On May 28 2020, a new law under China’s first Civil Code (“Code”) was adopted by the third session of the 13th National People’s Congress (NPC) and will take into effect on January 1st, 2021: it is addressing the issue of sexual harassment in workplace. This issue was never tackle as it was missing a clear definition of sexual harassment and specific punishment but this new law will correct that. Companies need to clearly understand the risks and ways to protect themselves.
What does the law says?
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.”
What constitutes sexual harassment?
Article 1010 is part of the second chapter (Right to Life, Right to Body, and Right to Health) of the fourth part of the Code (Personal Rights), so it is clearly stated that sexual harassment is an infringement of personal rights.
By giving a clear definition of sexual harassment, the code increases the previous scope of protection. It does not only cover women as previously mentioned by the law but also men now fall into scope of protection. As to what type of cases may be considered as sexual harassment, the Articles 1010 lists several examples and clearly state that the core issue is whether those acts are against a person wishes. So if a person express an explicit rejections to certain act or behaviour, then such act or behaviour will be likely be considered as sexual harassment act.
What are the implications for employers?
The Code also mentioned legal obligations for employers to prevent sexual harassment cases within the company. Companies are now legally liable for sexual harassment in workplace, especially if they failed to tackle the issue or try to take necessary steps to prevent the issue. It is therefore important that companies raise this topic and take necessary steps to avoid such issues
How can companies protect themselves?
On top of setting up and enforcing proper guidelines for staff behaviour in the workplace, companies should consider putting in place employment practice liability insurance (EPLI). It is usually part of Director’s and Officer’s liability insurance but keep in eye on your policy to make sure it is including EPLI as well. Depending on whether or not the new legislation will significantly increase the number of legal actions against companies, insurers will probably adjust their policies in coming months/ years.
If you want to review the policies you have in place and make sure your D&O includes Employment Practice Liability insurance, please contact our team in China.
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