September 22 2020

Diversity and inclusion (“D&I”) values are becoming increasingly important in the management of today’s multinational organisations. Recent events, such as the Black Lives Matter protests and a landmark decision prohibiting LGBT discrimination by the Supreme Court in the United States1, have brought to the fore issues of social disparity in all areas, including workplace inequality and discrimination. Addressing these issues to develop an inclusive workplace for all employees is one of the key pillars of many organisations’ sustainability goals. While China is not well known for promotion of workplace diversity or inclusion, recent developments have drawn interest and are seen as steps in the right direction. We reported on new rules regarding sex discrimination previously here (link). This article looks at a landmark case on transgender rights and recent changes on sexual harassment rules in China, which should be relevant to organisations seeking to address D&I issues in the country.

A landmark LGBT case in China

This case involves a transgender woman who underwent male-to-female sex reassignment surgery during employment in 2018. Her family name is Gao and she joined Beijing Dangdang Information Technology Co. Ltd. (“Dangdang”), a famous E-commerce company in China as its Product Director in 2015. On 16 April 2018, Gao was diagnosed with gender incongruence by the Shanghai Mental Health Center, and required surgery. On 27 June 2018, Gao applied for sick leave to her supervisor through WeChat and was then hospitalized for surgery on the same day.

She was discharged from hospital on 19 July 2018, with doctor’s advice to take a month off from work and a hospital medical certificate suggesting a full two-months’ rest after the surgery. During Gao’s leave, she submitted her leave applications through the company’s system several times. The leave applications were approved by her supervisor but were not approved by the company’s human resource administrator.

On 6 September 2018, Dangdang sent a notice of termination of employment to Gao, terminating her employment on the grounds of “continuous absenteeism”.

Proceedings

Gao initiated labor arbitration proceedings requesting reinstatement of her employment. She was supported in her claims. Dangdang appealed to the District Court which affirmed the earlier decision. Dangdang then further appealed to the Beijing No. 2 Inter-mediate People’s Court (“the second-instance court”).

The main contention by Dangdang was that Gao did not comply with the company’s sick leave application procedures as she applied for sick leave on the same day she was hospitalized and her leave was not approved by human resources, therefore the company was justified to refuse its approval of her sick leave and terminate her employment based on continuous absenteeism. However, Gao contended that her dismissal was discriminatory owing to the company’s transphobia, which was evidenced by a letter issued to her by Dangdang on 22 July 2019. In this letter, Dangdang still addressed Gao as “Mr” after her gender affirming surgery, referred to Gao as a “mentally ill patient” and claimed that both her female and male colleagues were strongly opposed to her using the bathrooms.

The second-instance court held that although Gao did not strictly comply with the company’s leave application procedures, this does not justify summary dismissal on the basis of continuous absenteeism. The reasoning is that Dangdang failed to provide a clear leave policy in its employee handbook that defines “emergency” explicitly, that states leave must be requested in advance, or that specifies leave without prior application in a non-emergency situation equals absenteeism. In taking this line of reasoning, the court recognized that sex reassignment surgery is a particular type of procedure that is very private to the individual and therefore it’s not unreasonable that the person may not decide until the last minute to undergo the surgery. Further, Dangdang’s employee handbook did not go through the consultation process before it was introduced to the employee population as required by the law. On 3 January 2020, the second-instance court made a final judgment, confirming the lawfulness of Gao’s leave, mandating Dangdang to reinstate Gao as its employee.

As the claim was wrongful termination of employment, the above reasoning on the lack of policy basis to terminate was determinative of this issue and it was not essential for the second-instance court to comment on the discrimination issue further. Nevertheless, the second-instance court urged Dangdang to recognize Gao’s new gender identity and to allow her to use the female toilets. In order to support Gao’s legally recognized identity as female, the second-instance court cited the Reply of the Public Security Administration of the Ministry of Public Security on Issues concerning the Change of Gender under the Household Registration for Transsexuals, which permits a citizen who has been through a transsexual operation to apply for change of gender under the household registration.

The second-instance court went further to deliver a lengthy judgement, encouraging people to learn to accept new things gradually as modern society becomes more diverse and many new phenomena are emerging. It mentioned that although most people are accustomed to understanding society based on the understanding of biological gender, there are still some people who have to express their gender identity according to their own life experiences. Hence, re-examination and recognition of such persistent social expressions is needed. Rather than advocating and promoting discrimination of transsexuals, the court expressed its wish to respect and protect the personality, dignity and legitimate rights of transgender people based on the cherishment of the dignity and rights of citizens.

