this sort of situation really should think long and hard about this rehiring. Might it have to eliminate her role (again) in a few months? A year? Can this employee ever be trusted? At the bare minimum, this employer should analyze how long the term of employment should be for this rehired employee and See China Employment Contracts: How to Set the Employment Term.

When our China employment team is confronted with a client-employer that wants to rehire someone who left under a cloud, our advice is usually that we first conduct an employer audit to determine whether the company’s employment documents and overall employment operation is strong enough to withstand the rehiring risks. If the client is unwilling to undergo the audit or to make the changes we recommend after conducting the audit, our advice is usually not to make the rehire because it is just too risky. Employment law compliance is everything in China, both for avoiding employee and employment bureau problems and letting a potential troublemaker back in without strong defenses almost always will lead to disaster.

Bottom line: Employers that are not careful with employee rehires put themselves at great risk.