16 February 2017

Is the Unilateral Termination of Employment Contracts Justifiable Based upon an Employee’s “False Attendance”?

By Yin Juquan (partner) and Zhang Yuanhao (assistant associate)

An attendance system is both necessary and crucial for employers. Checking employees’ “punch card” records is the most common, straightforward and effective method used by employers to manage employees’ attendance. However, “false attendance” acts such as leaving work after the card has been punched or asking someone else to punch a card, take place from time to time. Can employers unilaterally terminate labor contracts on the grounds that acts of “false attendance” severely violate employers’ rules and regulations? Laws and regulations do not provide whether acts like “false attendance” qualify as a severe violation but employers have legitimately terminated contracts on these grounds. This article will analyse relevant cases of unilateral termination.

Representative Case

In an employment dispute adjudicated by Shenzhen Intermediate People’s Court between Xie and company A [1], the termination of an employee’s contract was found to be legitimate. In this case, company A found out that an employee Xie asked another employee Wang to punch his card for him one morning. The company unilaterally terminated Xie’s contract on becoming aware of this incident. Xie argued that he did not know that Wang punched his card. The company’s surveillance tape, showed Xie walking into the company that day without stopping by the card-punching machine. The court held this was evidence that Xie was aware of the fact that someone else had punched his card. Xie’s act of asking someone else to punch his card is specifically prohibited by company A in its reward and punishment policy. A policy which does not violate any laws or regulations and was publically available. Hence, the termination of Xie’s contract by company A according to its reward and punishment policy was held to be legitimate.

Employers’ Burden of Proof 

The case of Xie shows that courts may rule in favor of employers who unilaterally terminate employment contracts when an act of “false attendance” occurs. The legal basis of such unilateral termination is found in Article 39(2) of the Labor Contract Law of the People’s Republic of China: “If an employee commits any of the following, the employer may terminate the labor contract:… (2) severe violation of employers’ rules and regulations.”  Employers need to prove that an employee has “severely” violated the employer’s rules and regulations and that the relevant rules and regulations are legitimate.

1. Employers’ Rules and Regulations

1)“False attendance” must be specifically defined by an employer as a “severe violation” for it to be used as a legal ground to terminate employment. Otherwise, termination on such grounds is likely to be deemed as invalid. “False attendance” is a violation of the principle of good faith. Therefore, provisions encapsulating “false attendance” are usually included in rules and regulations, such as a work attendance system, reward and punishment policy, or an honor code.

2)Rules and regulations need to satisfy the statutory requirements stated in Article 4 of the Labor Contract Law of the People’s Republic of China. They are only legitimate and effective after being formulated through democratic process and publicly announced. 

In an employment dispute between company B and employee Cheng[2], the court held that the APP attendance system used by company B was directly related to employees’ personal interests and should therefore have been proposed by the employee representatives’ congress and agreed upon by union and employee representatives. Company B, however, failed to provide any evidence showing that democratic process had been followed. The system was therefore not binding on Cheng. Though Cheng failed to observe the attendance requirements of company B, company B’s “Employee Manuals” and the APP attendance system could not be included as grounds for dismissal.  Company B’s termination of Cheng’s employment was therefore illegal. 

2. “False Attendance” in Violation of Rules

1)Acts of “false attendance” that breach rules and regulations such as: failing to record attendance according to company policy; submitting a false attendance record; asking someone else to punch your card, having signed in but in fact being absent - must be specifically prescribed as prohibited acts in employers’ rules and regulations.

2)“False attendance” occurs when attendance records are inconsistent with an employee’s actual attendance. If an employee is not in fact absent, but has asked someone else to punch their card for them, this will not be considered “false attendance” because the employee’s actual attendance conforms to the record. To meet the criteria for “false attendance”, the employer needs to prove not only that the employee has got someone else to sign in for them, but also that the employee was absent when this occurred. In other words, the principle of good faith must have been violated.

To prove “false attendance” has occurred, employers usually submit surveillance tapes accompanied by other evidence such as witness testimonies. If the evidence is insufficient to prove “false attendance” by showing an inconsistency between attendance records and actual attendance, the employer is likely to lose the case. In the employment dispute between company C and Chen[3], the court held that attendance records are the responsibility of the employer. Company C was held to bear the burden of proof of the employee’s attendance record. The surveillance tape provided by company C was insufficient to prove whether or not Chen was guilty of “false attendance”, so it was excluded by the court.

In conclusion, employers should specifically provide measures of punishment in their rules and regulations for “false attendance” and implement attendance systems and corresponding supervision measures to avoid legal risks. 

Editor’s note: this article was simultaneously published on Chinalawinsight.com


[1](2013) Shen Zhong Fa Lao Zhong Zi No.3400.

[2] (2016) Su 01 Min Zhong No. 5934

[3](2016) Yue 03 Min Zhong No. 9522

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