Facts
Decision
Comment


The Suzhou Municipality Intermediate People's Court in Jiangsu Province recently upheld an employee's claim for Rmb85,000 against his former employer for unlawful termination, because the employer had relied on a valid company policy in bad faith.

Facts

The company's policy required employees to seek advance approval to take leave and provided that taking leave without approval was considered absenteeism. On January 30 2013 (about 10 days before the beginning of the Chinese New Year holiday), the employee submitted an application to take leave a few days before and after the Chinese New Year, so that he could travel to his hometown in Hubei to celebrate it. After the employee submitted the leave application, the company talked to him several times and tried to persuade him to stay in Suzhou during the holiday. In none of the talks did the company say whether it was approving or rejecting the employee's leave application. The employee still left Suzhou for Hubei. Two days later (after the holiday had begun), the company officially rejected the employee's leave application on its internal network and the employee was later terminated for absenteeism in accordance with the company's written policy.

Decision

The employee's claim for unlawful termination was rejected in arbitration and the court of first instance. However, the appellate court ruled that the termination was unlawful by citing a violation of the principle of good faith. The principle of good faith requires an employer to provide express approval or rejection of an employee's leave application within a reasonable period. According to the appellate court, asking the employee to stay in Suzhou during the holiday did not constitute an express rejection of the leave application. Instead, the express rejection was provided only after the employee had already taken leave, which the court concluded was not within a reasonable period because it came after the start of the Chinese New Year holiday.

Comment

This case shows that a court may use the civil law principle of good faith to challenge the unilateral termination of an employee, even where such termination accords with valid company policy.

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). The Baker & McKenzie website can be accessed at www.bakermckenzie.com.