China: It was held that the Company shall compensate the Employee for its failure to fulfill the commitment to arrange the Beijing Household Registration for the migrant Employee

The Company and the Employee entered into an employment contract and the Agreement on the Introduction of Graduates from Non-Beijing Universities (“Agreement”). Pursuant to the Agreement, (1) the Company shall arrange the Beijing household registration for the Employee; (2) the Company shall assist to submit all documents to the competent authorities for Employee’s household registration in Beijing; and (3) the Company and the Employee agree that the employment is subject to the grant of Beijing household registration to the Employee. After three-year service at the Company, the Employee failed to obtain the Beijing household registration. The Employee terminated the employment contract and then filed a lawsuit against the Company to claim payment of compensation for the Company failed to arrange the Beijing household registration as promised. Through the judicial process, the court eventually ruled that the Company shall compensate the Employee for its failure to arrange the Beijing household registration. The court came to this decision based on the followings: (a) the agreement regarding Beijing household registration between the two parties is a prerequisite for the Employee to accept the Company’s offer; (b) the Company is obligated to actively facilitate the procedures of Beijing household registration for the Employee; (c) the Company’s failure to arrange the Beijing household registration for the Employee is breach of the Agreement; and (d) the Company used the false commitment of household registration to improve its position when recruiting the Employee, which amounted to a violation of the principle of good faith.