CHINA Law and Practice Contributed by: Yang Cheng, Songshan Liu, Yan Yu and Weina Wang, Lantai Law Firm
Trade unions are informed only where required by law, most notably where unilateral termination is contem - plated under Article 43 of the Labor Contract Law, and disclosure is limited to what is necessary for statutory supervision. Full investigation reports are normally restricted to a small internal group, such as HR, legal, compliance, senior management, and, where applicable, the trade union. In short, disclosure of HR investigation conclusions is limited, purpose-driven and tightly controlled, with no general obligation to inform third parties. 6.8 Disciplinary Measures Where allegations are substantiated, the employer may impose disciplinary measures in accordance with lawfully adopted and duly published internal rules that comply with Article 4 of the Labor Contract Law. Dis - ciplinary measures must correspond to the nature and severity of the misconduct as classified under those rules. Where the misconduct meets the thresholds under Article 39 of the Labor Contract Law – such as serious violation of company rules, serious dereliction of duty, or corruption causing material harm – the employer may terminate the employment contract with immedi - ate effect, subject to sufficient evidence and proce - dural compliance. Disciplinary action must be taken within a reason - able time after the employer becomes aware of the misconduct. Reasonable time spent on investigation is acceptable, but prolonged tolerance or delay may result in the termination right being deemed waived. Before termination or major disciplinary action, the employer must complete necessary procedures, including: • informing the employee of the factual and rule- based grounds; • allowing an opportunity for explanation; and • notifying the trade union in advance where unilat - eral termination is contemplated.
There is no requirement to conduct a separate or counter-investigation once allegations are substanti - ated, provided that the facts are sufficiently estab - lished, the evidence lawful, and the procedures com - pliant. In short, substantiated allegations may support disci - plinary action up to immediate termination, with the following controlling factors:
• evidentiary sufficiency; • procedural compliance; • proportionality; and • timeliness. 6.9 Other Measures
In practice, employers often adopt organisational or governance-focused measures following an HR inter - nal investigation, regardless of whether allegations are substantiated. Such measures are non-disciplinary and aim to stabilise employee relations, address manage - ment or process weaknesses, and reduce future risk. Where allegations are not substantiated, investiga - tions may still reveal communication gaps or team tensions. Employers commonly respond with non- punitive measures such as mediation, coaching, pro - cess review or limited organisational adjustments, provided these are framed as management actions rather than sanctions. Where allegations are partially substantiated or insuf - ficient for formal discipline, individual handling is often combined with remedial measures, including: • targeted training; • clarification of approval authority; • procedural updates; or • reinforcement of behavioural standards. Even where allegations are substantiated and disci - plinary action is imposed, employers frequently sup - plement individual measures with broader responses, such as: • enhanced supervision of sensitive roles;
• anonymised internal briefings; • updates to internal rules; or
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