Does Civil Code affect the labour contract?

By Leo Yu and Li Qiangqiang, Jingtian & Gongcheng
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With the Civil Code taking effect and being implemented, it’s timely to consider the “general” and “specific” relationship between civil law and labour law as well as the principle of law application. Labour law will be applied when there are provisions in labour law and civil law may be applied otherwise. Therefore, the latest provisions of the Civil Code may have a significant impact on human resource management and labour contracts of employers. This article will conduct a preliminary discussion from the perspectives of the impact of some important rules in the Civil Code on labour contract and the corresponding adjustment of labour contract.

喻鑫, Leo Yu, Partner, Jingtian & Gongcheng.
Leo Yu
Partner
Jingtian & Gongcheng

Personal information protection clauses

The issue of personal information protection has been of increasing concern in recent years. The government has begun to rectify strictly by legislating rules for personal information protection from all criminal law, administrative law and civil law perspectives. The Civil Code provides more systematic and specific provisions on the protection of personal information, including but not limited to the scope of application, the scope of protected personal information, the methods, conditions and principles of personal information processing, prohibited acts, and legal liability for infringement, etc.

Labour laws grant, to a certain extent, the employers’ right to know by obtaining employees’ personal information directly related to labour contracts. However, the exercise of this right will inevitably be regulated by the Civil Code and other personal information protection rules when collecting, storing and using employees’ sensitive personal information. If employers breach the relevant regulations to process employees’ personal information, such as providing employees’ personal information to domestic, foreign affiliated companies or third parties without permission, it may lead to personal information infringement disputes and corresponding liabilities.

We suggest an additional chapter in the labour contract to prevent corresponding legal risks:

(1) Clarify the scope of personal information that needs to be collected, and exclude the information that is irrelevant to employment relations, such as face recognition information and fingerprints, marriage and childbirth information, and other biometric information;

(2) The collection, storage and use of employees’ personal information should be agreed upon clear terms of authorisation, including the subject, purpose, method and circumstances of the processing of employees’ personal information.

(3) Clarify the storage and protection mechanism for employees’ personal information.

Standard Clauses Rules

Standard clauses refer to the clauses prepared in advance by one party without negotiation with the other party when concluding a contract. The Civil Code expands the standard clauses providers’ obligation of presentation and explanation of standard clauses to “other clauses that materially affect the other party”; it is not limited to clauses that exempt or reduce standard clauses provider’s liability. If the standard clauses provider fails to perform the obligation of clarity, it may result in the clauses being excluded from the content of the contract, without any binding force on the other party.

According to the Civil Code standard clauses rules, there will be a large number of clauses belonging to “other clauses that materially affect the other party” in the employers’ standard labour contracts, but labour laws and regulations do not clearly stipulate the validity of these standard clauses that have not been fully presented and explained. From the perspective of labour law judicial practice, it is not uncommon for employees to claim that the labour contracts provided by the employers are standard contracts and some clauses are invalid. In this instance, it is possible that the Civil Code standard clause rules will be invoked in subsequent labour disputes, thereby affecting the determination of the validity of the relevant clauses.

We suggest that employers present or explain the main contract terms regarding adjustment of work positions and workplaces, the adjustment and payment of salaries and benefits, the termination of the contracts and other clauses setting obligations or responsibilities for employees. For example:

1. Bold and underline key clauses;

2. When negotiating and signing labour contracts with employees, the alerting and explanation letter could be presented to employees at the same time, which shall be signed after confirmation by employees;

3. Add clauses to labour contracts stating that the contracts have been fully negotiated and explained. Employers can specifically leave a blank column for employees to write “confirm that I fully understand all the clauses and have no objections.”

Application of Implied Intention

The Civil Code clearly stipulates implied intention, that is the implication shall be deemed as an expression of intent only when it is stipulated by the law or agreed by the parties concerned, or conforms to the trade common practice between the parties. Although there are no specific provisions in labour law, it exists in the judicial opinions of some labour disputes. The Civil Code further clarifies the applicable rules for the implied intention and creates more possibilities for employers to deal with the risk of complex labour disputes through the pre-arranged labour contracts.

We advise employers to further clarify the applicable circumstances of implied intention in labour contracts to improve the possibility of being recognised by judicial practice if there is a clear agreement in advance. The specific circumstances include but are not limited to the following:

1. Stipulate clearly in labour contracts that the employers have the right to unilaterally adjust the employees’ work positions and workplaces in accordance with the needs of production and operation management;

2. Stipulate clearly in labour contracts the composition and conditions of special remuneration and benefits;

3. Stipulate time limit of the disagreement for important notices concerning employees’ salaries adjustment, adjustment of work positions and workplaces, performance appraisal, disciplinary procedures, etc. If the objection is not raised within the time limit, it shall be deemed as consent.

In addition to the above impacts, the effectiveness and implementation of the Civil Code may also have an impact on employers’ labour contracts and their management in terms of labour contracts storage management, sexual harassment and other aspects. In this regard, we believe that employers need to pay full attention, take forward-looking measures, and effectively improve human resource compliance through the improvement and adjustment of labour contracts clauses.

Leo Yu is a partner at Jingtian & Gongcheng. Li Qiangqiang also contributed to the article

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