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China: Supreme People’s Court Releases Seven Guiding Cases on Labour Disputes

Authors: Carol Zhu and Yinbing Chen

The Supreme People’s Court recently released seven guiding cases on labour disputes which will serve as important reference for people’s courts at all levels when hearing similar disputes in the future. The judicial rules reflected in these guiding cases are summarised as follows: (1) determination of employment relation shall be based on actual performance and existence of subordination relation; (2) judicial review of termination reason shall be limited to the contents explicitly stated in the termination notice served to employees; (3) managerial staff’s failure of taking reasonable measures after receiving complaint on workplace sexual harassment constitutes as serious violation of employer’s internal policy; (4) if employers refuse to conduct performance review without justifiable reason, performance-related bonus shall be paid to employees; (5) if employees leave before annual bonus payment, their entitlement to annual bonus shall be comprehensively determined based on separation reason and time, work performance and contribution etc.; (6) judicial proceedings of non-competition disputes will not interrupt employees’ post-employment non-competition period; and (7) employers’ recruitment requirements that are not necessarily related to employment, such as hometown place, will be found as job discrimination.

Key Action Points for Human Resources and In-house Counsel

Guiding or typical cases released by the Supreme People’s Court are important references for employers in China to understand judicial attitude toward certain types of labour disputes. In practice, employers may also use such publicly released cases to help employees understand relevant legal rules and avoid having potential labour disputes with employees.