This article addresses several issues related to employment in cases where employees are unable to perform their duties due to administrative detention, forced detoxification or criminal charges. Specifically, the article will discuss how employers can establish reasonable rules and regulations to deal with such situations, how to legally terminate employment, and whether employers can terminate employment for reasons other than an employee’s unauthorized absence.
Part 1
If an employee is required to undergo a two-year mandatory drug rehabilitation program by the government, can the employer unilaterally terminate the employment contract if there are no relevant regulations in place? This issue has two different viewpoints.
- One viewpoint is that:
If there are no relevant regulations in the company’s rules and regulations, the “serious misconduct” clause cannot be used to terminate the contract. If the employer insists on unilaterally terminating the contract, there is a risk of illegal termination.
Since the inability to perform the employment contract is due to the employee’s own reasons, in this case, the provision of “suspension of performance” in the labor contract can be considered. Since the employee is unable to provide labor due to their own reasons, the employer is not obligated to pay remuneration. The employer can stop salary payments and seal the employee’s social security account. This will reduce many risks for the employer.
- While the other viewpoint is that (this article holds this view):
- Regarding “suspension” of the labor contract:
Although there are provisions for “suspension” in the Regulation of Shanghai Municipality on Labor Contract, there is no such provision in China’s Labor Contract Law, so the applicability of “suspension” is questionable.
The Regulation of Shanghai Municipality on Labor Contract do not specify how to handle the employee’s social insurance during the suspension period. If the employer arbitrarily freezes the social insurance, the employer may face huge compensation risks when the employee encounters a major illness (especially for drug-using employees).
Therefore, if the two parties can reach an agreement and stipulate that the employee bears the social insurance cost during the suspension period (including the employer’s contribution), it is of course the best method. However, if an agreement cannot be reached, the employer will need to bear the cost of social insurance. It can be seen that if the employer uses the “suspension” of the labor contract to handle the situation while the employee is under compulsory drug treatment, it will lead to many unfavorable risks.
- Regarding “termination” of the labor contract:
If the employer’s rules and regulations stipulate that an employee who cannot perform the labor contract due to illegal behavior (such as drug use) is deemed to have committed “serious misconduct,” the employer may consider disciplinary action, but the validity of the rules, the investigation record, proportionality, local requirements, and the exact legal basis must be reviewed before termination.
Part 2
- How to terminate employment due to criminal behavior resulting in absenteeism? If an employee is suspected of committing a crime and is awaiting trial, can the employer exercise their right to terminate the employment contract?
Article 39, Paragraph 6 of the Labor Contract Law stipulates that the employer can unilaterally terminate the contract if the employee is being pursued for criminal responsibility according to law. However, before the employee is pursued for criminal responsibility, they may be detained unjustly and it cannot be determined whether the employee is at fault or guilty. Therefore, the employer cannot easily unilaterally terminate the employment contract. The employer must wait until the employee is being pursued for criminal responsibility before exercising their right to terminate.
- How to terminate employment due to illegal, non-criminal behavior resulting in absenteeism? If the employee is detained by administrative detention or is forced into drug rehabilitation, resulting in the loss of personal freedom and inability to perform the labor contract, can the employer unilaterally terminate the contract?
If the employer’s rules and regulations state that absenteeism constitutes a serious violation of discipline rather than only “absenteeism without reasonable cause,” the employer should not treat detention or rehabilitation as automatic grounds for dismissal. Any decision should be based on a valid, communicated rule, reliable evidence, the applicable local requirements, and a legal review of the intended termination ground.
- Practical Suggestions: This article suggests that the employer’s rules and regulations should include the following provision: “If the employee’s own fault or illegal behavior results in the inability to perform the labor contract, including but not limited to being administratively detained or forced into drug rehabilitation for a specific number of days, the employer can terminate the employment contract on the grounds of serious violation of discipline.”
Employer Investigation and Evidence Workflow
An allegation, detention notice, or police inquiry should trigger a controlled fact-finding process, not an automatic dismissal. Employers should distinguish between an allegation, an administrative measure, a criminal investigation, and being pursued for criminal responsibility according to law. The Labor Contract Law published by the Ministry of Human Resources and Social Security lists specific termination grounds in Article 39, requires lawfully established workplace rules under Article 4, and requires prior notice to the trade union where Article 43 applies.
- Confirm any immediate safety, safeguarding, or business-continuity risk without assuming guilt.
- Identify the exact allegation, the source of the information, and whether an official document is authentic and current.
- Give the employee a reasonable opportunity to respond where the circumstances permit, and record the questions and answers accurately.
- Preserve original attendance records, notices, policies, acknowledgements, messages, access logs, and witness statements. Keep an audit trail instead of rewriting source records.
- Separate interim operational measures from the final disciplinary decision. Record who approved each step and why it was necessary.
- Before issuing a decision, check the employment contract, valid workplace rules, consultation and publication records, local requirements, and any applicable trade-union procedure.
Evidence Preservation and the Termination Notice
Evidence should support both the alleged facts and the legal basis used. In Supreme People’s Court Guiding Case No. 180, the court assessed legality by reference to the reasons stated in the termination notice and did not accept different reasons added later. The case also illustrates the risk of relying on a disputed attendance record without supporting evidence.
A decision file should therefore contain the applicable rule, evidence that the rule was lawfully adopted and communicated, the investigation record, the employee’s response, the proportionality analysis, required approvals, and proof that the final notice was delivered. The stated reason should match the evidence available when the decision is made.
Suspension, Pay, and Social Insurance
Employers should not assume that detention, an investigation, or an inability to attend work automatically creates a nationwide right to suspend the contract without pay or stop social-insurance contributions. The answer can depend on the city, the employment contract, lawfully adopted rules, the employee’s status, and the form of any written interim agreement. Before withholding salary, changing benefits, or suspending contributions, obtain advice from qualified China labor counsel and confirm the local implementation rules.
Employee Personal Information and Confidentiality
Investigation files may contain sensitive allegations, identification data, medical information, or official records. Article 13 of China’s Personal Information Protection Law permits processing when necessary for human-resources management under lawfully formulated labor rules or collective contracts, among other legal bases. Employers should still collect only what is necessary, restrict access, use secure storage, set a retention period, and avoid circulating unverified allegations beyond the decision team.
Manager Checklist Before Discipline or Termination
- Is the employee’s actual status confirmed by reliable evidence rather than rumor?
- Does the proposed ground appear in a valid and communicated rule or in applicable law?
- Has the employee response been recorded and considered?
- Are pay, social insurance, access, and data-handling measures separately justified?
- Does the draft notice state only the facts and grounds that the employer can prove now?
- Have local counsel and, where applicable, the trade union reviewed the process?
Frequently Asked Questions
Can an employer terminate solely because an employee has been detained or accused?
There is no automatic rule that every allegation, detention, or investigation justifies termination. The employer must identify a legally available ground and prove the relevant facts and procedure. A separate, well-evidenced serious breach of valid workplace rules may require a different analysis from criminal responsibility under Article 39.
Can the employer suspend the employee without pay?
Do not assume so. The answer may turn on local rules, the contract, valid workplace policies, the employee’s actual ability to work, and any lawful written agreement. Salary and social-insurance changes should be reviewed before implementation.
What records should the employer preserve?
Preserve source documents, attendance and access records, investigation notes, employee responses, policy acknowledgements, delivery evidence, and the decision approval trail. Limit access and do not alter original records.
Legal review: This section provides general operational information, not a case-specific legal opinion. Any suspension, pay change, disciplinary sanction, or termination should be reviewed by qualified China labor counsel before implementation.
