Workplace sexual harassment is no longer a new phenomenon to employees and employers. Very likely, employers get involved in chaos. From an employer’s view, how to effectively prevent sexual harassment in the workplace is a critical problem. This article will discuss about what is the test for sexual harassment based upon laws and cases, then provide employers with suggestions on how to prevent and react to workplace sexual harassment to avoid employer’s liability in China.

 

I. Definition of Sexual Harassment under Chinese Law

Although the objective of sexual harassment can be male and female, generally, female is comparatively more vulnerable. Therefore, this article is based upon the assumption that the victim is female. Article 40 of Law of the PRC on the Protection of Women' s Rights and Interests (hereinafter Law on the Protection of Women’s Rights and Interests) states that “sexual harassment to female shall be prohibited”; Article 32 of Regulations for the Implementation of Law of the PRC on the Protection of Women' s Rights and Interests in Shanghai states that “it is prohibited to conduct sexual harassment to women through language, text, images, electronic message, physical behavior, etc.”; Article 237 of Criminal Law of the PRC (hereinafter Criminal Law) defines Indecent Assault as “coercively molest others or humiliate women by violence, threat or other means”.

However, currently, there is no clear definition of sexual harassment under Chinese law. In a judgment made by the Intermediate Court of Zhongshan, Guangdong Province, the judge ruled that workplace sexual harassment shall generally contain three aspects: “(1) sexual action; (2) the action is not welcomed to the victim and impairs the victim’s dignity; (3) the action can make the victim feel threatened, hostile and humiliated in the working environment”.

 

II. Employer’s Potential Liabilities Arising from Workplace Sexual Harassment

It is a “grey area” since there is no clear definition of workplace sexual harassment or the corresponding employer’s liabilities. Therefore, employers shall be more careful in dealing with workplace sexual harassment. Generally, employers might bear the liability to alleged harasser (“harasser”) and alleged victim of sexual harassment (“victim”).

A. Employer’s Possible Liability to Harasser

When investing workplace sexual harassment, employers bear a risk that they may be held liable under tort law if the investigation violates the harasser’s right of reputation or right of privacy. In addition, if employers plan to terminate labor contract with the harasser, they may be held liable for breach of contract if such termination is incompliant with the contract or relevant laws.

Right of Reputation

During the investigation, relevant information may be disclosed and rumors may swirl among people, which may infringe people’s right of reputation. As per Article 2 of Tort Law of the PRC (hereinafter Tort Law), “Persons who infringe civil rights and interests shall bear tort liability pursuant to this Law. Civil rights and interests referred to under this Law shall include…right of reputation and right of privacy.” As per Article 101 of General Principle of Civil Law of the PRC, “Citizens and legal persons enjoy the right of reputation. The human dignity of citizens is protected by law. It is prohibited to jeopardize the reputation of a citizen or legal person by such means as insult or defamation.”  Therefore, employers may be held liable to harassers if such right of reputation or right of privacy is violated during the investigation.

Right of Privacy

During the investigation, employers may need to check relevant person’s telephone records or personal belongings, which may violate a person’s right of privacy. In addition to Article 8 of Labor Contract Law of the PRC (hereinafter Labor Contract Law) that “an employer shall have the right to ask for basic information of the worker in direct relation to the labor contract”, Article 111 of General Provisions of Civil Law of the PRC (effective on 1st Oct., 2017) stipulates that “Natural persons' personal information shall be protected by law.” Therefore, employers may violate employee’s right of privacy if they exceed necessary limitation in collecting basic information of employee in relation to the labor contract.

However, there is no clear boundary between employers’ right to collect employee’s information as well as power of management and employee’s right of privacy. When employers need to check employee’s belongings, to what extent they may be held liable under Tort Law depends on the object and measures in such investigation. Generally, it is less likely for employers to be held liable when the object is employee’s office supplies rather than their personal belongings.

If the office supplies of employees are checked by employers based upon reasonable doubt and out of necessary internal management, it is generally supported by the court[1] and the risk for employers to be held liable is comparatively low.

Whereas the personal belongings of employees are checked by employers based upon reasonable doubt and out of necessary internal management of the company, although it is also likely supported by the court[2], the risk for employers to be held liable is higher than that of checking office stuffs.

By contrast, if the personal belongings of employees are checked by employers without reasonable doubt, it is very likely rejected by the court[3] and the risk for employers to be held liable is higher than that in the former two situations.

 

Whether Employers Can Terminate the Labor Contract with Employee Who Committed Workplace Sexual Harassment

Article 39 (2) of Labor Contract Law clearly states that “the employer is entitled to terminate the labor contract with an employee if the employee significantly violates the rules and regulations of the employer” and no compensation is needed for such termination. Therefore, if workplace sexual harassment is expressly prohibited by the employer, for employees who are alleged to commit sexual harassment, it is very common for employers to terminate their labor contracts without paying any compensation based upon the above article.  

