Zhou Qiu 4.17 US Sanctions ZTE Labor Law Issues

1. Why does the United States sanction ZTE?

 

 

The US Department of Commerce announced on April 16th that it will ban US companies from selling parts, goods, software and technology to ZTE for seven years until March 13, 2025.

The reason for the U.S. Department of Commerce’s sanctions against ZTE is that ZTE violated the U.S. restrictions on the sale of U.S. technology to Iran. In March 2017, ZTE pleaded guilty in the US Federal Court of Texas, acknowledging the sale of US goods and technology to Iran in violation of sanctions. According to a settlement agreement between ZTE and the US Treasury, the Ministry of Commerce and the Ministry of Justice, the company agreed to pay a fine of 890 million US dollars.

US Commerce Department officials said that according to the agreement at the time, ZTE promised to dismiss four senior employees and punish 35 employees by reducing bonuses or penalties. However, ZTE admitted in March this year that the company only fired four senior employees and did not penalize or reduce the bonus of 35 employees.

Ross of the US Department of Commerce said, "ZTE lied to us when it was included in the list of entities in the United States; it lied to us in the later suspension; in the final investigation, it also lied to us. ."

After the US Department of Commerce announced the sanctions against ZTE, ZTE has applied for the suspension of both H shares and A shares. For ZTE, the future will have a great impact on product development, planning, manufacturing, sales, etc., and US sanctions will undoubtedly dampen the development of ZTE.

 

Second, the US sanctions ZTE's labor law issues

 

As a labor lawyer, in addition to eating melons, I found that the US sanctions ZTE case may involve several Chinese labor law issues:

(1) Can ZTE dismiss four senior employees based on a settlement agreement with the US Department of Commerce?

(2) Can ZTE impose a fine or reduce bonus on 35 employees according to the settlement agreement with the US Department of Commerce?

(3) Can the 35 employees or/and other responsible company employees be compensated for the losses caused by US sanctions to ZTE?

 

3. Can ZTE dismiss four senior employees based on a settlement agreement with the US Department of Commerce?

 

According to the provisions of the Labor Contract Law, the legal basis for the company to terminate the labor contract unilaterally is Articles 39, 40 and 41 of the Labor Contract Law. The case does not involve the issues of Articles 40 and 41. In accordance with Article 39 of the Labor Contract Law, the reason for ZTE’s dismissal of four senior employees is most likely to be applicable to Article 39, item 2 of the Labor Contract Law, “serious violation of the rules and regulations of the employer”, or Three items were “seriously dereliction of duty, malpractice and malpractice, causing significant damage to the employer”.

 

For example, ZTE applies the dismissal of Article 39, Item 2 of the Labor Contract Law. According to the strict and rigid view of judicial practice, the following conditions must be met: (1) The rules and regulations must have clear provisions on this; 2) The democratic procedures in which the rules and regulations must be discussed and negotiated; (3) The rules and regulations must be publicized or informed to employees. As long as any of these conditions are not met, the company cannot invoke the terms to dismiss employees. Of course, in judicial practice, there are also a few courageous courts. For employees who are obviously seriously violating professional ethics and labor discipline, in the absence of effective rules and regulations, the company directly invokes Article 3 of the Labor Law and the Labor Law. Article 25, item 2 confirms that the company has legally terminated the labor contract.

 

If ZTE applies the dismissal of the third paragraph of Article 39 of the Labor Contract Law, it must prove that: (1) the employee has serious dereliction of duty or malpractice; (2) causing significant damage to the company. Violating the US ban on Iran is such a big thing that "causing major damage" should be easy to prove or self-evident. As a multinational company engaged in international business, ZTE should understand and abide by the trade rules and control measures of various countries. If it violates US sanctions against Iran, it will of course trigger retaliation and sanctions from the United States. The relevant managers should be able to identify Serious dereliction of duty." But if a staff member makes decisions and actions based on the decision of the superior leader, can the employee claim disclaimer on this ground? If it is fired, is it too embarrassing? Individuals believe that everyone should take responsibility and consequences for their actions, whether they are obeying superior instructions or rejecting superior instructions.

