( For reading purposes, the partial content of the case has been deleted )

Ms. S. is an international school teacher and signed a labor contract with the school. The school applied a foreign specialist certificate for her till contract validity period.

 The main contractual articles are as follows:

Article 8 stipulates the relevant circumstances of "termination of employment". 

Article 12 stipulates that "if either party violates this employment agreement due to its own fault, the breaching party shall be liable for breach of contract according to the performance of the contract. If both parties breach this employment Agreement due to their own fault, they shall bear the corresponding responsibilities according to the specific circumstances. Any loss caused by the fault of either party shall be compensated by the party at fault."

Article 18.1 provides that “this Employment Agreement shall be governed by and construed and executed in accordance with the laws of the People's Republic of China.”

In March 2021, the principal of school sent an email to employee S, informing：

her of an upcoming disciplinary hearing. The allegations against S included that she had encouraged her minor son to provide false testimony against other colleagues, knowing the testimony was untrue and intended to harm the reputations and well-being of those colleagues, thereby breaching standards of honesty and trustworthiness. The email also detailed the investigative process concerning S’ actions.

In April 2021, following the investigation, the school issued a termination notice to S. The school asserted that S was aware of and had encouraged her son to make false statements against a colleague, aiming to damage the colleague’s reputation and breached integrity.

S responded by applying for arbitration at Shanghai Labor Dispute Arbitration Commission, seeking compensation for what she claimed was an illegal termination of her contract. The Arbitration Commission ruled in favor of S, supporting her claim for compensation. Dissatisfied with this outcome, the school subsequently filed a lawsuit, challenging the arbitration decision and seeking a ruling that it should not have to pay compensation for the alleged illegal termination."

During the arbitration stage, the school had some problems with its litigation strategy, which did not yield satisfactory results. In the first instance litigation proceeding stage, the school appointed Lawyer Wen Ming, the senior partner of Shanghai I-Land Law Office, to present them. Lawyer Wen conducted a comprehensive analysis and identified that the key issue of the case was application of law. 

The school alleged that S had encouraged her son, a minor, to provide false statements against other colleagues, fully aware that these statements were untrue and intended to harm the reputation and welfare of her colleagues. This action was deemed contrary to the principles of good faith. However, the school did not furnish adequate evidence to substantiate the claim that the termination of S' employment was justified.

The court determined that S, being a foreigner employed in Chinese Mainland, is entitled to her basic labor rights such as minimum wage, working hours, rest and vacation, safety and health protections, in accordance with relevant regulations. For other matters not explicitly covered under these stipulations—such as other labor rights and obligations, and the establishment and maintenance of labor relations—the parties are permitted to make agreements based on principles of equality, voluntariness, and autonomy of will.

In this instance, since there was no clear agreement between the school and S regarding the specific liabilities involved in the termination of the employment contract, S' claim for compensation due to the alleged illegal termination of her labor contract lacks both contractual and legal basis. Consequently, the court ruled in favor of the school, supporting its request to deny compensation for the illegal termination of the labor contract.

In conclusion, the court of first instance ruled that the school was not required to pay compensation for the illegal termination of the labor contract.

S appealed against the verdict of the court of first instance.

S contends that the school's basis for terminating the labor contract is in accordance with the Chinese Labor Contract Law. Additionally, Article 18.1 of the labor contract explicitly states that 'This employment agreement shall be governed by and construed in accordance with the laws of the People's Republic of China.' Therefore, S argues that if the school terminates the contract in accordance with the Labor Contract Law, it is obligated to pay economic compensation as stipulated by the same law.

Regarding this matter, Lawyer Wen Ming contended that the contract was ambiguous about which specific laws were applicable and did not clearly define the terms for termination liability. Consequently, she argued that S' demand for compensation for the alleged illegal termination of the labor contract lacked contractual and legal basis. The court of second instance concurred with the judgment of the first instance court, supporting Lawyer Wen Ming's argument, rejecting S' appeal, and upholding the original verdict.

With the growth of employment of foreign employees, it's crucial for employers to address potential labor compliance risks effectively. Employers have both the obligation and the capability to manage these risks within a limited scope.

