Author: Han Kun Law Firm You Yang丨Zhao Zhihan丨Qiu Yuxia
On May 13, 2022, the Securities Association of China issued the "Guidelines for Securities Companies to Establish a Robust Remuneration System" (hereinafter referred to as " "Remuneration Guidelines" "), The guidelines will come into effect from the date of issuance. The accountability mechanism is particularly detailed, including the cessation, recourse and deduction of bonuses, allowances and other remuneration, and the pursuit of internal economic responsibilities for senior executives and key personnel in key positions who violate laws and regulations or cause the company to have excessive risk exposure.
On January 28, 2021, the General Office of the China Banking and Insurance Regulatory Commission issued the "Notice on the Guidance on Establishing and Improving the Performance Remuneration Recovery and Rebate Mechanism for Banking and Insurance Institutions" (hereinafter referred to as " "Opinions on Remuneration Recovery for Banking and Insurance Institutions" "). The same Involves the performance pay recovery and deduction mechanism (including the recovery of paid performance pay and the cessation of unpaid performance pay), and specifically explains the recovery situation, as well as the punitive measures in case of failure to cooperate, including warnings and adjustments to work reasonable and effective measures such as positions, judicial proceedings, etc., and report relevant situations to the China Banking and Insurance Regulatory Commission or its dispatched agencies.
Issues such as salary deferral, cessation and refund of employees in financial institutions have been controversial. Specific project risks and overall company risks are closely related to individual salary adjustments, resignation bonus determination, resignation approval and other issues. Among them, regulatory measures and civil The standards for liability trials are also different. This article only briefly answers some of the most hotly discussed topics.
1. Reasons that may trigger the refund of salary
(1) From the perspective of laws, regulations and regulatory provisions, administrative agencies have the right to restrict the rights of employees of financial institutions (including requiring the refund of salary), and the circumstances that may trigger rights restrictions are relatively broad
According to laws, regulations and regulatory provisions [1], regulatory authorities have the right to restrict the rights of employees of financial institutions, that is, including the cessation of payment, recourse and deduction of bonuses, allowances and other remuneration. The circumstances that trigger rights restrictions are relatively broad and can be mainly divided into the following two categories:
In administrative supervision practice, regulatory agencies such as the China Securities Regulatory Commission have repeatedly made "restrictions on employees of financial institutions from receiving remuneration and benefits other than basic salary within a certain year." and other rights” administrative supervision measures. The reasons for being ordered to return bonuses are wide-ranging and can basically be classified into the above two categories of legal reasons for restricting rights.
(2) In civil disputes, the court will usually combine the company's internal salary system, the parties' labor contracts and relevant case facts to comprehensively review whether the company's reasons for not paying or requiring employees to return bonuses are established.
Employees' salaries, remuneration, and bonuses belong to The scope of autonomy between the company and its employees can be independently agreed upon between the company and its employees, provided that it does not violate the mandatory provisions of laws and regulations. In practice, financial institutions usually formulate a series of internal rules and regulations, including remuneration systems, which stipulate the conditions and standards for bonus distribution, and specific circumstances under which bonuses are not to be distributed or bonuses should be returned. In judicial trial practice, the court usually combines the company's internal system, the labor contract between the parties, and the specific facts of the case to comprehensively examine whether the stipulated and agreed circumstances in which bonuses are not paid or employees are required to return bonuses have occurred, and on a case-by-case basis Make specific judgments.
2. Scope of persons who may be required to return salary
The scope of persons with restricted rights stipulated in laws and regulations includes directors, supervisors, senior managers and relevant practitioners of the company, "Directors, Supervisors, Senior Managers and Practitioners of Securities Fund Operating Institutions" "Supervision and Management Measures" further clarifies the scope of senior managers and employees:
Judging from practical experience, those with the highest risk of being ordered to return remuneration are mainly company executives, including: department heads, vice presidents/general managers in charge of business/ Deputy general manager, compliance director, chairman, committee director, president, chief risk officer and other personnel.