However, the preconditions for such legal termination are (i) employers have clearly stated in their regulations (e.g. Code of Conduct) that sexual harassment is a significant violation and employers are therefore entitled to terminate the labor contract; (ii) employees are clearly informed with such regulation upon enrollment. However, if employers terminate the labor contract with an employee based upon the above article in situations where (i) there is no such internal regulations, or (ii) the employee is not informed about such regulation, or (iii) the allegation is wrong and the employee does not commit sexual harassment, the employee may choose to continue the labor contract or claim for compensation.

B. Employer’s Potential Obligation to Victim

Under current Chinese law, there is no clear provisions on whether employers need to be liable for victims of workplace sexual harassment, whereas the relevant laws and regulations are as follows:

The Protection of Women’s Rights and Interests

Almost all the local regulations for the implementation of Law on the Protection of Women' s Rights and Interests in China have confirmed that employers shall take necessary actions to prevent sexual harassment at workplace. Article 33(2) of Regulations for the Implementation of the Law of the PRC on the Protection of Women' s Rights and Interests in Sichuan Province (hereinafter Sichuan Regulation) states that “employers shall take necessary actions to prevent workplace sexual harassment”. Article 47(2) of Sichuan Regulation further states that “when workplace sexual harassment has caused damages (physical or psychiatric harm) to female or jeopardized female’s reputation, the employer shall be liable for compensation if it is at fault”.

Physical (Psychiatric) Damages

In addition, Article 34 of Tort Law states that “Where an employee has caused others to suffer losses and damages in the course of employment, his/her employer shall bear tort liability.” Article 9 of Supreme People's Court's Interpretation on Some Issues Concerning the Application of Law for the Trial of Cases on Compensation for Personal Injury (hereinafter Supreme Court’s Interpretation on Personal Injury) states that “Where an employee causes damages to another in the course of employment, the employer shall undertake the liability for compensation”. Both damages mentioned in the above articles include psychiatric harm. (article 22 of Tort Law and article 1 of Supreme Court’s Interpretation on Personal Injury)

Based upon the above provisions, employers may need to undertake the liability to compensate victims of workplace sexual harassment.

 

III. Risk Level of Employer’s Liability of Workplace Sexual Harassment

The risk of employer’s liability of workplace sexual harassment can be divided into 6 categories:

  1. Sexual harassment conducted by one employee against another (who is also the employee of the employer) in the course of employment
  2. Sexual harassment conducted by an employee against an outsider (who is not an employee of the employer) in the course of employment
  3. Sexual harassment conducted by one employee against another but not in the course of employment
  4. Sexual harassment conducted by a person from the employer’s commercial partners against the employer’s employees during normal business intercourse
  5. Sexual harassment conducted by an employee against an outsider (who is not an employee of the employer) but not in the course of employment
  6. Sexual harassment conducted by a person from the employer’s commercial partners against the employer’s employees but not during normal business intercourse

Assuming the victim is a female, the risk for employers to bear the liability decreases in according to the above sequence, i.e. the highest risk is under scenario 1 while the lowest is in scenario 6.

Scenario 1

  • Liability to the victim: liability under Article 34 of Tort Law, Article 9 of Supreme Court’s Interpretation on Personal Injury and regulations in protection of women’s rights and interests in China.
  • Liability to the harasser: liability arising from jeopardizing the harasser’s right of reputation, right of privacy or from wrongful termination of labor contract.

Scenario 2

  • Liability to the victim: since the company is not the employer of the victim, compare to multiple liabilities in scenario 1, there is no need for the employer to bear liabilities under regulations in protection of women’s rights and interests.
  • Liability to the harasser: same as that in scenario 1

Scenario 3

  • Liability to the victim: since sexual harassment is not conducted in the course of employment, there is no need for employers to bear employer’s liabilities to the victim under Tort Law. However, it is still possible for employers to bear liabilities under regulations in protection of women’s rights and interests.
  • Liability to the harasser: same with that in scenario 1.

Scenario 4

  • Liability to the victim: since the harasser is not an employee of the employer, the employer only needs to bear possible liabilities to the victim under regulations in the protection of women’s rights and interests. Meanwhile, compare to scenario 3, there is a bigger chance for the employer to win the case due to those external intervening factors in this scenario.
  • Liability to the harasser: since the harasser is not an employee of the employer, there is no need for the employer to investigate the harasser, so it is unlikely that the employer will jeopardize the harasser’s right of reputation or right of privacy. However, in order to avoid jeopardizing the harasser’s right of reputation, employers need to be careful about the wording when contacting their commercial partners with regard to the sexual harassment.

Scenario 5

Theoretically, although there is no need for employers to bear any liabilities to the victim, they might still be involved in the dispute as the victim may seek for any possible compensation through vicarious liability. Therefore, it is suggested that the employer should actively defend itself based upon the fact that the harasser is not its employee and the alleged sexual harassment did not happen in the course of employment. 

