China Employee Discipline: Your Rules and Regulations are Just a Starting Point

Every employer in China should have its own set of Rules and Regulations because without one you will have an extremely tough time terminating a China employee.

Many companies doing business in China have learned the hard way that terminating a China employee is not easy. Recognizing this many foreign employers in China now have a Rules and Regulations document and most have even translated this document into Chinese for their China employees. This is a good start but it may not be enough. Here are a few additional basics you should bear in mind if you are going to employ anyone in China.

Your Chinese-language Rules and Regulations need to be a lot more than just a mere translation of the employee manual you use in the United States, Australia and/or Europe. It needs to be tailored for your China employees in your business. And just as is true for any legally important document, literal translations  do not work. You need a document that all your employees could understand as the Rules and Regulations usually apply to everyone in the company, not just to your expat employees. This is not just about being culturally conscientious: the Chinese language version of your Rules and Regulations needs to be clear enough to form the basis for your being able to terminate your employees.

You need to make sure your employees actually receive a copy of your Rules and Regulations and that you have prove that they did so. If you ever get into a dispute with one of your Chinese employees, there is a good chance he or she will claim never to have received a copy of your employer Rules and Regulations. Your best counter to this argument will be to provide the arbiter with a Chinese language signed acknowledgement of receipt form, proving that your employee got a copy of your Rules and Regulations.

If we could only name one section that you absolutely must have in the Rules and Regulations, it would be the section on disciplinary actions. What employee misconduct triggers punishment? Make sure your Rules and Regulations make clear the grounds for terminating an employee. Think hard about the misconduct that could be committed by your employees and put those actions in your Rules and Regulations as being subject to discipline or termination. Without this section, your employee can do terrible things that harm your business and yet you will likely find yourself without a basis to discipline or terminate the offending employee.

Far too often foreign employers make the mistake of filling their Rules and Regulations with mission statements and incentives and things they encourage the employees to do. This is all nice to have, but it misses the point of having Rules and Regulations, which should have very different goals from an employee handbook. Your Rules and Regulations should set forth the rules on how you manage and oversee your employees. It is the governing law for your organization. This is why Rules and Regulations are generally negative in tone; it sets forth what you do not want your employees to do so that you can discipline them if they do these things.

But not only do you need a china-focused set of Rules and Regulations, you also need to give your employees opportunities to comment on or question your Rules and Regulations and stay on top of addressing those comments and questions. If you fail to address an employee’s concerns about your Rules and Regulations, or even if you fail to clarify those Rules and Regulations in response to a question, you can be at risk for your actions being deemed unreasonable and disproportionate. Your action can more easily be called into question, which could lead a court to order you to pay some statutory severance to your terminated employee or, even worse reinstate the employee.

If the time comes where you need to discipline one or more of your employees pursuant to your written Rules and Regulations, you now need to make sure that your discipline is pursuant to your own Rules and Regulations and that your employee knows that he or she has been disciplined. It is not uncommon for China employees to claim that they never received your discipline decision. This is of particular importance when your employee commits a minor wrongdoing and then starts escalating with his or her offenses. If you cannot show that you previously disciplined your employee for his or her past offense(s), you may not be justified in terminating the employee for being a repeat offender? Put it on paper every time you issue a warning. We advice our clients to hand deliver their discipline notices to their employees with a witness there to record it. In addition, use email and require confirmation and/or an outside courier service that requires a signature for the delivery. If you have an internal procedure for appealing disciplinary actions, follow that procedure.

We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.