## Facts

- Capital Iron & Steel-Japan Electric Electronics Company (Capital Iron) hired Chen Jingke.
- Chen signed multiple written agreements with Capital Iron connected to his employment and overseas training.
- The agreements gave Capital Iron two key contractual rights:
  - to recover training expenses if Chen left employment or was absent during the agreed employment term; and
  - to treat the employment as automatically terminated if Chen was absent without authorized leave, with Chen owing damages equal to three months’ average wages.
- Capital Iron sent Chen to Japan for about one year of technical training.
- For the Japan trip, Capital Iron loaned Chen money.
- After returning to China, Chen took approved leave to visit family.
- When the approved leave ended, Chen did not return to work and did not obtain authorization for additional leave.
- Chen’s father sent Capital Iron a medical letter asking for more leave on the stated ground that Chen needed time to recover from a disease; Capital Iron considered the letter false.
- Capital Iron sent a representative to Chen’s home, but Chen was not there.
- Capital Iron then sent Chen a written notice directing him to return to work or face discipline.
- Chen still did not report back to work.
- Capital Iron terminated the employment contracts and filed a complaint with the Beijing Labor Arbitration Committee seeking (1) reimbursement of training costs, (2) repayment of the loan, and (3) economic damages under the contracts.
- The Beijing Labor Arbitration Committee granted Capital Iron the relief it requested.
- Chen appealed, seeking reinstatement and back pay and arguing that he did not owe training-cost reimbursement because the Japanese government had underwritten the training.
- The appellate court rejected Chen’s arguments, affirmed the judgment, and ordered Chen to pay the amounts owed; Chen appealed again.

## Issues

1. Whether Chen’s failure to return to work after his approved leave ended constituted unauthorized absence under the parties’ agreements.
2. Whether the contract provisions providing for automatic termination upon unauthorized absence and damages equal to three months’ average wages were enforceable on these facts.
3. Whether Chen avoided responsibility for training-cost reimbursement by claiming the training was funded by the Japanese government.
4. Whether Chen was entitled to reinstatement and back pay after the employer terminated him for unauthorized absence and obtained an arbitration award.

## Decision

- The appellate court affirmed the labor-arbitration outcome in Capital Iron’s favor.
- The court upheld Capital Iron’s termination of Chen based on his continued failure to return to work after approved leave ended and after notice.
- The court ordered Chen to pay the amounts awarded, including training costs, repayment of the loan, and economic damages calculated as three months’ average wages as stated in the contracts.
- The court rejected Chen’s request for reinstatement and back pay.
- The court rejected Chen’s contention that third-party funding of the training eliminated his contractual obligation to reimburse training expenses.

## Legal Principles

- When an employee remains absent without authorized leave after an approved leave period ends, and the parties’ agreements treat such absence as grounds for termination, an employer may terminate consistent with those agreements.
- Contract terms requiring repayment of employer-borne training costs may be applied when the employee triggers the repayment condition set out in the agreements (such as leaving employment or being absent during the agreed service period).
- A contractual damages clause measured by a fixed wage-based amount (for example, three months’ average wages) may be awarded where the facts fall within the clause’s stated breach condition.
- A defense that a third party funded training does not bar reimbursement where the adjudicator finds the employee’s repayment duty remains in effect under the parties’ contracts and the employee does not defeat the employer’s claim.
- Reinstatement and back pay are not available where termination is upheld as valid under the governing agreements and the employee’s continued unauthorized absence is established.

## Conclusion

In Capital Iron & Steel-Japan Electric Electronics Co. v. Chen Jingke, the appellate court affirmed an arbitration award enforcing employment-and-training agreements after Chen failed to return to work when his approved leave ended and remained absent despite notice. The court upheld termination based on the contracts’ unauthorized-absence terms, ordered Chen to reimburse training costs, repay the trip loan, and pay contract damages equal to three months’ average wages, and denied Chen’s request for reinstatement and back pay, rejecting his claim that Japanese government funding excused repayment.


Capital Iron & Steel-Japan Electric Electronics Co. v. Chen Jingke, CEILAW, Selected People’s Court Cases, Case 115211995036 (1994)