What it means for employers: This case has a few practical implications but the wider social implications are even more notable. First, on the practical side, this case once again demonstrates that it is important for employers to have internal policies clearly articulating rules with defining terms, citing situations and giving examples. Besides, under the Article 4 of Labor Contract Law, the employer is obliged to inform and consult their employees on policies which will directly and substantially affect their interests. In addition, correspondence in contentious situations likely leading up to litigation should be thoughtfully drafted to avoid the impression of being overly harsh or discriminatory against the employee.

On the wider implications, while there are no specific laws in China that expressly protect LGBT employees from discrimination in the workplace, the judgment made it clear that if a transgender individual’s identity has been registered in accordance with laws, his/her changed identity is legally recognized and the employer should treat the employee as the changed gender. However, as the Chinese legal system does not recognize judicial precedents as a source of law, it is hard to say if this case would serve as an exemplification, leading to more similar cases in favor of employees of a protected class. Although the PRC Civil Code does not explicitly state the right to be transgender, it does incorporate personal rights as an independent part, which codifies sexual harassment for the first time and is deemed as a step forward for China’s legislation. The next section of this article examines these recent changes under the PRC Civil Code.

New laws on sexual harassment in China

On 28 May 28 2020, China’s first Civil Code (“Code”) was adopted at the third session of the 13th National People’s Congress (NPC) and will take effect on January 1, 2021. The new Code, as a national law, addresses sexual harassment in the workplace.

For years, owing to the absence of a clearly worded definition of sexual harassment and specific punishments for acts of sexual harassment, remedies available to victims of sexual harassment in China are relatively limited. It was not until 1 January 2019 that victims of sexual harassment have been able to bring lawsuits under “sexual harassment liability disputes” as the cause of action. With a clear definition of sexual harassment for the first time in China’s national legislation, the Code has lasting legal ramifications.

Provisions

Article 1010 of the Code stipulates that “Where a person sexually harasses another person against his or her will through verbal behavior, words, images, physical behavior, or other forms, the victim has the right to request the perpetrator to assume civil liability according to the law.

Government agencies, enterprises, schools and other entities shall take reasonable measures of prevention, acceptance of complaints, investigation and handling, so as to prevent and cease sexual harassment conducted by violators by making use of their powers, supervisor/subordinate relationships, etc.”

Implications

What constitutes sexual harassment?

Article 1010 is incorporated in the second chapter (Right to Life, Right to Body, and Right to Health) of the fourth part of the Code (Personal Rights), making it clear that sexual harassment is an infringement of personal rights.

Offering China’s first national definition for sexual harassment, the Code expands the scope of protection. Prior to the promulgation of the Code, only women were protected against sexual harassment by the Chinese laws such as the Law on the Protection of Women’s Rights and Interests2and the Special Rules on the Labor Protection of Female Employees3. Unlike the pre-existing legislations, under the Code, sexual harassment against men may also fall into the legally prohibited category.

As to the question of what type of situation a sexual harassment case may fall under, the first sentence of Article 1010 lists several examples to demonstrate the common acts of sexual harassment and emphasizes that the core issue is whether those acts are against a person’s wishes. The Code does not clarify how to determine if there is a violation of the victim’s will. Generally, the reasonable person standard may apply. For instance, if the victim has expressed explicit rejections to certain behaviour, such behaviour is likely to be deemed to constitute sexual harassment.

What are the obligations of employers and when will they be found liable?

Another point worth noting is that the Code attempts to prevent and curb sexual harassment by imposing legal obligations on employers. The second sentence of Article 1010 requires employers to provide an internal mechanism for employees to lodge complaints and to take reasonable efforts to prevent sexual harassment in the workplace. Prior to the Code, only some legislation have briefly touched on the obligations of employers to prevent workplace sexual harassment. Now the Code explicitly states that employers can be liable for sexual harassment in the workplace, especially for their failure to perform their obligations. If employers fail to comply with the law, they may bear tort liability under Article 1010, 1165 and 1191.

What it means for employers: Though the Code holds employers responsible for preventing and addressing sexual harassment in their workplaces, it does not lay out specific guidelines for enforcement. Hence, it remains unclear whether the stringent legislation will be practically effective and be enforced strictly. Nevertheless, employers are still advised to be well prepared for this new law and take action such as reviewing current disciplinary policies and adopting procedures for receiving and handling sexual harassment complaints, in order to provide a safe working environment free of sexual harassment.To view all formatting for this article (eg, tables, footnotes), please access the original here.

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