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Termination

Notice

Are employers required to give notice of termination?

Yes.

Redundancies

What are the rules that govern redundancy procedures?

Under the Labour Contract Law, employers must alert and seek the opinion of their labour union or staff 30 days in advance if the employer needs to retrench 20 or more employees – or where the number of employees to be retrenched is fewer than 20 but comprises 10% or more of the enterprise’s total number of employees – due to any of the following circumstances:

  • the employer is undergoing restructuring pursuant to the Enterprise Bankruptcy Law;
  • the employer has serious production and business difficulties;
  • the enterprise is undergoing production changes, significant technological reform or a change to its mode of operation and, on varying its employment contracts, a need for retrenchment remains; or
  • the objective circumstances on which an employment contract was concluded have undergone significant changes and, as a result, the contract can no longer be performed.

The employer may carry out retrenchment after reporting the retrenchment scheme to the labour administrative authorities.

Are there particular rules for collective redundancies/mass layoffs?

The following personnel must be prioritised in a retrenchment exercise:

  • workers who have entered into a fixed-term employment contract of a certain length with the employer;
  • workers who have entered into a non-fixed-term employment contract with the employer; and
  • workers whose family members are unemployed or who need to support elderly or young family members.

If an employer rehires employees within six months of carrying out retrenchment, it must notify the retrenched personnel, whose employment under the same conditions must be prioritised.

Protections

What protections do employees have on dismissal?

Subject to limited exceptions, economic damages will be paid to dismissed workers based on their years of service and are generally calculated as one month's wage for each completed year of service. Where the period of service is between six months and one year, it will be deemed a completed year of service. Where the period of service is less than six months, the employer must pay half a month's wage to the worker in economic damages.

Where a worker’s monthly wage (ie, the average wage of a worker more than 12 months before the rescission or termination of his or her employment contract) is more than three times the preceding year’s local average monthly wage, according to the municipal people's government of the municipality (either centrally administered or divided into districts) where the employer is located, economic damages will generally be calculated at three times the average monthly wage. The years of service for which economic damages will be paid cannot exceed 12 years.

In addition, where an employer rescinds or terminates a employment contract in violation of the Labour Contract Law and the worker asks for the employment contract to be continued, the employer must continue the contract. Where the worker does not ask for the employment contract to be continued or where it cannot be continued, the employer must pay compensation pursuant to the above criteria.

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