Case Study In Labour Law

Is it illegal to fire an employee if he/she operates an online shop during working hours?

Background

Miss Zheng is an employee of an e-shop company and she signed an employment agreement on April 23rd, 2014 with her employer for a term of five years. In this employment agreement, there is a special clause that as long as the employment agreement is still valid, Miss Zheng may not be engaged in any same or similar work or business as her work in the e-shop, otherwise Miss Zheng shall pay to her employer RMB50 thousand as penalty.

On May 9th, 2015, Miss Zheng is running her own online shop during the working hour and was caught by her boss.

Question

Does the employer have the right to terminate the employment agreement with Miss Zheng and claim the RMB50 thousand penalty fee?

Analysis

The employer does have the right to terminate the employment agreement with Miss Zheng and claim the RMB50 thousand penalty fee.

The reasons are:

  • Pursuant to PRC Labor Law, the employer has the right to terminate the employment agreement if an employee seriously violates the labor rules in working hours. In our case, the employment agreement between Miss Zheng and her employer expressly states that Miss Zheng is not allowed to run an online shop during working hours;
  • The RMB50 thousand penalty fee is agreed by both Miss Zheng and her employer;

However, we might as well remind the employer to keep evidence for Miss Zheng’s wrong behavior such as internet record, supervision video and etc, otherwise, the employer might not be supported by the court if a lawsuit is activated.

 

(a)The decline in the growth rate of employment was associated with a sharp decline inthe growth rate of the labour force.(b)As in the past, the share of casual labour in total employment went up.(c)The number of unemployed increased from 20 million in 1993-94 to 27 million in1999-2000.(d)The decline in the employment growth in 1994-2000 was attributable to a stagnationof employment in agriculture, resulting in a drop of the share of agriculture in totalemployment from 60 percent in 1993-94 to 57 percent in 1999-2000.(e)On the other hand, employment growth in all the sub-sectors within services, such astrade, hotels, restaurant, transport, storage, communication and financial and business services, (except community, social and personal services having negativegrowth rate) exceeded 5 percent per annum (

Table-4)

. This refutes criticisms bysome economists that the substantial growth of the service sectors have createdunemployment. In fact, services are not only fastest growing, but also moreemployment generating. Consequently, the share of service sectors in employmentincreased from 21 per cent in 1983 to 26 percent in 1999-2000.

Table-3: Employment growth rates in 1972-2000 (percent)

Average Annual Growth rate (percent)PeriodPopulation Labor forceEmploymentGDPEmploymentElasticity w.r.t.GDP1972-19782.272.942.733.90.711977-19832.192.042.17

4.0

0.541983-19882.141.741.544.90.311987-19942.102.292.43

5.6

0.441994-20001.931.031.076.00.18

 Source:

Planning Commission, Government of India.

Table-4 Sectoral Employment in 1983 to 2000

Employment (percent to total)Annual growth rate (%)Sector 

19831987-881993-941999-001983to1987-881987-88to1993-941983to1993-941993-94to1999-00

Agriculture63.260.160.456.71.82.62.20.02Mining & quarrying0.70.90.80.77.41.03.7-1.9Manufacturing11.611.911.112.13.61.22.32.6Electricity, gas

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