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Asia Briefing

Terminating a Contract Over Résumé Fraud in China

Terminating_1464854315_54103Résumé 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 résumé fraud and detail the relevant risk management precautions a company can take.

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 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 his résumé and his actual 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, the ruling body determined that the termination of the employment contract was unlawful and that the employment contract should be reinstated.

Legal Rights

An employer enjoys the right to information. It is at the discretion of the employer to approach an employee to gain this information; if it does not, the employee is not obliged to disclose anything. 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 have seriously violated 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
  • The internal regulations explicitly specify that submitting a false résumé is severe enough to justify an immediate termination

Risk Management

In order to prove this, the employer needs to appropriately preserve evidence of the employee’s fraudulent information. The employer also needs to make sure that the employee submitted the résumé himself with the knowledge of it being false. In cases where a résumé is submitted via the internet or a third party (i.e., under any circumstances in which the identity of the sender is difficult to track), the employer needs to prove that the résumé was not modified after leaving the hands of the employee. In addition, some cases require proof that the false information submitted in the résumé has affected the performance of the employee.

To avoid such labor disputes, we recommend that during the recruitment process, employers request a printed résumé signed by the candidate stating that all the information provided is accurate and not falsified. While evidence collection is crucial to safeguarding against legal procedures, conducting due diligence and background checks during the recruitment period is the most effective preventive measure, especially when hiring for positions with greater responsibility. 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 American investors 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, including liaison offices in Boston and Waltham specifically established to support our American clients, we are your reliable partner for business expansion in Asia and beyond. For inquiries, please email us at [email protected]. For further information about our firm and how we can support American investors in Asia, please visit our North American Desk.