Scenario 6

It is personal dispute between the harasser and the victim, therefore, the possibility for the employer to be involved in is at the lowest level.

 

IV. Tips for the Employer to Deal with Workplace Sexual Harassment

Employers shall set up internal mechanism in reaction to workplace sexual harassment from two aspects: pre-harassment prevention and post-harassment management.

A. Set up Pre-harassment Prevention Mechanism

Employers should set up their prevention mechanism in the following aspects:

a) Clarify sexual harassment in the employer’s regulations, which mainly include:

  • Clarify what is sexual harassment and clearly prohibit such behavior. 
  • Explicitly express that employer’s authority to investigate. For instance, clarify that the ownership of employees’ office supplies (e.g. office computers, lockers, office emails, etc.) belongs to the employer and the employer has the authority to investigate office supplies based upon reasonable doubt.
  • Clarify punishment of employee who conducts sexual harassment. For instance, clarify that any conduct of workplace sexual harassment is deemed a significant violation of employer’s regulation and the employer is entitled to terminate labor contract without paying any compensation.[4]

It should be noticed that the employer’s rules and regulations is not at its sole discretion. As per Article 4 of Labor Contract Law, when an employer formulates, amends or decides on rules and regulations which are directly related to the interests of employees, such matters shall be discussed by the employee representatives or the general meeting of all employees to bring up relevant proposals or opinions. The employer shall further conduct equal negotiation with the labor union or employee representatives before making a decision. Meanwhile, the employer shall publish or inform employees about those regulations.

Therefore, when making rules and regulations, an employer should comply with both substantial and procedural requirements stipulated by law. It is suggested that the internal in-house counsels of the employer should cooperate with external lawyers to ensure the preciseness, enforceability, and legality of the rules and regulations, thus to avoid future disputes in the interpretation of those rules and regulations,

After the due procedure is met, an employer needs to formalize those rules and regulations and publish them in written forms (for instance, include them into the company’s code of conduct). Meanwhile, an employer needs to notify all of its employees about those rules and regulations (better to use email notification as it’s easier for the employer to produce evidence in any future dispute).

b) Establish efficient complaints and response mechanism for sexual harassment to fully protect victims’ privacy and ensure their complaints can be submitted and dealt with in time.

c) Based on the employer’s own status, establish special team to handle sexual harassment timely and efficiently.

d) Provide regular training to employees about prevention of sexual harassment, which includes how to define workplace sexual harassment, channels for employees to submit claims, and actions they can take to protect their rights.

B. Establish Post-harassment Management Mechanism

An employer can establish its post-harassment management mechanism in the following aspects:

a) Pay attention to the protection of the harasser’s right of reputation and right of privacy:

Right of privacy: in order to avoid infringing the harasser’s right of privacy, investigations are suggested to be conducted confidentially. Meanwhile, without any negative impact on the investigation, it’s better to have the harasser on the scene during the investigation and give the harasser necessary notification in advance.

It shall be noticed that the internal rules and regulation (e.g. code of conduct) is not an umbrella. Although the employer has expressly stipulated that “the employer is entitled to investigate on the employee who is alleged to conduct sexual harassment”, such regulation may still be found invalid due to violation of employee’s right of privacy.[5] Therefore, during the investigations, especially when the employer needs to check the employee’s personal belongings, special attention should be paid to the boundary between employer’s authority of investigation and employee’s right of privacy. 

Right of reputation: in order to avoid infringing the harasser’s right of reputation, investigations are suggested to be conducted confidentially. In addition, even though convincing evidence has been found, the employer may consider to keep it confidential when terminating the labor contract as long as the case does not achieve the level of criminal law and is not compulsory to provide relevant information to any third party.

b) Pay attention to the protection of the victim during the investigation and in the follow-up actions

Since the victim has already suffered from sexual harassment, it is suggested that investigations and follow-up actions should be conducted confidentially, avoiding further damage to the victim due to disclosure of such sensitive and humiliating information. Meanwhile, in order to reduce the damage suffered by the victim, to comfort the victim as much as possible and to minimize hostile emotions from the victim against the employer, the employer can, if necessary, arrange free psychological counseling for the victim.

c) Involvement of third party

In order to keep neutrality and increase the victim/harasser’s (the parties) trust to the investigator, employers can hire an independent third party (e.g. law firms) to do the investigation and directly communicate with the parties. Employers can assist parties to sign confidentiality agreement with the third party, thus to ensure that, without necessity, any information received by the third party during the investigation shall not be disclosed to any third person (including the employer) without consent of the parties. 

Nevertheless, when the case is severe and serious, it is necessary to report to public security organs and seek their authorized official investigation.

When it comes to the termination of labor contract, hiring a third party to negotiate with the harasser is also an alternative way with higher efficiency, which can also avoid bias claims and legal risks.