In a recent Beijing case, the court ruled that an employer’s refusal to renew or extend an employee’s employment contract was unlawful because the employer did not send a non-renewal notice prior to the contract’s expiration date. The fact that the employer and employee were litigating during the notice period about whether the contract had already been lawfully terminated did not release the employer from the non-renewal notice requirement.

The employee was injured at work and took periodic sick leave as a result of the injury. The employer alleged that the leave was frequently unapproved and thus terminated her employment on August 26, 2013, for serious violation of company rules. The employment contract had a three-year term and would have expired on March 25, 2014.

The employee challenged the termination in arbitration and in court demanding reinstatement. The final court upheld the arbitration and lower court decision that the termination was unlawful and granted the employee’s claim for reinstatement. On October 10, 2014, in response to the final decision, the employer notified the employee that it would pay her salary for the reinstatement period from the unlawful termination on August 26, 2013 to the contract expiration on March 25, 2014. The notice also explained that her contract had not been renewed beyond that contract expiration date.

The employee filed another lawsuit to challenge the company’s decision not to renew or extend her employment beyond the contract expiration date. The non-renewal of her contract was ruled unlawful because the company did not provide her with a non-renewal notice until October 10, 2014, which was after the employment contract’s expiration date on March 25, 2014.

Key Take-Away Points:

According to Beijing labor contract regulations, an employer should notify an employee of its intent to continue or terminate a labor contract 30 days prior to the contract expiration date. Thus, the employer in this case should have provided a non-renewal notice to the employee no later than February 25, 2014. However, the employer did not provide a non-renewal notice during the litigation process either because the employer did not realize it should or because it did not want to confuse the termination issue before the courts. This case shows that the employer still must send a written non-renewal notice to the employee even when labor arbitration or litigation is ongoing.