Since the last half of 2016, an increasing number of companies who have not set up trade unions, especially foreign companies, embarked on establishing ones in response to the call of the All-China Federation of Trade Union (ACFTU). In order to meet the requirements of our client companies, I insisted in setting up trade unions for two of them. During the service, the HRs focused on one issue by coincidence, that is, where the employee involved is elected as the chairperson of a trade union or is enrolled into the trade union committee. Is there any special statutory protection granted by the laws under a continual performance of employment contract?
This article will revolve around the issue of special protection for the chairperson, the vice chairperson, and members of a trade union committee on the grounds of applicable regulations by way of case study.
I. Statutory Renewal of Employment Contract
Employee A commenced work in Company A on July 15, 2005 with his latest employment contract term from July 15, 2007 to September 30, 2010. On August 13, 2007, Employee A was elected as a member of the third trade union committee by the Federation of Industrial Trade Union of Pudong District, with his service term from August 2007 to August 2012. However, Company A informed employee A of the termination of his employment contract due to its expiration on August 30, 2010. Employee A filed an application to the arbitration committee on November 9, and he claimed for double severance pay due to illegal termination.
This case was heard by the labor arbitration committee, courts of first instance as well as second instance. The people's court of second instance alleged, although the last written employment contract with Company A expired on 30 September 2010, the employee was still working for the trade union within its term of service. Thus, the Company's termination of the employment contract by reason of expiration lacked a legal basis, and the Company involved should undertake legal obligations. As a result, the court of second instance maintained the decision of first instance, and held that Company A should award statutory compensation equivalent to double severance pay as a punishment.
As Art.45 of the Labor Contract Law of PRC stipulated, if the employment contract expires and it is under any of the circumstances as described in the law, then the term of the employment contract shall be extended until the disappearance of the relevant circumstance. The law is herein referred to the Trade Union Law of PRC.?
The contractual term is not consistent with the term of service for chairperson or vice chairperson and members of trade union committee: the labor contract is terminated, but the term of service has not expired. To guarantee the trade union's consecutive operation and its stability, the Trade Union Law legally strengthened the protection of employment contracts for chairperson or vice chairperson and members of trade union committee, which allows them to perform daily responsibilities of managing trade union committees, coordinating labor relations, and protecting the legitimate rights of employees in the company without the possibility of contract termination.?
As Art.18 of the Trade Union Law of PRC provided, from the day on which the full-time chairperson, vice chairperson and committee members at the trade union begin their positions, the employment contract shall be prolonged automatically; whilst for the part-time chairperson, vice chairperson, and committee members if the period of the employment contract is shorter than his/her service term, the employment contract shall automatically be extended to the expiration date of service. However, this provision is not exclusive to staff who commit serious negligence during the service term or reach the statutory retirement age.
Automatic extension of the employment contract , as mentioned above, shall be complied with in the same way of settling staff during the medical period or female employees during period of pregnancy, childbearing, breast-feeding when their labor contracts are terminated. In these cases, the company does not need to negotiate with the employees or the members of trade union committee in terms of contract extension. Their original employment contract shall be automatically extended on the basis of law. Thus, the parties may not enter into a new contract for only the prolonged period. Noticeably, the regulations on extension of employment contract for full-time officers and part-time officers differs pursuant to the aforesaid provision. The contract for the former will be prolonged since the day that he/she was elected to be the member of committee, with its extension being the chairman's full service period; whereas for the latter, the employment contract will be automatically extended to the day when the service period expires.
