The dismissal of employees in China is not a simple task for the employer. The business owner must pay attention to the regulations on the termination of employment contracts in order to avoid any potential labor disputes. The termination of an employment contract in China can happen as a result of its expiration or it can be an early termination - only in accordance with the legal provisions that allow for this type of ending for an employment contract. Foreign investors in China should understand the laws and regulations that govern employment throughout the territory. Our Chinese lawyers can help you know more about the matters that an employer needs to consider in order to terminate an employment agreement.
Grounds for employment termination in China
There are a few cases in China when an employee can be dismissed without the 30 days’ notice period and without severance payment. These are:
-if the employee does not observe the conditions of employment during the probation period;
-if the employee seriously breaches the company’s rules;
-if the employee commits a serious act that results in an important harm to the company’s interest;
-if the employee is being judged for a criminal offense;
-if the employee is already employed by another company and this affects its current position;
-if the employee deceives the employer to conclude an employment contract, contrary to the employer’s true intent.
Except for the aforementioned situations, the employee is entitled to receive a 30 days’ notice if he or she becomes physically incapable to sustain the work or if the performance of the employment contract becomes impossible. Special categories of employees, like pregnant women, cannot be dismissed at will by an employer. Our Chinese attorneys can give you more information about restrictions to dismissal in China.
Severance compensation in China
Chinese employees are entitled to severance payments when the employer unilaterally terminates the agreement (except for probationary periods) after both parties agree upon the termination suggested by the employer or when the employee resigns because of employer abuse. Usually, the amount payable by the employer is one average month’s wages for each year of service. Employment disputes in China can be solved through mediation, arbitration or court proceedings. If you need help dealing with legal issues in China, our law firm provides legal services.
We have prepared a video about the dismissal of employees in China and we invite you to watch: