By Jiang Junlu and Wu Mengqiu King & Wood Mallesons‘ Commercial & Regulatory group
According to the report of Legal Daily on October 24th, the Legislative Affairs Commission of the Standing Committee of the National People’s Congress (the “Legislative Affairs Commission”) respectively sent letters to five local people’s congresses in Guangdong, Yunnan, Jiangxi, Hainan and Fujian. It is suggested that these congresses amend provisions of local regulations on population and family planning based on the reality of each province, regarding the dismissal or termination of employment contracts with employees who have more children than that are allowed by the Law on Population and Family Planning (the “Family Planning Law”) (“unplanned childbirth”).
The official in relevant department of the Legislative Affairs Commission stated that the provisions of the relevant local population and family planning regulations should be amended during the implementation given the fact that the reality has significantly changed compared to when these regulations were promulgated. For regulations that are difficult to be adjusted in a short period, they should be enforced in a different manner, at least reducing the intensity of enforcement so as to adapt to new times and policies and meet the reform and development requirements, which is also intrinsic requirement for the principle of appropriateness in legislation.
Once published, the news has caused a lot of attention. Whether employers can dismiss employees on the basis of unplanned childbirth has always been a big social concern. Nevertheless, the standards of local judicial practice vary from place to place. Under the background of population and family planning policies change, terminating the employment contract on the basis of unplanned childbirth obviously no longer meets the requirement of the new age. Thus, for the first time, the Legislative Affairs Commission points out the direction for local practice on the issue of “Dismissal Based on Unplanned Childbirth” through filling system.
“Dismissal Based on Unplanned Childbirth” in Local Regulations Do Not Exceed The Limit Imposed By Family Planning Law
According to Article 42 of the Family Planning Law, in addition to social upbringing charges, where the person who does not follow the birth planning policy is an employee of a state organ (in which case, he or she is a “public official”), he or she shall be given administrative punishments in accordance with law; other employees except for public officials shall be given disciplinary punishments by the institutions or organizations to which they belong. But the Family Planning Law does not elaborate on the “disciplinary punishments”.
Accordingly, local regulations have further explanations on this article and further interpret “disciplinary punishment” as dismissal/termination of contract. For example，Article 33 of the Regulation of Yunnan Province on Population and Family Planning (2016 Amendment) provides that: Whoever violates this regulation bearing one child outside the birth-control plan, social upbringing fees shall be imposed upon both of the couple in light of the Management Measure of Yunnan on Fees for Social Upbringing and following rules: (1) If the person is an employee of a state organ, state institution or social organization, he or she shall be given dismissal punishment; (2) If the person is an employee of a company, his or her employment contract shall be terminated.
According to Article 72 (1) of the Legislation Law, the provincial people’s congress and its standing committee is entitle to promulgate local regulations, in accordance with the specific circumstances and actual needs of its administrative region, provided that such regulations do not contravene the Constitution, laws, and administrative regulations. Therefore, the provisions of local regulations conform to the requirement of the Legislation Law. In addition, according to Article 7 of the Family Planning Law, enterprises, institutions, and citizens shall assist the people’s governments in the implementation of population and family planning. And Article 12 also requires enterprises and institutions fully carry out the family planning tasks. With large pressure on family planning tasks, local statutes further interpret “disciplinary punishment” as dismissal, which is in line with the legislative purpose and spirit of the Family Planning Law.
Local Regulations on “Dismissal Based on Unplanned Childbirth” Do Not Violate Employment Contract Law
In order to protect the company’s employment autonomy, Article 39 of the Employment Contract Law entitles enterprises the right of unilateral termination. Meanwhile, to prevent enterprises misusing such right, the Employment Contract Law lists six lawful situations where enterprises can terminate employment contract, including “the employee seriously violates the rules and procedures set up by the employer”. Hence, there are voices that since the Employment Contract Law does not equip employers with the power to terminate contract based on the violation of the Family Planning Law, local regulations are invalid as it in violation with Employment Contract Law.
