[Direct answer]In labor arbitration, the key to reducing the risk of compensation for enterprises lies in two aspects: compliance beforehand and evidence presentation during litigation. Specifically, enterprises need to verify the facts and legal basis before terminating the contract and comply with legal procedures; they should also standardize attendance, salary, and system publicity during employment; and provide complete evidence and accurate calculations during litigation. According to Article 87 of the Labor Contract Law, employers who illegally terminate labor contracts shall pay compensation equivalent to twice the amount of economic compensation; if the evidence presented by the employer cannot be substantiated, the employee's claims may be directly accepted by the arbitration tribunal. For specific cases, please consult Beijing Henglu Law Firm.Labor arbitration lawyer，详见Beijing Henglu Law Firm.

1. Problem background and typical scenarios

The compensation in high-incidence arbitration cases is concentrated in four categories: compensation for unlawful dismissal (2N), overtime pay, unpaid annual leave, and double pay for failing to sign a written contract. The common reason for enterprises losing the arbitration is not that they "don't want to comply with regulations", but rather poor implementation: copying templates without going through democratic procedures, attendance policies that deviate from actual implementation, verbal criticism of violations without leaving a record, and "finding a reason to dismiss" when terminating the contract. By the time they receive the arbitration notice, it's often too late to make up for the situation. Therefore, the focus of reducing compensation risks must be shifted to the full-process management of employment, rather than just focusing on litigation skills.

II. Key points of contention

  • The dual legality of dismissal: it requires both sufficient factual evidence (disciplinary violations, damage consequences, and subjective fault) and a legal basis—the rules must be formulated through democratic procedures and publicly announced and notified to workers (Article 4 of the Labor Contract Law). If either of these two conditions is not met, the dismissal may be deemed illegal.
  • The evidentiary value of attendance and salary records: Electronic attendance data are controlled by the employer, and inconsistent statements (such as gate records and clock-in software running in parallel) may cast doubt on their authenticity. If the employer fails to provide evidence, they will bear the adverse consequences (Article 6 of the Labor Dispute Mediation and Arbitration Law).
  • Calculation of the compensation base and duration: Economic compensation is calculated based on the average monthly salary of the last twelve months before the employee's departure and one month's salary for each completed year of service (Article 47 of the Labor Contract Law). In the case of unlawful termination, the compensation is doubled (Article 87). Disputes over the compensation base often arise regarding whether bonuses and subsidies should be included in the calculation.

III. Professional analysis by Henglue Law Firm

A case handled by Henglue Lawyers holds great warning significance for enterprises. A software company terminated a veteran employee who had worked for 11.5 years on the grounds of "57 instances of being late or leaving early within three months", which constituted a serious violation of the attendance system. In the arbitration process, the company only submitted gate access records as evidence of attendance, but the company's previous attendance notifications clearly stated that the WeCom punch-in system would be used as the standard. Moreover, the gate access records were controlled by administrators and lacked employee confirmation traces. The company also failed to provide evidence of having issued warnings or reminders to the employee regarding the 57 instances of being late or leaving early. The arbitration committee ruled that the termination lacked factual and legal basis and was an illegal termination. Based on the employee's average monthly salary of 17,314.42 yuan and his 11.5-year working tenure, the arbitration committee ordered the company to pay compensation of 398,231.66 yuan and issue a severance certificate in accordance with Article 87 of the Labor Contract Law. Three key risk points were identified during the review: inconsistencies between the implementation of the attendance system and the company's regulations, failure to promptly document disciplinary actions, and lack of evidence review prior to termination. Enterprises should conduct a three-step self-check ("facts – regulations – procedures") before each unilateral termination and use a severance compliance checklist to prevent risks before arbitration.

IV. Practical suggestions and legal basis

At the institutional level: According to Article 4 of the Labor Contract Law, rules and regulations directly involving the workers' vital interests shall be discussed and determined by the workers' representative conference or all workers, and be publicized or informed to the workers. It is recommended to retain the attendance records of training, the receipt confirmation, and the screenshots of OA publicity; for the termination due to the worker's fault according to Article 39, fix the evidence by comparing the provisions of the system item by item; for the termination without fault, follow the procedures of Article 40 and give written notice 30 days in advance or pay the compensation for notice. At the calculation level: The compensation base shall be calculated based on the wages and bonuses and allowances due (Article 47 of the Labor Contract Law), and the illegal termination shall be paid double the amount (Article 87). At the procedural level: Notify the trade union of the reasons for the termination and keep the records before the termination. At the litigation level: Submit the attendance records, wages, and evidence of the rules and regulations in full to avoid selective evidence-gathering that may raise questions of credibility. For the construction of a compliant employment system, please refer to the relevant guidelines.Legal advisory services for enterprises on a long-term basis.

