Beijing Issues Judicial Guidance on Hot Issues Concerning Employee Reinstatement
- By Xia Yu
- Published 25 June 2024
- Article 48 of China’s Labor Contract Law grants an employee the right to request reinstatement, provided that his employer has illegally terminated the labor contract between them and the labor contract couldn’t be performed. On 30 April 2024, the Beijing High People’s Court and the Beijing Labor and Personnel Dispute Arbitration Committee jointly issued Answers to the Trial of Labor Dispute Cases (I) (“Answers”), replying 92 questions on difficult issues in the trial of labor dispute cases. This article focuses on introducing and analyzing the answers for hot issues regarding employee reinstatement disputes in the Answers and provides relevant suggestions for employers.
- Whether a labor contract can or cannot be performed is often a key issue in cases involving the illegal termination of a labor contract. According to the Answers, the court or arbitration committee should generally support the employee’s request to continue to perform the labor contract. However, the employee should be informed to change his request for reinstatement into requesting compensation after a determination that the labor contract couldn’t be performed. If the change is agreed, the case will be heard on the issue of compensation. Otherwise, the original request will be rejected.
- It should be emphasized that the above-mentioned trial procedures after the determination that the labor contract cannot be continued are not a unified national standard. It only applies to the courts and arbitration institutions in Beijing. Although some provinces like Zhejiang have similar judicial interpretations, some provinces have made different provisions. According to the Several Opinions on Implementing the Principle of Balancing Trial and Enforcement formulated by the Shanghai High People’s Court, the court may directly order compensation for a claim to restore the labor relationship if it is found that the labor contract couldn’t be performed objectively. Meanwhile, Article 78 of the Judgment Guidelines for the Trial of Labor Dispute Cases, issued by Shenzhen Intermediate People’s Court in 2015, stipulates that an employee is not allowed to change his request for payment of compensation or continued performance of the labor contract during the arbitration period. Therefore, it is important to carefully choose where to file a lawsuit/arbitration for employee reinstatement.
- How to determine whether a labor contract can or cannot be performed has always been a difficult issue. In this regard, the Answers lists seven situations in which such a determination can be made. These situations are as follows:
- 1. The employer no longer exists due to reasons such as it being declared bankrupt, closed or revoked, its business license being revoked, or it being dissolved.
- 2. The employee reaches the statutory retirement age during the arbitration or litigation process.
- 3. The labor contract expires during the arbitration or litigation process, and there is no legal obligation to conclude a new open-ended labor contract.
- 4. The position requested for reinstatement is highly irreplaceable and unique, and the position has been replaced. According to the Answers, the general manager and the person in charge of finance are usually considered to be in such a position. Furthermore, this situation is not sufficient to serve as a sole basis for determining that the labor contract cannot be performed.
- 5. The employee has found a new job. According to the Answers, the social insurance payment record alone is not enough to determine that the employee has formed a labor relationship with a new employer. However, the burden of proof is transferred at this time, and the employee shall prove that there is no labor relationship between him and the new employer. If the new employer is not a party to the case, the social insurance payment record is the only ground for the judgment that the labor contract cannot continue to be performed, and it should not be directly judged whether a labor relationship has been formed.
- 6. During the arbitration or litigation process, the employer sent a notice of resumption of work to the employee, requiring the employee to continue working, but the employee refused.
- 7. Other situations where the conditions for continuing to perform the labor contract are not met. In judicial practice, loss of trust should be included in this situation. Labor relations are both property and personal, so mutual trust between employees and employers is important for the performance of labor contracts. In Beijing, the court did make a ruling that the labor contract should not be continued simply based on the loss of trust in a few cases although the court made such a ruling based on the fact that the labor contract cannot be continued objectively and the fact that the trust relationship has broken down in most cases.
- According to the Answers, it is recommended that employers standardize their labor management. Before deciding to terminate a labor contract, its legality should be fully evaluated. After the reinstatement dispute is accepted, the employer may choose to notify the employee to return to work, if he refuses, his request for reinstatement is likely to be rejected and conduct a comprehensive and in-depth investigation of the employee to find a breakthrough for quickly and efficiently resolving disputes. In addition, when setting up positions, employers should try to refine the division of labor and highlight the uniqueness of each position. This helps prove that the labor contract cannot be continued because the requested position is irreplaceable and unique.