It has come to our attention that labor arbitration committees in Jiangsu Province are becoming much more strict in requiring that companies strictly follow procedures when terminating employees. Labor arbitration committees have always held a preference for finding some level of fault with employers in order to require some payment of severance. The continuing economic crisis, deteriorating employment conditions, and a severe lack of labor arbitrators in the face of rising claims with local labor tribunals is making labor arbitration more difficult for employers. Arbitrators have less time to hear claims and are now pushing employers to settle claims, even when employers have sufficient grounds to terminate employees for no severance.
Two areas that employers must now be aware of:
1) Letters to labor unions: in the past, this has rarely been an issue in labor arbitration. Recently, some labor arbitrators in Jiangsu have now required that notices be sent to the labor union simultaneously with the termination notice to the employee. This is true, even if a company does not have a labor union. Various labor arbitration tribunals have different rules in force. Some arbitrators are now requiring that if a company does not have a labor union, the company should send a notice to the “local supervising labor union” or the local labor bureau. As local labor arbitration committees follow different rules, it is critically important that employers contact their local labor bureaus to find out the local rule in place.
2) Re-training: re-training of employees has always been a requirement for terminating employees for no severance. However, labor arbitrators are now becoming more strict in demanding sufficient, documented proof that the company did in fact attempt to re-train the employee. It is now critically important that employer do the following:
– Document in detail the employees deficiencies
– Create an action plan showing the improvements and deliverables that will be expected from the employee
– Have the employee sign the action plan outlining his deficiencies and expected improvement
– Create a detailed plan for re-training
– Collect documents or other evidence that shows that the employee was in fact re-trained and coached. Included should be the person who re-trained the employee, what task or tasks were coached, the time and date of the retraining.
Lehman, Lee & Xu is a prominent Chinese corporate law firm and trademark and patent agency with offices in Beijing, Shanghai, Shenzhen, Hong Kong, Macau, and Mongolia. The firm is recognized as a leading expert in corporate law and an active member of the Shanghai community.
To learn more about us, please visit our website at www.lehmanlaw.com.
