How a Singapore Cable Company Managed a Performance-Based Termination with HROne
Helping an overseas employer avoid an unenforceable exit arrangement and complete a compliant termination in China.
Industry
Cable & Electrical Manufacturing
Region
Singapore
Company Size
Confidential
HROne Services Used
• Employer of Record
• HR Compliance
• Termination Support
• Employee Communication
• HR Compliance
• Termination Support
• Employee Communication
THE CHALLENGE
A performance issue that needed a lawful exit path
A Singapore-based cable company had one employee in China under HROne’s EOR arrangement. Due to ongoing performance concerns, the client was considering asking the employee to sign a written commitment stating that if certain targets were not achieved within a few months, the employee would automatically leave the company.
This type of arrangement may feel practical in some overseas markets, but it can create significant risk in China. A document that attempts to turn future underperformance into an automatic resignation or automatic termination may not replace the legal process required under China employment rules.
For the client, the key challenge was how to address a real performance problem without creating a bigger legal and employee relations issue.
This type of arrangement may feel practical in some overseas markets, but it can create significant risk in China. A document that attempts to turn future underperformance into an automatic resignation or automatic termination may not replace the legal process required under China employment rules.
For the client, the key challenge was how to address a real performance problem without creating a bigger legal and employee relations issue.
THE SOUTION
Choosing the faster and safer exit path
HROne advised the client not to rely on an automatic-exit commitment as the basis for termination. The team explained that a document stating the employee would “automatically leave” if performance targets were not achieved within a few months may not replace the lawful termination process required in China.
Under China’s Labor Contract Law, performance-based termination generally requires a proper legal process, including training or position adjustment before termination can be considered. Economic compensation may also apply depending on the termination basis and the employee’s years of service.
More importantly, HROne helped the client look at the issue from both a legal and cost perspective. If the company had already decided not to continue the employment relationship, keeping the employee for several more months under a document with uncertain legal effect could increase payroll costs, social benefit contributions, management time, and future dispute risk.
Instead of prolonging the situation, HROne recommended a cleaner and more predictable approach: proceed with a compliant termination package. After discussion, the client chose to provide N+1 compensation, allowing the matter to be resolved earlier, more professionally, and with lower overall risk.
Under China’s Labor Contract Law, performance-based termination generally requires a proper legal process, including training or position adjustment before termination can be considered. Economic compensation may also apply depending on the termination basis and the employee’s years of service.
More importantly, HROne helped the client look at the issue from both a legal and cost perspective. If the company had already decided not to continue the employment relationship, keeping the employee for several more months under a document with uncertain legal effect could increase payroll costs, social benefit contributions, management time, and future dispute risk.
Instead of prolonging the situation, HROne recommended a cleaner and more predictable approach: proceed with a compliant termination package. After discussion, the client chose to provide N+1 compensation, allowing the matter to be resolved earlier, more professionally, and with lower overall risk.
THE RESULTS
Lower risk, lower cost, and a cleaner exit
With HROne’s guidance, the client avoided using a performance commitment that could later be challenged in China.
By moving directly to a compliant N+1 termination arrangement, the employer avoided paying several additional months of salary and benefits only to potentially face the same severance obligation later. The employee also received a clear and fair exit package, reducing emotional friction and the likelihood of dispute.
This case showed that in China, the most cost-effective HR decision is not always the one that appears cheapest at the beginning. A compliant and timely exit can often save the employer more than a delayed, uncertain, and legally fragile approach.
By moving directly to a compliant N+1 termination arrangement, the employer avoided paying several additional months of salary and benefits only to potentially face the same severance obligation later. The employee also received a clear and fair exit package, reducing emotional friction and the likelihood of dispute.
This case showed that in China, the most cost-effective HR decision is not always the one that appears cheapest at the beginning. A compliant and timely exit can often save the employer more than a delayed, uncertain, and legally fragile approach.
THE KEY OUTCOMES
• Helped the client avoid a legally uncertain automatic-exit document
• Reduced unnecessary salary, benefits, and management costs
• Prevented the employer from delaying termination only to pay severance later
• Recommended a cleaner N+1 termination path
• Lowered the risk of labor disputes and enforceability challenges
• Reduced unnecessary salary, benefits, and management costs
• Prevented the employer from delaying termination only to pay severance later
• Recommended a cleaner N+1 termination path
• Lowered the risk of labor disputes and enforceability challenges
“We originally thought a performance commitment would be the simplest option, but HROne explained the legal and cost risks clearly. Their advice helped us avoid unnecessary delay and handle the termination properly.”
Client Representative
Singapore Cable Company
DISCLAIMER
This case study reflects a specific performance-related termination situation in China.
Performance management, automatic-exit arrangements, resignation commitments, termination grounds, severance obligations, and enforceability risks may vary depending on local law, company policy, evidence, communication records, and case facts.
Companies should not rely on overseas-style performance exit documents without reviewing their validity under China employment requirements.
Performance management, automatic-exit arrangements, resignation commitments, termination grounds, severance obligations, and enforceability risks may vary depending on local law, company policy, evidence, communication records, and case facts.
Companies should not rely on overseas-style performance exit documents without reviewing their validity under China employment requirements.
