In a recently publicized Chongqing case, an employer’s termination of an employee based on the employee’s poor performance ranking was ruled as unlawful even though poor performance ranking was stated as a termination ground in the employment contract and company rules. The employee was unilaterally terminated by his/her employer because he/ she ranked in last place in the year-end performance evaluation for two consecutive years. The local labor dispute arbitral tribunal ruled that the employer may only unilaterally terminate its employee’s employment contract based on statutory termination grounds, such as “incompetence”. In a “forced ranking system”, there will always be an employee ranked at the bottom and it does not (necessarily) mean the relevant employee is “incompetent”(e.g. there may be a situation where all employees are excellent or good).