Case Study: Replacement and Compensation for Pregnant Employees in a Corporate Dissolution

Event Replay

 Case Study: Replacement and Compensation for Pregnant Employees in a Corporate DissolutionOn March 1st 2006, a Chongqing tools company employed Ms. Zhang. In June 2015, the company’s shareholders decided to dissolve the company due to its poor performance and failure to achieve the expected operating results and made a shareholder meeting resolution. At this time of the company’s poor performance, Ms. Zhang was 3 months pregnant. The company then, made a dissolution announcement to all of its employees and sent the employment end notice to each of them. Furthermore, the company negotiated on the execution of the compensation agreement and calculated the severance based on each employee’s years of service for the company.

In September 2015, Ms. Zhang initiated a labor arbitration before the labor dispute arbitration commission at the company, claiming against the company for her living costs, maternity-leave salary, birth-giving expenses and other benefits she was entitled to during the pregnancy, confinement and nursing period (hereafter “the benefits”). The company contested the claim, refusing to pay the benefits. In the end, the arbitration commission did not uphold such claims.

Analysis

Case Study: Replacement and Compensation for Pregnant Employees in a Corporate DissolutionAs there is no specific local regulation or normative document in Chongqing expressly setting forth ex-Gratia (legal jargon which means given as a favor or gratuitously where no legal obligation exists) payment to pregnant employees in case of corporate dissolution, the arbitration commission did not uphold the claim of the applicant for the benefits.

In issue of special protection for pregnant employees involved in cases such as corporate dissolution and liquidation is a contentious focus in the current employment law practices in China. As stated above, due to the fact that there are no consistent and definite legal provisions in cases like this, the practices and judicial trial practice guides differentiate depending on the area or district. To a certain extent, it is to the disadvantage of the employees who are pregnant or who are in confinement/nursing periods.

In order to protect employee interests (especially, to take particular care of the special employees in weak positions) and facilitate liquidation, ideally, it would be defined and refined legally under the same standard and with practical and flexible measures. However, there still remains areas of improvement on such regulations in China.