In August 2011 a court in Yancheng City, Jiangsu Province ruled a public transportation company's termination of a vehicle attendant unlawful for failure to notify the labour union before the actual termination pursuant to Article 43 of the Employment Contract Law.

During an inspection, a company officer discovered that the employee had sold two invalidated tickets with a face value of Rmb1 each to passengers. Based on internal company rules (which were voted on and passed by the company's employee representatives), the company unilaterally terminated the employee.

The court held that although the company's internal rules were binding, the termination was still unlawful because the company failed to notify the union. Article 43 of the Employment Contract Law requires an employer to provide notice to the union before any unilateral termination of an employee. The case report was not clear whether the company had its own union or whether it was required to notify the upper level branch of the All China Federation of Trade Unions.

This case demonstrates that although companies may have valid substantive reasons for terminating an employee, procedurally, they still must notify the labour union before termination; otherwise, they risk having their termination decision overturned in court.

For further information on this topic please contact Andreas Lauffs or Jonathan Isaacs at Baker & McKenzie's Hong Kong office by telephone (+852 2846 1888), fax (+852 2845 0476) or email (andreas.lauffs@bakermckenzie.com or jonathan.isaacs@bakermckenzie.com).

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