* Three ex-GSK staff seek labour arbitration in Shanghai
* Panel to hear case on Thursday
* Plaintiffs seek payment of unpaid expenses used as bribes
(Adds more GSK comment)
By Li Hui and Adam Jourdan
BEIJING/SHANGHAI, July 16 Three former Chinese
employees of GlaxoSmithKline PLC, which is embroiled in
a long-running corruption probe in China, are seeking
compensation for illegal dismissal from their jobs, a lawyer
representing them told Reuters.
The plaintiffs are seeking two months' pay for each year of
their employment from Britain's biggest drugmaker for dismissing
them between April and May for expenses that were "not compliant
with company regulation," Shanghai-based Liu Feng said.
They are also seeking reimbursement for unpaid expenses, the
lawyer added. Some former sales staff at GSK were laid off with
unpaid expenses, part of which were used to pay doctors and
hospital staff with approval from their managers.
In some cases, the unpaid expenses were worth more than
200,000 yuan ($32,200), according to Liu.
The labour dispute arbitration committee in Shanghai's
Huangpu district will hear the case on Thursday.
A similar labour arbitration case filed by a former GSK
salesperson was heard in the central province of Henan in May.
That plaintiff, who did not want to be named, said by telephone
that the decision would be issued soon.
While any compensation GSK could end up paying will be
relatively minor, it is another headache for the drugmaker and
could further tarnish its reputation in the Chinese market.
Chinese police in May charged Briton Mark Reilly, the former
head of GSK in China, and two Chinese executives for allegedly
orchestrating a widespread network of bribery to promote sales
in the biggest corruption scandal to hit a foreign firm in China
since 2009. Prosecutors are reviewing the case.
"The workers think the company is very dishonest and its
attitude abominable. They are very dissatisfied with the
company's actions," Liu said in a telephone interview.
In an email, a GSK spokesman in China declined to comment on
individual cases. But he said that a "single digit" number of
Chinese ex-employees, who had been dismissed because of issues
related to expenses, had brought cases against the firm through
labour arbitration channels.
"We have zero tolerance to expense fraud, and where we have
found potential issues, we have thoroughly reviewed them and
taken disciplinary action including dismissal where
appropriate," he said.
The spokesman added that GSK's process for evaluating
expense claims was "a robust, multi-stage process which involves
independent third-party review and follows Chinese Employment
He declined to comment further on the allegations from the
ex-employees about GSK's conduct.
Liu said about two dozen other former GSK staff had
contacted him about filing similar cases, but they were waiting
to see the outcome of the Shanghai case.
"My expenses were approved by my manager ... but they are
saying it was a personal action not a company one," said one of
the plaintiffs, speaking on condition of anonymity.
The same plaintiff added that, during recent dismissals, GSK
urged some China employees to resign and told them that if they
did not, their contract would be terminated and the company
would give them a bad reference reflecting problematic expenses.
GSK has declined to specify the number of staff that were
dismissed as result of a crackdown on illegal expenses, but a
source familiar with the matter told Reuters that it was a very
small proportion of the company's total workforce in China of
GSK is facing the biggest corruption scandal to hit a
foreign company in China since the Rio Tinto
affair in 2009, which resulted in four executives, including an
Australian, being jailed for between seven and 14 years.
The allegations against GSK have damaged its reputation,
thrown its China management team into turmoil and forced it to
change its China business model, although the firm says head
office had no knowledge of the alleged wrongdoing.
China is a key growth market for large drugmakers, which are
counting on its swelling middle class to offset declining sales
in Western countries.
China is set to be the second biggest pharmaceuticals market
behind the United States within three years, according to
consultants IMS Health.
But bribery between sales staff and doctors is believed to
be rife in the world's second biggest economy, and it remains to
be seen whether the GSK case will be a one-off or the first of a
broader campaign to clean up the Chinese health sector.
Other large international drugs manufacturers including Novo
Nordisk A/S, AstraZeneca Plc, Sanofi SA
, Eli Lilly & Co and Bayer AG were
also visited by Chinese officials in 2013 as part of a broad
investigation into the business.
($1 = 6.2035 Chinese Yuan)
(Editing by Kazunori Takada and Mike Collett-White)