A “mass layoff” is defined under Article 41 of PRC Labor Contract Law as being when a company terminates the labor contracts of at least 20 employees or a number of employees equal to 10 percent of its total workforce, whichever is lower. A company may implement a mass layoff in any of the following situations:

  • Undergoes restructuring under the enterprise bankruptcy law
  • Suffers serious problems with production or other business operations
  • Changes products, makes important technological renovation, or adjusts the methods of its business operation, and it is still necessary to lay off the number of employees after changing the labor contract
  • Other major changes occur in the objective economic environment relied upon at the time of conclusion of the labor contracts, rendering them non-performable

The process for implementing a mass layoff is as follows:

  • Company explains the circumstances of the mass layoff to its labor union or directly to the staff 30 days before the intended implementation of the layoff
  • The opinions of the labor union or the employees are taken into account by the board of the company
  • The company reports the implementation of the mass layoff to the local labor administration department
  • Once the 30 day period expires, the mass layoff can be implemented