A company in Shanghai was sentenced to compensate employees for illegal termination, but immediately dismissed the employees and extended their probationary period to six months
The labor contract stipulates a 3-month probationary period, upon which the company and employees negotiate to extend the probationary period to 6 months. However, as six months approached, the company dismissed employees on the grounds that they did not meet the hiring criteria. Does the company constitute an illegal termination? Can we agree to an extension again after the probation period expires? Recently, the Baoshan District People's Court in Shanghai concluded such a case.
In early April 2021, Mr. Wang joined a certain company as an architectural designer. The two parties signed a fixed term labor contract for a period of 3 years, which stipulated a probationary period of 3 months. The salary during the probationary period was 16800 yuan per month, and after becoming a full-time employee, it was 21000 yuan per month. The company also agreed to make up for the salary during the probationary period according to the salary standard after becoming a full-time employee. In July 2021, when the three-month probationary period was about to expire, the company negotiated with Mr. Wang to extend the probationary period to six months. In early August of the same year, the company proposed to terminate the labor relationship between Mr. Wang and his employer, citing that he did not meet the employment requirements during his probationary period. Both parties have communicated multiple times regarding matters such as resignation compensation, but have not reached a consensus.
In October 2021, Mr. Wang applied for arbitration to the Baoshan District Labor Dispute Arbitration Commission in Shanghai, requesting the company to pay compensation for illegal termination and salary differences. Due to the arbitration award not supporting Mr. Wang's entire request, Mr. Wang filed a lawsuit against the company in Baoshan Court.
Mr. Wang believes that the reason he agreed to extend the probationary period was because the company promised to become a full-time employee as soon as the period was extended. Now the company is terminating itself after extending the probationary period, which has constituted illegal termination. The company is required to pay compensation for illegal termination and make up for the salary difference during the probationary period.
In the trial, the defendant company argued that Mr. Wang performed poorly during the three-month probationary period, and the company negotiated with Mr. Wang to extend the probationary period to six months based on the purpose of continuing the investigation, without exceeding the statutory upper limit of the probationary period. Afterwards, due to Mr. Wang's poor performance, the labor relationship between the two parties was terminated due to his failure to meet the employment conditions during his probationary period. The company's actions comply with legal provisions and the court is requested to reject all of Mr. Wang's requests.
After trial, Baoshan Court held that in this case, the defendant company negotiated with Mr. Wang to extend the probationary period to 6 months near the expiration of the agreed 3-month probationary period. Although it did not exceed the statutory maximum period, the Labor Contract Law clearly stipulates that the employer and the same employee can only agree on one probationary period. In the absence of any changes in the employee's job content and position, the above-mentioned extension of probationary period is essentially a second agreed probationary period and should be invalid. Based on this, if the defendant company terminates the labor relationship between the two parties after the three-month probationary period expires and Mr. Wang fails to meet the employment conditions during the probationary period, it constitutes illegal termination. Therefore, the court ruled that the company shall pay Mr. Wang compensation for illegal termination and make up for the difference in wages during the probationary period as agreed by both parties.
After the first instance judgment, the defendant company was dissatisfied and filed an appeal. The second instance upheld the original verdict.
Regarding some legal issues involved in this case, Judge Li Sidan of the Civil Trial Division of Baoshan Court provided answers. She said that the probationary period is a period for mutual inspection and adjustment between labor and management. During this process, both parties can choose between two options. During the probationary period, the employee's salary can be lower than the regular salary. If the employee wants to terminate the labor relationship, they do not need to inform the company one month in advance, but can inform the company three days in advance. If the enterprise, after investigation, finds that the employee does not meet the employment conditions during the probationary period, it may exercise the unilateral termination right in accordance with legal provisions.
"Many companies therefore believe that employees can be dismissed at will during the probationary period, which is incorrect. The exercise of the right to terminate during the probationary period is still strictly limited by law, and only when the law clearly grants the company the right to terminate is considered legal. Li Sidan said that companies should pay special attention to the exercise of the right to terminate in the case of" it is proven that the employee does not meet the employment conditions during the probationary period ". Companies not only need to provide evidence to prove the specific fact that the employee does not meet the employment conditions, but also the termination behavior should be made before the expiration of the probationary period, otherwise it will constitute illegal termination.".
In addition, the Labor Contract Law also has clear provisions on the duration of the probationary period. For example, if the labor contract period is less than 3 months, a probationary period cannot be agreed upon, a probationary period of 3 months to 1 year cannot exceed 1 month, a probationary period of 1 year to 3 years cannot exceed 2 months, and a probationary period of 3 years or more or an open-ended labor contract cannot exceed 6 months.