5. Henglue Law Firm's Reminder

The case is handled byTian JiayanThe lawyer (practice license number: 11101202111381309, subject to the document issued by the judicial administrative organ) represented the worker to obtain compensation of 398,000 yuan, which in turn demonstrates the cost of the lack of corporate compliance. It is recommended that enterprises regularly carry out employment inspections: standardize the attendance procedures, keep records of disciplinary actions in real time, and conduct collective reviews of the dismissal procedures; for those involved in arbitration, it is advisable to seek legal assistance as soon as possible.Labor arbitration and workers' compensation lawyerCalculate the risk range and formulate mediation or defense strategies to keep uncertainties under control at the negotiation table.

Q1: How exactly is the compensation of 2N calculated for unlawful termination of employment?

According to Article 87 of the Labor Contract Law, if an employer unlawfully terminates or terminates a labor contract, it shall pay compensation to the worker at twice the standard of economic compensation prescribed in Article 47. The economic compensation shall be calculated based on the worker's length of service in the unit: one month's salary for each completed year of service; more than six months but less than one year shall be calculated as one year; and less than six months shall be paid half a month's salary. The base amount shall be calculated based on the average monthly salary earned in the twelve months prior to the termination, including bonuses, allowances, and subsidies; if the monthly salary is more than three times the average monthly salary of local workers in the previous year, the compensation shall be capped at three times the amount and the compensation period shall not exceed twelve years.

Q2: If an employee seriously violates company rules, does the company still have to pay them compensation when terminating their employment?

According to Article 39 of the Labor Contract Law, if an employee is dismissed for serious violations of the company's rules and regulations, the company does not need to pay economic compensation. However, the prerequisite are that the company can prove three points: there is sufficient evidence of the violation of the rules and regulations, and it cannot be based solely on subjective impressions or a single record; the rules and regulations clearly list the behavior as a serious violation of the rules and regulations, and have been formulated through democratic procedures and have been announced or informed to the employees; the dismissal procedure is legal, including notifying the trade union of the reasons for the dismissal in advance. Any missing link may be deemed an illegal dismissal, and the company may be required to pay double the amount of economic compensation. This is also the main reason why enterprises lose the case in such cases.

Q3: What will happen if the company cannot provide attendance records?

According to Article 6 of the "Law on Mediation and Arbitration of Labor Disputes", the evidence related to the disputed matters shall be held and managed by the employer, and the employer shall provide it; if it is not provided, the employer shall bear the adverse consequences. In disputes over overtime pay and absenteeism, the arbitration tribunal may directly accept the employee's claim of overtime facts, or deny the company's determination of disciplinary violations. Therefore, enterprises must keep attendance and wage payment records within at least two years, with consistent policies and an employee confirmation mechanism; electronic attendance records should be able to export the original data, avoiding only the final summary table without process records, otherwise the authenticity will be easily challenged.

Q4: Will I still be subject to arbitration after signing a settlement agreement with my employees?

A standard settlement agreement can effectively settle disputes: If the parties reach an agreement on the method of termination, the amount of compensation, and the payment period and sign a written agreement, the worker's application for arbitration regarding the same dispute will generally not be supported. However, there are two exceptions: if the agreement involves fraud, coercion, or taking advantage of the other party's vulnerability; or if the amount is significantly lower than the statutory standard and there is a major misunderstanding or manifestly unfairness. Therefore, the agreement should be reviewed by a lawyer, stating the composition of the compensation, the payment method, the liability for overdue payments, and the clause that "there will be no further labor disputes between the parties", and keeping records of the negotiation process to avoid having the entire compensation recalculated after the agreement is deemed invalid.

Q5: How can companies assess the risk of compensation before a trial?

It is recommended to estimate the compensation according to a three-step method: First, calculate the statutory benchmark based on Articles 47 and 87 of the Labor Contract Law. Determine the economic compensation N and the compensation 2N according to the average salary of the previous 12 months and the length of service, as well as the arrears in wages, overtime pay, and the difference in annual leave wages; Second, score the evidence and evaluate the completeness of our own evidence and the possible counter-evidence submitted by the other party, judging the probability of support for each request; Third, set a mediation range with the amount of probable loss as the upper limit and the compliant amount as the lower limit, authorizing the agent to negotiate within the range. The three-step estimation should be completed immediately after receiving the notice of the court hearing, in order to gain time for defense and mediation.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, so as to avoid missing the statutory time limit. →Labor arbitration legal services·Attorney Tian Jiaoyan·Beijing Henglu Law Firm