Identification and handling of incompetent employees

By Summer Wang, Boss & Young

In practice, it’s normal that employers unilaterally rescind the labour contract on the grounds that the employees are incompetent. In this regard, the author believes that in the theory and practice of labour law, if the employer intends to identify an employee as “incompetent” in the sense of labour law, the employer must have a complete evaluation process with the employee and provide corresponding evidence when necessary. In short, “the process shall be complete and the evidence shall be sufficient”, which includes:

Summer Wang
Boss & Young

(1) Define the job responsibilities and requirements of the employee. The precondition that the employer determines that the employee is incompetent means defining the employee’s job responsibilities and/or specific requirements for the specific job, and being able to prove that the employee signs a document that can demonstrate that the employee knows his/her job responsibilities and/or job requirements.

(2) The employer has clear agreements, rules and regulations on “incompetent”, and the relevant agreement, rules and regulations are legal. If the employer lists the circumstances in which the employee is not qualified for the job, or stipulates the method of assessment and evaluation to the employee in the form of rules and regulations, decisions, etc., the rules and regulations or decisions shall be formulated in accordance with democratic procedures and shall be publicized or delivered to the employee, and the content shall not violate the laws and regulations.

(3) Situations in which employees are incompetent. In general, examples or situations in which employees are incompetent include:

  • The employee failed to complete the specific work within the time required, and with the quality, quantity and requirements required by the employer.
  • The employer should be able to prove what kind of tasks are assigned to the employee, the completion time of the employee, and the completion results. The employer also needs to rationally consider the difficulty and workload of the tasks.
  • The result of performance evaluation is unqualified. If the employer evaluates the employee in the form of scoring, in addition to the fact that the contents of the evaluation form should be legal, the employer must inform the employee in advance of the evaluation methods.
  • Failed to pass training. If the employer provides training to the employee in certain situations, such as if the employee is incompetent, the employer may pre-specify the standards or objectives that the employee should meet after the training is over with the employee. If the employee fails to meet the standards, the employer may identify that the employee is incompetent for the second time.

(4) Appropriate delivery and notification method. The employer needs to prove that it has informed the employee of the conclusion that he/she is incompetent. The specific form may be a paper notice, a letter, email, text message, WeChat, etc.

Subsequent processing

According to article 40 of the Labour Contract Law of the People’s Republic of China, we believe that if the employer confirms that the employee is not qualified for the job, it can take the following actions against the employee:

  1. Training. In the case of an employee who is incompetent, the employer has the right to train the employee, regardless of whether the employee has adjusted to the new post, or while maintaining the original post.
  2. Adjust the salary and position. In the case of an employee who is incompetent, the employer has the right to adjust the position of the employee and apply the salary of the new position. If the employer decides to transfer the employee to the new position, it is necessary to pay attention to the reasonability of the adjusted position (such as matching the new post with the employee’s ability, and not being insulting), and should retain the notice of the employee’s transfer and related evidence that the employee works in the new position.
  3. Rescind the labour contract. If the employer rescinds the labour contract with the reason of incompetence, it should give the employee written notice 30 days in advance, or make an additional payment of one month’s wages to the employee, and pay economic damages according to article 47 of the Labour Contract Law of the People’s Republic of China.
  4. If the employer wishes to rescind a labour contract with a specific employee on the grounds of incompetence, the basic evidence may be collected according to the criteria determined in this article. The lawyer may conduct action guidance and risk assessment to minimize the risk of illegal release if necessary.

Summer Wang is an attorney at Boss & Young in Shanghai


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