The Chinese Labor Contract Law offers significant job security to employees, making termination challenging and costly. Below are key points and tables detailing the process and conditions for terminating employees in China.
Types of Termination and Conditions:
Type of Termination | Admissible Grounds | Type of Employee | Severance Payment |
During Probation | Employee doesn't meet job requirements, serious rule violations, fraud, criminal offence, etc. | Fixed-term, Non-fixed | No |
Mutual Agreement | Agreed with employee | Fixed-term, Non-fixed | Yes (if initiated by employer) |
Immediate (unilateral) | Serious violations, causing company loss, fraud, criminal offence, second job harming employer | Fixed-term, Non-fixed | No |
30 Days' Notice | Incompetence, inability to work after sickness/injury, fundamental change in job circumstances | Fixed-term, Non-fixed | Yes |
Not Renewing Contracts | After one/two fixed-term contracts, varies by city | Fixed-term | Yes (unless refused by employee) |
Mass Layoff | Company restructuring, serious production difficulties, changes in production method | Fixed-term, Non-fixed | Yes |
Automatic Termination | Bankruptcy, business license revoked, government-ordered closure | Fixed-term, Non-fixed | Yes |
Key Points
During probation, employers can terminate without severance if grounds are valid.
Post-probation, termination requires one month's notice or mutual agreement.
Immediate termination is possible for severe violations but must involve the labor union.
30 days' notice is required for unilateral termination with severance for specific reasons.
Mass layoffs have stringent conditions and procedures.
Termination During Probation Employees can resign with three days’ notice, while employers can terminate only on valid grounds like job incompetence, rule violations, or criminal offenses. No severance is required for admissible grounds.
Termination for Fixed-term/Non-fixed Term Contracts
Termination can occur via mutual agreement, unilateral notice, mass layoff, or automatic termination due to company closure or bankruptcy.
Immediate Termination for Misconduct
Employers can terminate immediately for misconduct without severance but must inform the labor union.
30 Days' Notice Termination Allowed for specific reasons with severance, requires labor union notification.
Mass Layoff
Defined as reducing 20 or more employees or 10% of the workforce, allowed under specific conditions like company restructuring or economic difficulties.
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