Primary Facts

From August 1984 to July 1987, Zhen Chen was under training in a civil aviation flight academy, with financial support by Air China. Upon his graduation, Chen Zhen established employment relationship with Air China, in the position of pilot. On 10 September 1996, he executed a non-fixed term employment contract with Air China. 

On 5 December 2012, Zhen Chen proposed to terminate the employment relationship with Air China and submitted corresponding written notification. Air China held that Zhen Chen should pay the company default fine and damages as stipulated by the employment contract, and that the company has the right not to handle relevant procedures for him, since the employment contract was still effective in accordance with the law before Zhen Chen paid such payment to the company.

In April 2013, Zhen Chen filed a claim with the Shunyi District People’s Court, Beijing, requesting Air China to issue separation certificate, transfer out his personal archive and other relevant archives, and that he does not need to pay the alleged liquidation damages in the amount of RMB 1,870,000. Air China made a countercharge, claiming that Zhen Chen should pay the liquidation damages in the amount of RMB 2,100,000 as well as damages in an amount of RMB 2,100,000, and that Zhen Chen should return to the company his flight profession resume and other materials.

Judgments

Judgment of First Instance:

  1. Air China should issue separation certificate for Zhen Chen, transfer out his personal archive, social security accounts, physical examination certificate for flight crew and flight profession resume.
  2. Chen Zhen should pay Air China the training fees in the amount of RMB 1,820,000.
  3. Overruling other claims raised by both parties.

Air China was not satisfied with the first instance judgment and appealed to Beijing Third Intermediate People’s Court. In the second instance judgment, the court rejected the appeal and sustained the original judgment. Now the judgment has been effective.

Court’s Reasoning

  1. Employee is entitled to unilaterally terminate his/her employment contract pursuant to the law. Zhen Chen has delivered his declaration of will to Air China, thus, their employment contract should be terminated in accordance with the law.
  2. The employment contract restricts employee’s right on unilateral termination by stipulating that: “Zhen Chen may not terminate this employment contract until all the issues in relation to economic matters are settled”. Such stipulation is in violation of relevant provisions in the Labor Contract Law, Therefore, the court will not support these claims.
  3. Given the continuous training and corresponding training fees provided by Air China, Zhen Chen should repay Air China these training fees for terminating the employment contract. Due to Air China’s failure to provide the breakdown of training fees, the Court rules that the amount of payment will be RMB 1,820,000, which is calculated, in a discretionary manner, with reference to the facts of this case and relevant regulations by CAAC.
  4. There is a double counting in Air China’s claims on liquidation damages and other damages. Since the court has ruled that Zhen Chen should pay the company training fees, the court will not hear other claims on these issues.

KWM Comments: According to the Labor Contract Law, employee may terminate employment contract by submitting a written notice to employer 30 days in advance. The stipulations restricting employee’s “Resignation Right” is in violation of the Labor Contract Law and should be rendered void. However, in the event that employer has paid training fees for the employee, these fees should be repaid by employee upon his resignation. The employer should undertake the burden of proof to prove that it paid training fees to the employee. In practice, employers should pay attention to collecting evidence related to training fees, such as receipts and invoices issued by third parties, for the purpose of protecting their legitimate rights and benefits.