In a recent Tianjin case, the court rejected an employment reinstatement claim from an employee who discovered her pregnancy shortly after the nonrenewal of her employment contract.
Shortly before the employee's employment contract was set to expire, the employer offered to renew it under the same terms. The employee declined to renew since her sales performance under the contract had been poor. The employer and the employee then agreed to end the employment relationship by signing a non-renewal agreement.
Shortly after the non-renewal, the employee discovered she was four to six weeks pregnant, meaning she had been pregnant before the non-renewal agreement. The employee demanded the non-renewal agreement be revoked and her employment be reinstated because:
(i) she was pregnant when the employer ended the employment relationship; and
(ii) the non-renewal agreement did not reflect her genuine intent since she was unaware of her pregnancy at that time.
Article 45 of the PRC Employment Contract Law provides that if an employee is pregnant when the employment contract expires, the employment contract term should be extended until the employee's nursing period ends. However, the Tianjin court opined that this article was not applicable in this case since the employer was also unaware of the employee's pregnancy when ending the employment contract. Thus, the court ruled that the employer did not end the pregnant employee's employment while knowing about her pregnancy and that the non-renewal was lawful.
Key take-away points:
Although the case report did not specify the role the employee-signed nonrenewal agreement played in the court's factual determination that the employer did not know about the pregnancy, based on our experience, the court would have been more likely to reinstate the employee if the employer had merely sent a unilateral non-renewal notice. Therefore, use of a nonrenewal agreement when an employment contract expires, while not required, can help reduce the risk of an employee successfully challenging a non-renewal.
Employers should be aware this decision by the Tianjin court may not be representative of all jurisdictions. Some courts might revoke the non-renewal agreement and reinstate the employee based on the view there was a "major misunderstanding" when the agreement was entered into, though if the agreement includes certain irrevocability language, this may reduce such risk.