China: Termination based on employee’s detention as part of a criminal investigation was held to be wrongful

The employee entered into an open-ended employment contract with the employer. During performance of employment, the employee was suspected of taking bribes as a non-governmental official and was detained for criminal investigation purposes by the local police. The employer sent a notice of termination to the employee on the ground that the employee was held criminally liable. The local police later released the employee, as there was not enough evidence to further pursue the case. The employee filed a claim against the employer demanding reinstatement of employment. The case went through labour arbitration and first and second instances of trial. The court eventually ruled in favour of the employee based on the following: (1) it is a statutory cause for termination if the employee is convicted and sentenced to criminal penalty; (2) the employee was detained as part of a criminal investigation, but had not been convicted; and (3) the employer shall not expand the interpretation of the said statutory cause for termination, abuse the right of termination or infringe upon employee’s legitimate rights and interests.