In this specific case, the school faced a significant challenge during the legal proceedings: due to improper storage, the surveillance video which was the crucial evidence was not preserved correctly. This error prevented the school from presenting the original evidence during court cross-examinations, which results in failing to conclusively prove the legality of the contract termination on part of the school.

Despite these setbacks, Lawyer Wen Ming adopted an innovative legal approach. She moved beyond conventional tactics and focused on the application of law, ultimately protecting the client's interests successfully. Lawyer Wen Ming recommends that employers involved in foreign-related employment relationships consider the following additional factors, besides retaining relevant evidences:

Internal rules and regulations serve as the cornerstone for any employer. Enterprises have the capacity to devise, implement, update, and repeal these rules and regulations to align with both legal standards and their unique organizational characteristics. This process is crucial for managing internal personnel and addressing specific issues effectively. Additionally, these rules enable workers to anticipate the processes and outcomes of their labor, thereby motivating them to be fully engaged in their work and strive for their remuneration.

In this particular case, both the labor contract and the school's specific rules and regulations clearly stipulate the expectations for teachers' conduct and particularly address dishonest behavior. This establishes a normative foundation that was instrumental in the subsequent legal proceedings.

In handling labor-related cases, the occupational particularities of employees must be carefully considered. This is especially crucial in instances of 'unilateral termination of labor relations by the employer,' where the professional particularities of the employee should be a primary consideration. For example, in the apparel retail industry, 'mislabeling' might be treated as a common disciplinary violation. However, in the pharmaceutical industry, the same act could be seen as a grievous offense with potential life or death consequences.

In the context of this case, the employer is an international school—a place of the educating and training underage children of those who come to work in China from allover the world with different professionals. As the ancient saying goes, 'Morality is the teacher, and the body is the model.' Consequently, schools impose higher moral standards on teachers, which is explicitly reflected in both the school's rules and regulations and its labor contracts. Honesty and integrity are foundational expectations for educators within such institutions.

However, in this case, the teacher, referred to as S, was aware that her son could not have witnessed the dispute in question, yet she encouraged him, a minor, to commit perjury and make false statements during the school's investigation. Despite the school conducting two hearings and presenting surveillance video evidence, S persisted in her dishonesty. Given these circumstances, it is justifiable for the school to terminate S' employment, which is in alignment with its ethical standards and disciplinary protocols.

In Shanghai, the management of labor disputes involving foreign employees operates under a framework that respects the autonomy of the parties, subject to the administrative permission. Specifically, the labor contract between an employer and a foreign employee who has received approval for employment should clearly define several key aspects: the term of employment, position, remuneration, insurance, working hours, conditions for termination of the employment relationship, and liability for breach of contract. This approach allows both parties to negotiate these elements to some extent.

However, it's important to note that not all aspects of the employment relationship are subject to negotiation. According to Article 2 (1) of 2006 Shanghai High Court's Answer to Several Questions on the Trial of Labor Dispute Cases, certain labor standards must adhere strictly to national regulations. These include the minimum wage, working hours, rest and vacation periods, and labor safety and health. Therefore, in these specific aspects, the provisions of the labor contract must align with the prevailing labor laws and regulations to ensure that foreign workers receive the same legal protections as domestic workers.

This framework ensures that while employers and foreign workers in Shanghai can negotiate many terms of employment, while critical labor standards that impact the fundamental rights and safety of workers are non-negotiable and shall be consistent with national laws and regulations.

Lawyer Wen Ming's ability to 'turn defeat into victory' in a challenging legal scenario can be attributed to her extensive experience and deep expertise in labor law. With over a decade of practice in legal matters with international elements, Lawyer Wen Ming has developed a profound understanding of labor trial practices and trends. Her keen observations and strategic insights are originated from her years of active engagement in the field of labor law.

Lawyer Wen Ming’s expertise is well-recognized by her peers, she therefore is a distinguished member of the Labor and Social security Committee of Shanghai Lawyers Association, serving in both its 11th and 12th terms and is regarded as a Professional Labor Law Lawyer recognized by Shanghai Lawyers Association.

This combination of practical experience, specialized knowledge, and professional recognition underscores Lawyer Wen Ming's capability to adeptly navigate complex labor disputes and secure favorable outcomes for her clients.