It’s a common scenario many organizations find themselves in when doing business in China. An employee is found to be a shareholder or director of another company and has sent customer details or other sensitive business information to that company. This raises the possibility of several issues, including that the employee may be directly competing with the employer – or aiding a competitor. It may also be possible that the employee is accepting bribes or other advantages in exchange for the employer’s business.
In many jurisdictions, the employer could investigate further by searching the employee’s e-mails, devices and computers, conducting interviews and gathering evidence. If the evidence demonstrates that the employee is guilty of misconduct, the employer could dismiss the employee. If the evidence also shows that there may have been a breach of anticorruption laws, the employer usually can take additional steps to investigate further and share the results (including personal information found during the investigation) with its lawyers, parent company overseas and, in some cases, government authorities or regulators.
In China, however, employers could find themselves facing criminal charges or labour arbitration if they do not proceed carefully. Employers must navigate China’s mosaic of data privacy safeguards as well as its protective labour laws. There are several steps employers can take to minimize the risk of prosecution, or to avoid their labour arbitration case being dismissed.
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Jennifer Van Dale is a partner of Eversheds and head of the firm’s Hong Kong and Asia Pacific employment practice
