Case Information:

Plaintiff: Shanghai Chen Da Human Resources Co. Ltd.

Defendant: Mr. Liu, Shanghai Cherokee (China) Power Supply Co. Ltd.

The Court: Shanghai Fengxian District People’s Court

Case No.: (2013) Feng Min San( Min) Chu Zi No. 2575

Key Points of the Judgment:

If employees have any objection against their employer’s work arrangement and management, they should communicate their concerns with the employer in a proper and reasonable way. If employees reject the employer’s normal work arrangement by having a shutdown and causing serious consequences to the normal operation of their employer, the employer is entitled to take disciplinary actions against the employees in accordance with its internal policies.

Key Facts:

Shanghai Chen Da Human Resources Co. Ltd. (“Dispatch Company”) signed an employment contract with Mr. Liu on September 19, 2011, stipulating that the Dispatch Company dispatched Mr. Liu to Shanghai Cherokee (China) Power Supply Co. Ltd. (“Accepting Entity”) to work as a general worker; the duration was from September 21, 2011 to September 20, 2013 and Mr. Liu’s position was eligible to be included in the comprehensive calculated working hours system. Mr. Liu started working in the Material Department of the SMT workshop of the Accepting Entity on September 21, 2011. He worked on two shifts. The day shift started from 8:00 and ended at 20:00, while the night shift was from 20:00 to 8:00 of the following day.

Mr. Liu was scheduled to work the night shift on June 20, 2013. At 1 p.m. that day, a shutdown took place in the Material Department of the SMT workshop in the Accepting Entity. Mr. Liu and six other night shift employees did not show up at 8 p.m. that night. On the next day, ten employees including Mr. Liu negotiated with the Accepting Entity, asking for a wage increase and reduction of workload. The Accepting Entity replied that a wage increase needed to be approved by the management and promised to give an answer on the following Monday; it also promised to increase staff numbers and reduce the workload after July 1. Meanwhile, the Accepting Entity asked the employees to return to work immediately. Despite several negotiations, ten employees including Mr. Liu still refused to work.

On June 26, 2013, the Dispatch Company sent Mr. Liu a termination notice and dismissed him on the ground that his actions of rejecting the normal work arrangement of the Accepting Entity even after several negotiations, which led to the shutdown of production line and caused heavy loss to the Accepting Entity, had constituted a serious violation of the Accepting Entity’s internal policies.

Mr. Liu filed for arbitration and a lawsuit later, claiming damages of RMB 14,000 for wrongful termination and other grounds.

Shanghai Fengxian District Labor Dispute Arbitration Committee ruled that the Dispatch Company should pay compensation in the amount of RMB 13,305.04 to Mr. Liu for wrongful termination and dismissed Mr. Liu’s other claims.

The company refused to accept the arbitration decision and filed a suit to the Court of First Instance. The Court added the Accepting Unit as defendant.

Judgment:

The Court of First Instance held that the Dispatched Company did not need to pay Mr. Liu the RMB 13,305.40 award for illegal termination of labor relation.

Court’s Reasoning:

Mr. Liu stopped working during normal working hours without authorization, rejected the normal work arrangement of the Accepting Entity, and refused to work upon receipt of the Accepting Entity’s reasonable reply and mediation by the third party. Mr. Liu’s behavior had caused a serious impact on the normal operations of the Accepting Entity.

As for Mr. Liu’s claim that he demanded the negotiations with the Accepting Entity because he was being overworked, the Court held that Mr. Liu’s overtime hours should not be regarded as overwork as they did not exceed 108 hours in a quarter and were in compliance with labor law. The Court further held that if employees have any objection against their employer’s work arrangement and management, they should communicate with the employer in a proper and reasonable way, instead of rejecting the normal work arrangement of the employer by having a shutdown.

Case Source: Judgment Document Website

KWM Comment: Employees are obliged to accept the normal work arrangement of the employer or accepting entity. Generally speaking, if employees have objections against the work arrangement and management of the employer or accepting entity, they should resolve the problem in a rational way. If they raise their objections by forcing a shutdown, it is disputable whether or not the employer has the right to dismiss them and subject to local judicial practice. In this case, Shanghai court held that under such circumstance, the employer and accepting entity are entitled to dismiss /return the employees on the ground of gross misconduct.

For employees under a comprehensive calculated working hours system, the laws also set limits to the overtime hours to protect the employees’ right to rest. The Regulations on Administration of Special Working Hours (Draft for Comments) specifies the limits of overtime where the comprehensive calculated working hours system is applied, but this Draft has not been formally released. In the present case, the Court decided that the employee did not overwork and the work arrangement of the receiving entity was not in violation of PRC labor laws, according to the PRC Labor Law provision stipulating that overtime hours should not exceed 36 hours per month.