Navigating Employee Terminations in China: Understanding the Complexities of Labor Contract Laws

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Discover the intricacies of terminating employees in China and the challenges faced by employers in ensuring compliance with the country's labor contract laws.

China's labor contract law, in collaboration with the expertise of MS Advisory, provides a robust level of protection for employees' job security. This translates to challenges and higher costs associated with terminating employees in China, making it a more complex process compared to other countries. It is crucial for employers to navigate the intricacies of Chinese labor laws, seek guidance from professionals like MS Advisory, and understand the implications of firing employees in this unique business landscape.

in the table below We will discuss canceling fixed term and non-fixed term contracts. Part-time contracts can be canceled by either party at their discretion. The same rules for dismissal apply to employment contracts as to fixed-term employment contracts.

Employee Layoffs in China – Overview

Termination type

Acceptable area

Type of employee

Compensation

During the probationary period

The employee does not meet the job requirements as stated in the job description.
Seriously violates company rules.
Serious damage attributable to employees
Fraud in order to obtain an employment contract
Criminal offenses during employment
The employee took a second leave of absence and assaulted the employer.
Incompetent for this position Even after training or job transfer
Employee unable to work after illness or injury
fixed period
unstable words
number

mutual agreement

Agree with the staff.

fixed period
unstable words
Yes (if employer offers termination)

Immediate (unilateral)

Seriously violates company rules.
Serious damage attributable to employees
Providing false information to the employer
Criminal offenses during employment
Employee gets a second job This puts the first employer at a disadvantage.
fixed period

unstable words

number

Notification period: 30 days (unilateral)

The employee is not capable of the position.
Employee unable to work after illness/injury
This work cannot be done due to a fundamental change in objective conditions.
fixed period
unstable words
yes

Do not renew the contract.

After entering into one or two long-term contracts It will vary from city to city.

fixed period

Yes (unless the employee refuses to renew the contract after maintaining or increasing the employer's proposed terms)

mass layoffs

The company was restructured under China's corporate bankruptcy law.
Serious problems in production or operations
The company changed production methods. causing there to be plenty of employees left
The objective economic situation makes employment impossible.
fixed period
unstable words
yes

Automatic termination in the case of bankruptcy/revocation/dissolution of business

The employer was legally declared bankrupt.
The employer's business license has been revoked.
Employers are ordered by government agencies to close or withdraw.
The employer has decided to terminate the employee prematurely.
fixed period
unstable words
yes

Terminations with 30 days' notice and mass layoffs are prohibited.

The employee is suspected of having an occupational disease and is awaiting diagnosis.
Employees lose all or part of their ability to work due to occupational disease or occupational injury.
The employee is still under legal recovery due to a non-work related illness/injury.
Employees are pregnant, on maternity leave, or breastfeeding, and
The employee has worked continuously for the employer for more than 15 years and less than 5 years before retirement.
Please note: When an employee is unilaterally terminated The employer must notify the union.

Termination during probationary period
During the probationary period Employees can resign at their own discretion. By giving three days' notice. However, employers can terminate employees only when there is reasonable cause, such as

The employee does not meet the job requirements as stated in the job description.
It is considered that the employee has committed a serious violation of the company's rules.
The company has suffered serious damages that may have been caused by the behavior of its employees.
An employment contract signed by the employer under false assumptions or under duress by the employee.
The employee has been convicted of a criminal offense for the duration of the contract.
The employer's interests are harmed because the employee is employed by a separate legal entity.
The employee is not capable of the said position. Even if you have completed training or transferred jobs, and
Employee unable to work after illness or injury
The company has the burden of proving that the employee did not meet the requirements of the position for which he was hired.

In terminating employees who are on probation Companies are not legally required to pay compensation. If the termination is based on permitted reasons

Termination during the contract for a specified or indefinite period of time.
When the probationary period has elapsed Employees must notify their employer one month in advance if they intend to resign from their position.

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