Coconut Palm’s Recruitment Ad Violates Chinese Labor Law

​Coconut Palm Group is a well-known coconut drink enterprise in China. It recently posted a recruitment advertisement which widely triggered public criticism, in which the company asked candidates to sign a commitment letter and promise to work for the company for their entire working life. Coconut Palm Group even required the candidates to pledge their houses as a guarantee for the lifetime labor contract. Now Coconut Palm Group has deleted this controversial recruitment advertisement and apologized for its “improper language” which caused a negative social impact.

Below we have put forward 2 key issues enterprises should raise attention to when posting recruiting advertisements.

1. Employers shall not seize properties or demand guarantees from the employees. According to Chinese Labor Laws and Regulations, it is illegal for the employer to charge any deposit, guarantee fund or mortgage payment from the employees. If an employer violates the law by seizing property from employees as guarantee, it will be imposed a fine of not less than RMB 500 and not more than RMN 2,000 for each employee. Coconut Palm Group is likely to be punished if seizing houses as guarantees from its employees and be liable for damages to the employees.

2. Employees are entitled to the freedom to quit the job. The employee can always terminate the labor contract upon giving his/her employer a 30-day prior written notice. Under the several circumstances specified in Article 38 of Chinese Labor Contract Law, the employee can even quit the job without the 30-day prior notice. Coconut Palm Group violates the law by demanding employees to serve the company for their entire working life. Meanwhile, the so-called commitment letter has no legal effect under Chinese Labor Law.

The probable purpose for enterprises like Coconut Palm Group to seize properties from employees is to retain the talents and stop employees from switching jobs. However, what Coconut Palm Group did is not a wise choice. “Enterprises should always keep in mind of the compliance issues when taking measures to attract and retain employees.” said Feng Shi, Yun Ya Labor Law lawyer. “It is suggested to solve the problem of staff turnover in a legitimate way, such as applying rules of service term or non-competition obligation.” For further legal advice, please do not hesitate to contact Yun Ya lawyers.