Terminating a Contract on the Grounds of Resume Fraud in China

Resume fraud cases have risen in China in recent years. This is hardly surprising as, due to China’s increasingly competitive job market, applicants are willing to take sometimes drastic measures to appeal to potential employers. This can have significant consequences for the employer, such as wasted expenditure in the recruiting and hiring process and loss of efficiency and productivity. Moreover, leaving the issue to the contract termination stage will lead to severe legal complications. Here, we examine a case study that illustrates the risks of resume fraud and detail the relevant risk management precautions that can be taken.
 
Case Study
 
Company A and Employee A signed an employment contract for a managerial role. In the following months, Company A observed that Employee A’s performance was not meeting the requirements for the role, and was displaying competency issues. Suspicious, Company A decided to run a background check, and discovered significant differences in the information provided by Employee A in their resume, and the actuality of their work experience. Company A deemed this dishonest behavior that breached the rules of PRC labor law, the employment contract and the company’s employee handbook, and therefore decided to terminate the employment contract with Employee A.
 
Employee A disagreed with the decision and filed an application with a local labor dispute arbitration committee to request a reinstatement of the employment contract. The case underwent the legal procedures of arbitration, first hearing, second hearing and a retrial. In each instance, it was heard that the termination of the employment contract was unlawful, and that the employment contract should be reinstated.
 
Legal Rights
 
An employer enjoys the right of information. It is at the discretion of the employer to approach an employee to gain this information; if they do not, the employee is not obliged to disclose anything themselves. Furthermore, an employer gains the right to terminate an employment contract only when the dishonesty of the employee constitutes fraud, as stipulated in the Labor Contract Law. Article 39 of the Labor Contract Law states that the employer is entitled to unilaterally terminate the employment contract in cases where the employee is found to seriously violate the employer’s internal regulations, or where the employment contract signed by the employee is against its real intention by means of deception or coercion.
 
A claim can be made on either of these clauses, but the evidence required will vary from article to article. In order to successfully file a case, the company needs to prove the following:

• The employee consciously submitted false information with intent to deceive or sign an employment contract against the will of the company;
• The company has clear and valid internal regulations in place; and,
• The internal regulations explicitly specify that submitting a false resume is severe enough to justify an immediate termination.

Risk Management

In order to prove this, evidence of the employee’s fraudulent information needs to be appropriately preserved. The employer also needs to make sure that the resume was submitted by the employee themselves with the knowledge of the resume being false. In cases where a resume is submitted via the internet or a third-party (i.e., under any circumstances in which the identity of the sender is hard to track), it needs to be proved that the resume was not modified after leaving the hands of the employee.  In addition to this, proof that the false information submitted in the resume has affected the performance of the employee is also required in some cases.
 
To avoid such labor disputes, employers are suggested to request a printed resume signed by the candidate stating that all the information provided is accurate and not falsified during the recruitment process. While evidence collection is crucial to safeguarding against legal procedures, conducting due diligence and background checks during the recruitment period is the most effective preventative measure, especially when hiring for positions with greater responsibility. It can be seen that without taking the relevant precautions, a company may lack the legal basis to terminate the employee.
 
Since its establishment in 1992, Dezan Shira & Associates has been guiding foreign clients through Asia’s complex regulatory environment and assisting them with all aspects of legal, accounting, tax, internal control, HR, payroll and audit matters. As a full-service consultancy with operational offices across China, Hong Kong, India and emerging ASEAN, we are your reliable partner for business expansion in this region and beyond.
 
For inquiries, please email us at info@dezshira.com. Further information about our firm can be found at: www.dezshira.com