 

In accordance with the provisions of the Labor Contract Law, employees may claim compensation for illegal termination of labor contracts, and may also request to continue to perform labor contracts. An interesting topic is that if ZTE’s dismissal of employees, the employee filed labor arbitration or litigation, and was finally found to be illegally terminated, and the employee’s request to continue to perform the labor contract was supported. Zhongxing’s calculation is not in violation of the US Department of Commerce. What is the settlement agreement? Another interesting topic is: If ZTE negotiates with employees to terminate the labor contract and pay a certain amount of financial compensation to the employees, is it a violation of the settlement agreement with the US Department of Commerce?

 

4. Can ZTE impose fines or reduce bonuses on 35 employees according to the settlement agreement with the US Department of Commerce?

 

1. Article 35 of the Labor Contract Law stipulates that the unit must negotiate with the employee before the labor contract can be changed. Therefore, if ZTE reduces the employee bonus according to the settlement agreement with the US Department of Commerce, it may be deemed to be a unilateral change of labor contract, and there is a risk that it is deemed to be illegal. From this point of view, it is very important for the employer to develop a salary reward system that is both principled and flexible.

 

2. If ZTE imposes a fine on employees, the risk is even greater. The State Council's "Regulations on Enterprise Workers' Awards and Punishments" once stipulated that enterprises can impose fines on employees, but the regulations were abolished ten years ago. According to the burning mainstream view of the field of labor law, after the "Regulations on Enterprise Workers' Rewards and Punishments" was abolished, enterprises have no right to impose fines on employees according to the rules and regulations, let alone without rules and regulations. (Jiangsu readers should pay attention to this. Jiangsu Province has exceptions to this. The Jiangsu Province Salary Payment Regulations clearly stipulates that enterprises can reduce their wages according to the rules and regulations.) I have always had any objection to this mainstream view. superfluous.

 

5. Can the 35 employees or/and other employees of the responsible company be compensated for the losses caused by the US sanctions to ZTE?

 

Article 16 of the Ministry of Labor's "Interim Provisions on Wages Payment" stipulates that "when the laborer causes economic losses to the employer, the employer may require compensation for the loss according to the labor contract." Based on this regulation, many labor arbitrations The committee and the people's court held that if the labor contract is not stipulated or the rules and regulations are not stipulated, the employer has no right to ask the employee to compensate for the loss. The idea of ​​these people is that as long as there is no provision in the Labor Law or the Labor Contract Law, the unit has no right to ask employees to compensate for the loss. Article 90 of the Labor Contract Law only stipulates that employees who violate the law to terminate the labor contract, breach of confidentiality obligations or non-competition restrictions need to compensate the unit for losses, and there is no provision for the unit to compensate the employees for compensation losses under other circumstances.

 

My point of view is that if an employee deliberately causes damage to the unit, such as deliberately destroying the company's equipment and deliberately stealing the company's property, does the unit have no right to ask the employee to compensate for the loss? If an employee intentionally causes damage to the unit, the unit may require the employee to make compensation. Why does the unit have no right to claim compensation for the loss caused to the unit by the employee?

 

In fact, even if the Labor Law and the Labor Contract Law do not clearly stipulate, the reasons and legal basis for the compensation of the employees are very simple and clear. The labor contract is also a kind of contract. There is a contractual relationship between the employee and the enterprise. Whether it is based on the breach of contract law or the tort liability based on the tort law, the unit has the right to ask the employee to bear the liability for compensation. Therefore, the problem is not the question of whether or not to compensate, but the question of how much to lose and how to pay. Taking into account the occupational risks of employees, the interests of employees' duties and duties are attributed to the unit, so employees should not be burdened or burdened with excessive risks and responsibilities. When investigating employees' liability, employees should only bear corresponding risks according to their faults, or A small part of the liability, on the one hand, can strengthen the sense of responsibility of employees, on the other hand, it can prevent the unit from passing all risks to employees.

 

(The above is a brief legal analysis of the labor law issues that may be involved in this case based on the contents of the public report. You are welcome to leave a message.)