In addition, the "Opinions on Salary Recovery for Banking and Insurance Institutions" clarifies that the performance salary recovery and deduction mechanism applies to resigned personnel and retirees [2]. There is no clear regulation on whether resignations and retirees of other financial institutions are applicable, but the risk of being included in the scope of refund by reference is not ruled out.
3. The scope of remuneration that may be subject to regulatory penalties includes both unpaid bonuses, allowances, etc. (no longer paid), and also includes remuneration that has been paid (refunded)
According to regulatory regulations [3], when there is a major violation of law In the event of irregularities or major risks, the company may stop paying all or part of unpaid remuneration. From the perspective of regulatory practice, measures to restrict the rights of employees include: no remuneration and benefits other than basic salary should be paid to relevant personnel in a certain year. In addition, those already paid may also be refunded.
In civil cases, the court usually combines the company's internal salary system and the facts of the case to make a comprehensive judgment on the range of salary that should be returned or not paid. In the absence of clear provisions on the company's internal remuneration system, the referee may determine the scope based on the principle of fairness.
For example, in the (2019) Beijing 02 Minzhong No. 12683 case, the Beijing No. 2 Intermediate People’s Court limited the scope of bonus returns due to product risks. That is, if a risk occurs in a project for which an employee is responsible, only that project should be compensated. The bonus for the project itself shall be suspended, claimed or deducted, but not the bonus for the employee's entire work shall be suspended, claimed or deducted.
4. In addition to regulatory requirements, the company's internal rules and regulations can also specify the identification of responsible personnel, but there should be objective and clear standards, and should be disclosed to employees
If the company's internal rules and regulations clearly stipulate that when risks arise in the project, the relevant responsible personnel If the bonus should be stopped, the company has the right to stop the bonus or require the bonus to be refunded accordingly. However, the internal regulations should have objective and clear standards for how to determine "risks in the project" and "scope of responsible personnel", and evidence must be provided to prove that the bonus has been stopped. meet relevant standards. Otherwise, the judicial authorities may not support it. For example, (2019) Yu 01 Min Zhong No. 3435, (2019) Jing 03 Min Zhong 13712 case.
In addition, the company's internal rules and regulations should also be disclosed to employees. If the company cannot provide evidence to prove that the salary system has been disclosed to employees, the company's claim not to pay bonuses based on the provisions of the salary system may be difficult to get support from the court. See Beijing No. 2 Intermediate People's Court. (2017) Beijing 02 Minzhong Case No. 11016.
5. Judging from the trial thinking of some judicial organs, collective decision-making may exempt individual liability
Some court rulings believe that: when project operations are collectively decided and implemented by a company, the company should bear the corresponding risks and responsibilities, requiring individual employees to It would be unfair to take responsibility.
For example, in the (2019) Jing 0105 Min Chu No. 36884 and (2019) Jing 03 Min Zhong 13712 cases, the Beijing Chaoyang District People’s Court and the Beijing No. 3 Intermediate People’s Court both held that “the implementation process of the project includes leadership decisions , sales promotion, system implementation and other aspects, it would be unfair if only individual employees bear all the company's risks and responsibilities. The company's operating process is the collective decision-making and implementation of various organizations, and cannot simply be shied away from being borne by an employee alone. "
For another example, in the (2021) Beijing 02 Minzhong No. 5325 case, the Beijing No. 2 Intermediate People’s Court held that “when XX was the general manager of the company, the relevant decisions made by the company, , were all made through collective voting by the Product and Business Review Committee. results, and each committee member voted and signed on the request for instructions report. Among them, department heads, relevant department leaders, and compliance directors attended the meeting. The convening and voting procedures of the meeting were in compliance with the relevant regulations of the company's product and business review committee "Responsibility for risks arising from related asset management products should not be borne by the individual parties.