Nevertheless, the aim for Employment Contract Law listing the six legal grounds is to prevent employers recklessly or arbitrarily terminate the employment contract, while termination on the basis that “the employer violates provisions of laws or regulations ”obviously do not belong to recklessly or arbitrarily termination. Thus, the Employment Contract Law does not exclude the termination based on the violation of laws and regulations. Therefore, it is our opinion that “termination based on the violation of laws and regulations “, as a fallback provision, is implied in Article 39. That is to say, even if the Employment Contract Law does not directly include this kind of situation into list where employers can unilaterally terminate the contract in Article 39, this is intrinsic in the Employment Contract Law. Thus, violating provisions of laws and regulations can be used as the basis for employers to terminate contracts.
The Essence of “Dismissal Based on Unplanned Childbirth” Dilemma Is The Coordination Between Labor Rights Conferred by the Employment Contract Law And The Birth Rights of Employees Empowered in Family Planning Law
As the Employment Contract Law explicitly lists “serious violation of the rules and regulations of employers” as one of the situations for employer to unilaterally terminate the contract, employers can exercise their autonomy by making “Employee Handbook” or other internal rules. In fact, we have seen a lot of cases where there are provisions in employee handbook stating that violation of the national family planning policies and regulations can be a ground for employer to immediately dismiss employees.
With family planning policy as one of the fundamental Chinese nation-wide policies, it is not inappropriate for employers to request employees to comply with the family policy with the purpose of ensuring the vigorous implementation of the fundamental national policy and reasonable arrangement of production and operation plan. Therefore, by listing violation of family planning policy as serious violations of company’s rules and regulations, the company does not violate the national laws, regulations and policy provisions.
Thus, even in the absence of local regulations on population and family planning, in the current legal framework, employers can still legally dismiss employees based on internal regulations. Thus, the essence of legal dilemma is not that local regulations violate the Family Planning Law or Employment Contract Law, but in fact lies in the existing conflict between the labor rights conferred by the Employment Contract Law and the birth rights of the employees empowered in Family Planning Law.
In Order To Radically Resolve the Legal Dilemma of “Dismissal Based on Unplanned Childbirth”, It Is Required To First Amend Family Planning Law, and Further Revise Local Regulations And Internal Rules In A “Top-To-Down” Method
The Report of 18th National Congress of the Communist Party of China (“the 18th Report”) explicitly pointed out that “adhere to the basic national policy of family planning, improve the quality of birth population, and gradually improve policies to promote long-term balanced development of population.” Compared with the 18th Report, the 19th report no longer includes principles related to the adherence to the basic national policy of family planning; instead it emphasizes to promote family planning policy with the development of economic and social policies, and reinforce the research of population development strategy, which reflects the adjustment direction of population and family planning policy.
The policy is an important guideline for legislation, and legislation should actively adapt to the needs of social development and the policy. The local practice is the driving force for the coordination of legislation and social needs. Nevertheless, the resolution of “Dismissal Based on Unplanned Childbirth” dilemma cannot solely depend on the amendment of local family planning regulations. Meanwhile, local regulations would undermine the authority of law if the changes break the current legal framework.
Therefore, changes of the policy should be first reflected in the Family Planning Law. After the Family Planning Law being revised, local regulations should be promulgated and adjusted in accordance with the policy and law. Finally, the employer will make the revision of the internal regulations based on the new laws and regulations. From the national law level to the local regulations, and then internal rule of the employer, a ‘top-to-down’ adjustment shall be made to adapt to the new era, in order to radically solve the “Dismissal Based on Unplanned Childbirth” dilemma and protect the legitimate rights and interests of employees.
The essence of “Dismissal Based on Unplanned Childbirth”dilemma is not that local regulations exceed the limits of the Population and Family Planning Law or the Employment Contract law; instead, it lies in the existing conflict between the labor rights conferred by the Employment Contract Law and the birth rights of the employees empowered in the Family Planning Law. Therefore, to address the “Dismissal Based on Unplanned Childbirth” issue can not only rely on the amendment of local regulations on population and family planning. It is our opinion that the radical solution is to amend the Family Planning Law in the first place in order to meet the trend of the new area, and further to revise local regulations and company’s internal rules.