Termination contract meets a sticky ‘ending’

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Termination contract meets sticky ‘ending’
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The termination of an employment contract was ruled invalid by Henan Xinxiang Intermediate People’s Court due to one small language error.

A company wished to terminate the contract of an employee who had been absent without leave. But it sent her a “Notice of ending of employment contract”, using the word “end” instead of “terminate” – two different concepts under PRC law.

The employee was hospitalised with an illness on 23 March 2017, and took about five weeks’ leave until 1 May. After the leave ended, she neither showed up for work nor applied for more leave. The company reminded her in October that she should come to work, but on reporting for duty she requested another job because the hours of her current job were too long. The company refused her request and the employee stopped going to work.

The company sent her the contended “Notice of ending of employment contract” on 6 November, arguing that the employee was deemed absent without leave, since she had not reported for work for such a long period. The company terminated her employment contract and employment relationship on the basis of article 39 of the Law on Employment Contracts.

During the trial, the court found that the employee had not submitted any sick note to the company after 2 May, and there was no evidence of her applying for leave following that date. Neither had she reported for work or fulfilled her job duties as requested. Considering attendance records submitted by the company, her conduct constituted absence without leave.

However, the company had erroneously sent her the “Notice of ending of employment contract” instead of a “Notice of termination of employment contract”. The terms are two different concepts under PRC law, addressed in two different provisions of the Employment Contract Law.

“Ending of employment” generally refers to automatic ending of employment on the occurrence of certain events, such as expiration of a fixed-term contract, whereas “termination” generally refers to when either the employer or employee actively notifies the other party to terminate the employment early.

The court of first instance ruled that the employment contract between the company and the employee had not been effectively terminated and therefore should continue to be performed. The court of second instance upheld the original judgment.

KEY TAKEAWAYS

This judgment reflects the legislative intent to favour protection of workers, and the small mistake in terminology by the employer eventually led to invalidation of termination of the employment relationship. From a legal point of view, the termination of an employment contract and the ending of an employment contract are two different legal concepts, and should not be confused by employers.

When providing an employee with notice of termination/ending of their employment contract, employers should pay attention to the nature of the notice and review the wording, or seek professional advice to avoid procedural defects.



Business Law Digest is compiled with the assistance of Baker McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker McKenzie by e-mailing Howard Wu (Shanghai) at howard.wu@bakermckenzie.com

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