6. The pursuit of civil liability within the company has a high standard of proof
If the company requires employees to return bonuses and compensate the company for losses on the grounds that the project has been subject to administrative supervision penalties and relevant employees have dereliction of duty, the burden of proof is relatively low. High, it is necessary to prove that the administrative supervision penalties and losses suffered by the company were directly caused by employees' work errors. For example:
In the (2019) Beijing 0105 Minchu No. 36884 and (2019) Jing 03 Minzhong 13712 cases, the Beijing Chaoyang District Court and the Beijing No. 3 Intermediate People’s Court held that: “The company failed to submit strong evidence to prove that its company’s was regulated The supervisory measures taken by the department to suspend operations for rectification and the company’s economic losses were directly caused by XX’s work mistakes, which means that there is no direct causal relationship between the company’s losses and XX.” In the case number, the Xi'an Intermediate People's Court held that "the company has not submitted evidence to prove that a certain person caused heavy losses to the company, so the company's request lacks factual basis and this court will not support it."
7. Practice There is controversy over whether the remaining deferred bonuses should be paid when employees leave the company.
In practice, in order to improve the stability of employees, the salary systems of some financial institutions clearly stipulate that if employees leave before the payment of deferred bonuses, no deferred bonuses will be paid. The remaining deferred bonuses caused disputes between the departing employees and the company over unpaid bonuses. For such cases, there is great controversy in judicial trial practice. Some courts have held that the employer has the right to independently determine the conditions for bonus payment and the circumstances under which bonuses are not to be paid based on the specific circumstances of the company in accordance with the law. This means that the company recognized the company's employee resignation as a condition for not paying deferred bonuses, thereby rejecting the employee's claim to leave the company. Deferred bonus requests later. For example: (2019) Lu 01 Min Zhong No. 11775, (2018) Shanghai 0115 Min Chu No. 6802, (2019) Shanghai 02 Min Zhong 8005 case.
However, some courts hold the opposite view. For example, the Beijing Xicheng District Court held in the (2018) Jing0102 Minchu No. 8272 case that “the employer enjoys a considerable degree of autonomy in the setting and distribution of bonuses, but the relevant bonus system The design also needs to be within the framework of the law, and be substantively fair and procedurally legal. In this case... the relevant performance bonus system submitted by the securities company stipulates that the company will stop paying all or part of the payment to employees who voluntarily leave their jobs. Performance bonus. The provisions of this provision actually limit the relevant rights and interests of workers and limit or exempt the employer from its obligations or responsibilities under the Labor Contract Law. According to Article 26 of the Labor Contract Law stipulates that this clause is invalid ", thus supporting the employees' claim for payment of delayed bonuses.
[1] See Article 24, Paragraph 1 of the Securities Investment Fund Law of the People's Republic of China, Article 70, Paragraph 1 of the Regulations on the Supervision and Administration of Securities Companies, and Article 5 of the Measures for the Administration of Information Technology of Securities Fund Business Institutions Article 18, Article 51, Paragraph 1 and other provisions of the "Measures for the Supervision and Administration of Directors, Supervisors, Senior Managers and Practitioners of Securities Fund Business Institutions".
[2] "Guiding Opinions on Establishing and Improving the Performance-Based Remuneration Recovery and Rebate Mechanism for Banking and Insurance Institutions" stipulates in paragraph 2 of Article 13: "The performance-based remuneration recovery and rebate mechanism shall apply to resigned personnel and retirees."
[3 ] Article 65 of the "Guidelines for the Governance of Securities Companies" stipulates: "The performance-based annual salary of senior managers of securities companies shall be determined by the board of directors based on the results of the annual performance appraisal of senior managers. More than 40% shall be paid in a deferred manner, and the payment period shall be deferred." Not less than 3 years. The payment of deferred remuneration shall follow the principle of equal division. If senior managers fail to perform their duties diligently and cause the securities company to commit major violations or major risks, the securities company shall stop paying all or part of the unpaid wages. Annual performance salary.
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