Almost all employment contracts contain clauses specifying the position, scope of work and duties of the employees. They are such common clauses that many employers tend to neglect or underestimate their importance to a practical binding relationship and as a key basis of the employer’s legal rights vis-à-vis its employees.
Each employee’s position in the company hierarchy should be identified, but why are descriptions of the scope of work and job duties important? Of course, they set out the scope of work to be handled, which is one of the main terms of the employment agreement. But even more importantly from a legal and practical perspective, a description of scope of work and specification of job duties can be used as a key legitimate standard to support the employer’s decision to terminate an employment contract.
As commonly known, Chinese employment laws do not support at-will termination of an employee. If an employer intends to terminate a contract with an employee unilaterally without reaching mutual agreement (i.e., involuntary termination), the reason for the termination must fall within the limited statutory grounds set out in the Employment Contract Law of the PRC.
Among legitimate statutory grounds for involuntary termination is “incompetent for the job”, in practice surely one of the most typical reasons for an employer to want to dismiss an employee. Under the rubric of incompetence, for example, an employer may decide to terminate because the employee is “not proactive enough”, “his/her response is not fast enough”, or “he/she cannot speak or understand English well”.
Although these may be sound business reasons, that is not to say it is easy to terminate. On the contrary, in practice it is generally very challenging to win an involuntary termination case on the basis of employee incompetence. A statistical review of rulings in Chinese courts has shown that employers lose 90% of termination disputes brought on grounds of employee incompetence, and around 1/3 of those losses can be attributed to the employer’s failure to produce sufficient evidence. Thus, solid and convincing evidence is vital for an employer to prevail on a claim for involuntary termination on the basis of incompetence.
How to draft a job description that can be used as effective evidence for supporting an incompetence-based termination claim? There are no official standards or guidelines, and, in practice, the employer’s claim will be reviewed based on the specific facts and circumstances of the work situation. Judges in different cities or even different districts may have different opinions and follow different local practices regarding the quantum of evidence required to prove incompetence.
That said, we offer the following suggestions regarding the description of scope of work and job duties in employment contracts to facilitate proof of incompetence if a dispute should arise:
(1) Include job standards the employee is required to follow and benchmarks to measure achievement in the contract in addition to the scope of work. Although this sounds like common sense, we have seen many employment contracts listing only the job position and scope of work without including standards or benchmarks. It may be difficult to quantify standards or an employer may have a concern that detailed requirements may deter qualified candidates from considering the job. These concerns are understandable, but completely omitting job specifications often leaves an employer with few options if an employment relationship turns sour and the employee does not agree to leave voluntarily. Typically the employer must pay the employee a premium to agree to mutual termination.
(2) Don’t state the job requirements too generally or too broadly. Terms such as “satisfactorily”, “timely”, and “high standard” will likely be considered too general to be meaningful to a labor tribunal or the court in the event of a dispute. Broad specifications covering too many job responsibilities may frighten away some candidates. On the other hand, job specifications that are too strict are likely to increase the difficulty of recruiting qualified candidates. A good job specification should be reasonable and practical, balancing the employer’s demands and the employee’s practical concerns.
(3) Try to quantify some requirements to set objective standards,especially relating to work quality, efficiency and language skills expected from the employee. For example, instead of stating that the employee should possess good writing skills, the employer may specify that acceptable reports or emails drafted by the employee should not contain any major errors and no more than two or three minor errors.
(4) Carefully balance the job requirements specified in the main contract and the company policies. A common mistake that many employers and HR managers make is to rely too much on the company policies and the employee handbook for details of the rules and standards employees must meet. It should be noted that company policies are required to be formulated through a democratic conciliation process by seeking the opinions of all the employees or the employee representatives. Also, they must be read and signed by the employee for the rules in the policies and handbook to be binding on the employee. By including all the detailed requirements in separate company policies and standards employees must meet the employer increases its risk and its burden to prove in court that these policies and rules are legally valid and also bind the individual employee to the dispute.
(5) Include some catchall terms. Catchall terms are not panaceas and more often than not they will be rejected by a labor tribunal or court. That said, they serve to show the mutually agreed intentions or goals of the parties, and there should be no harm to add them to the job description, e.g., “complete other related work according to the standard and time required by the managers of the company”.
While there are surely many other factors to consider when implementing an involuntary termination by employers, we hope that the above tips will help increase your chance of prevailing in employment incidents or disputes in China by having a well-planned employment contract in place.