Having your own business does not automatically enable you to hire employees in China. There are a set of rules and regulations related to employment that every employer in China has to abide by while considering employing an employee in China.
In this article, we would like to elaborate on employment contract termination for employers should be aware. A contract of employment may be terminated by, among several things: termination by the employee with or without notice, unilateral termination by the employer. The procedure, formalities and severance pay which apply on a termination of employment are determined by an individual’s contract and relevant laws and regulations.
The clauses of termination of employment must be carefully documented with a written employment contract and agreed upon by both parties. A permanent employment can be terminated by mutual consent or by the employee with a 30-day notice or by the employer under specific circumstances. Even so, workers who have had an occupational injury leading to disability to work, or a female employee on maternity leave, cannot be fired.
Justified reasons for terminating an employee are listed as follows:
- Proven not qualified during probation;
- Has seriously violated the rules and policies of the employer;
- Has committed gross negligence of duties, embezzlement, seeking personal benefits at the expense of the employer and thus causing serious damages to the employer;
- Concurrent employment with another employer without agreement by the current employer, which has seriously affected his/her performance of duty with the current employer;
- The employment contract was signed by fraud or under duress;
- The employee has been under criminal charges.
If the employer has sufficient evidence that the employee’s act has fallen under one of the above categories of faults or misconducts, the employer may immediately terminate the employment contract without any severance payment.
What should Employers Pay Attention to
Following are the key points that employers need to keep in mind regarding the termination of employment contracts under applicable laws and regulations:
- An employer must give 30 days’ prior written notice or payment in lieu
- It is proved, during the probation period, that the employee does not meet the requirements for the position that he/she was recruited;
- The employee seriously violates the company policies;
- The employee causes severe damage to the employer because he/she seriously neglects his/her duties or seeks private benefits;
- An employer may terminate employees for providing conditions which are met under the relevant laws and regulations.
- The employer has to rely on at least one of the few specified circumstances under which the Chinese Labor Law allows it to unilaterally terminate the employment contracts with the employees by serving a notice to the employee with immediate effect.
- An employer shall not terminate the employment contract under Articles 40 and 41 of the Employment Contract Law of the People’s Republic of China if the employee:
- Is engaging in operations exposing him/her to occupational disease hazards and has not undergone an occupational health check-up before leaving the position, or is suspected of having an occupational disease and is under diagnosis or medical observation;
- Has been confirmed as having lost or partially lost his/her ability to work due to an occupational disease or a work-related injury during the employment with the employer;
- Has contracted an illness or sustained a non-work-related injury and the stipulated time period of sick leave has not expired;
- Is a woman who is in her pregnancy, delivery, or breastfeeding period;
- Has been working for the employer continuously for no less than 15 years and is less than 5 years away from his/her legal retirement age; or
- Finds himself/herself in other circumstances under which an employer shall not terminate the employment contract as prescribed in laws or administrative regulations.
How HROne can be beneficial to your business
HROne has more than 13 years of robust experience in Chinese Labor Law and is committed to ensure the highest level of compliance standards for our clients. HROne helps you to safely and legally hire employees in China, where a direct employment contract is not desired or feasible or where a company does not have a legal entity in China through Employee Leasing/Talent dispatching Service.
In extension to Mainland China, HROne also provides service in Hong Kong and Taiwan. HROne fulfills all essential responsibilities as that of a legal employer for employee’s termination aspects and also provide legal consultation service.
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