International Labor & Employment Law Committee Newsletter

Issue: September 2012

Editor: Tim Darby | European Editor: Paul Callaghan | Latin America Editor: Juan Carlos Varela | Canada Editor: Gilles Touchette | Asia and Oceania Editor: Ute Krudewagen

China, Page 2

Shenzhen Passes First Local Legislation on Equality Between the Sexes

Jonathan Isaacs, Baker & McKenzie, Hong Kong

The Regulations on the Promotion of Sex Equality (Sex Equality Regulations), passed June 28, 2012, by the Shenzhen Municipal People's Congress Standing Committee, will become effective January 1, 2013. While various national laws and local regulations already contain provisions related to sex discrimination and sexual harassment, this is the first piece of legislation exclusively addressing the issue of sexual equality. Key provisions include the following:

  • The Sex Equality Regulations define the terms "sex equality" and "sex discrimination" and recognize the concept of "disparate impact" in a discrimination context. Further, the Sex Equality Regulations recognize certain exceptions to the rule against sex discrimination, such as affirmative action-type measures taken to expedite factual sex equality and special measures taken to protect women's physical health and safety, particularly for women who are pregnant, giving birth, or are in their nursing periods.
  • The Sex Equality Regulations specifically impose fines up to RMB 30,000 on employers that violate the sex equality principle by imposing restrictions, refusing to hire candidates, or increasing the hiring standards on the basis of the individual's sex, marriage status, or pregnancy status, during the recruitment process. The regulations, however, do not specify penalties for alleged sex discrimination in other employment-related decisions, such as promotion or termination.
  • The Sex Equality Regulations provide a detailed definition on "sexual harassment," which includes unwelcomed sexual advances, or any conduct, remarks, words, images, or electronic information of a sexual nature, and using submission to sexual advances as an express or implied condition for receiving an employment offer, promotion, compensation benefits or awards (which is typically known as quid pro quo). Employers have certain obligations with respect to sexual harassment, i.e., take precautionary measures to prevent sexual harassment, provide training to employees, and take appropriate measures if a sexual harassment incident takes place.
  • Under the Sex Equality Regulations, a separate government authority will be set up to hear any sex equality or sexual harassment claims. Such claims can also be directly submitted to the courts.

Although China has had laws and regulations specifically protecting the rights and interests of women, and generally requiring fair employment practices, for many years now, actual discrimination claims have still been relatively rare. It remains to be seen whether this new step by Shenzhen's government will encourage employees to raise complaints about sex discrimination to the government or the courts.

Guangdong Court Awards RMB 1 Million to Employee from Employer for Invention While Employed

Jonathan Isaacs, Baker & McKenzie, Hong Kong

According to a report in June, the Guangdong Province High People's Court upheld an award to an employee from the employer of RMB 1 million for a patented invention created by the employee during employment.

In the reported case, the company had been granted two patents based on two service inventions developed by the employee. In 2009, the company licensed to another entity the right to utilize one of the two mentioned patents. In 2010, the employee filed a complaint to the Shenzhen Intermediate People's Court (Shenzhen Court), claiming a total amount of RMB 20 million as the employee inventor. The employer argued that any amounts payable to the employee under the Patent Law had already been included in the bonus paid to the employee.

According to the report, the Shenzhen Court took the view that the company should pay the employee compensation for the patented invention under the Patent Law and its implementing regulations. However, since the employee failed to prove the amount of profits made by the company, the Shenzhen Court ruled that the employer should pay the employee RMB 1 million as compensation (and dismissed the other claims of the employee) by making reference to the highest amount of damages for patent infringement stipulated in the Patent Law. Under the Patent Law, this remedy should be used when it is difficult to determine the profit earned by the infringing party as a result of the infringement. The Guangdong Province High People's Court upheld the ruling of the Shenzhen court.

Under the implementing regulations of the Patent Law, if an employer is granted a patent for a service invention created by an employee, the employer should pay the employee compensation. If the company has not signed any agreement with the employee or does not have any company policies regarding the compensation amount, the employer must compensate the employee in accordance with a statutory scheme; for most types of patents, this involves remuneration equal to 2% of after-tax profit or 10% of a license fee, and a RMB 3000 reward payment.

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