Otherwise, there is an exception for the extension of an employment contract; this exception refers to serious negligence in a service term or reaching the age of lawful retirement. Based upon the applicable regulations, male employees shall retire at 60 years old, and female employees shall retire at 50 years old. However to define severe negligence during service term, Art.2 (2) of the Interpretation of Several Issues on Trade Union Law of PRC for Civil Trial from the Supreme People's Court prescribes clearly that the severe negligence provided in Art.18 of Trade Union Law refers to the specific situation of item 2,3 or 4 of Art.25 of the Labor Law of PRC, i.e., serious violation of labor disciplines or the internal rules and regulations of the employer, causing great losses to the employer due to serious dereliction of duties or engagement in malpractices for selfish ends, being prosecuted for criminal responsibilities in accordance with the law. Hence, for chairperson, vice chairperson, or members of the committee who commit one of the above behaviors would not have his/her contract prolonged as stipulated by law.
II. Protection on Change of Position and Corresponding Salary?
Employee Cai was employed to work in Company B on May 10, 1995. The Company and Cai reached a non-fixed term employment contract on May 1, 2008, and Cai was designated as the director of cotton textiles production and part-time chairman of the trade union. Because Cai lied to Company B by reporting false working time for his subordinate Wen in May of 2008, Company B issued a written warning to Cai. Due to this, the Company launched a personnel conference and made a decision that Cui broke the principles by helping the employee make false attendance records. This act was beyond the realm of responsibilities as the chairperson of trade union, and it demonstrated lack of faith and fairness of personnel management; thus Cai damaged employment unity. The Company posted an announcement that transferred Cai's position from the director of cotton textiles production to staff thereof on 1 May 2009, which was then notified to the trade union. After this, the trade union responded to the Company with a request of recalling the punishment because this decision constituted a violation of laws and regulations. However, the Company did not follow trade union's suggestion. On September 1, 2009, Cai filed an application to the labor arbitration committee, and he claimed that the company should revoke the order of position transfer and reinstate him to his original position as well as retroactively pay the standard of his original position.?
This case has gone through labor arbitration, first and second instance. The court of second instance held that the employee was entitled to exercise his rights under the protection of law. In light of working as ?chairperson of a trade union, the position transfer should be in accordance with the regulations of Trade Union Law and be agreed upon by the parties of both the trade union committee and upper-level trade union committee. The treatment of Cai due to its violation of regulations is obviously improper. Thus, the court ordered the company to revoke the order for Cai, reinstate him to his original position, and award him the salary difference for this period.
A reasonable adjustment on working content, position, and salary represents an initiative right of operation for the employer. Yet the exercising of rights has its limits. The transfer of positions and salaries should be conducted in this way: (a) first of all, it should be agreed upon by mutual negotiation, i.e., the parties involved shall change the contract language by way of actual performing or entering into any written documents; (b) secondly, alteration of positions should be based upon an agreed provision stipulated in the employment contract; (c) thirdly, statutory alteration of positions, i.e., where the employee meets the requirement stipulated in Art. 40 (1) (2) of the Labor Contract Law of PRC, the employer has the authorized right to adjust the employee's position accordingly.
Even if one of the above conditions is met, the compulsory limitation to change positions still exists for the employees as chairperson or vice chairperson of trade union. As provided in Art.17 of Trade Union Law, during his service term, a trade union chairperson and vice chairperson shall not be arbitrarily transferred to other positions. When indeed necessary, approval shall be obtained from the respective level trade union committee and higher level trade union. General assembly or representative assembly must be held to discuss the dismissal of the trade union chairperson or deputy chairperson, and the chairperson and vice chairperson may not be dismissed unless all members of the general assembly or half the representatives of the representative assembly approve of the dismissal.
Moreover even if the employees satisfy the requirement of expiration of medical period or incompetency as regulated, the employer shall not transfer his/her position without consent. In other words, it is highly suggested to report to the same-level trade union or upper-level trade union at first, and most importantly, to gain the consent from the trade union. On one hand, it will ensure the performance by trade union's function to its greatest extent in case the essential positions change in a trade union due to general election of the trade union general assemblies and representative assemblies. On the other hand, it is a good way to make a promise to the employee who work as chairperson or vice chairperson of trade union by encouraging their continual performance from liabilities granted by the trade union. This relationship establishes harmonious employment relations.?