Are you a foreign company in china and want to terminate an employee? Do you want termination without creating any mess? How to handle the completion of a foreign employee? Terminating, an employee requires following specific procedures and rules.

This is one of the significant concerns for foreign companies operating in China. If you don’t follow the proper guideline, you may face dire and complication situation for the company. You may have to pay fines, undergo restrictions and reinstate the employee.

In China, there are some rules for the process based on circumstances surrounding the termination. An employ must undergo proper proceedings and a contract. A contract may be an open-ended or fixed term. But what is this right and when to end a foreign employee? The agreement gives the employees certain rights when his agreement is terminated.

If you are a newer company in china, which does not know much about the proceedings, you may face issues. You must get an insight into the termination process, termination periods and severance payment. How will you do it? Read this article, and you will find the whole process, an outline of surrounding rules and regulations. You may require expert advice to avoid any issue.

Protection from unilateral termination

Do you want to terminate an employee unilaterally? It will surely have a potentially adverse impact on the employee. In China, there are some situations, which protect a person from unilateral termination. Such conditions are as under:

  • When an individual loses the capacity to work due to occupational disease.
  • An employ is still under medical care because of illness or injury
  • Employee is pregnant
  • The employee has worked for 15 years in the company
  • Employee’s retirement is five years away.


Role of labor unions

In actual termination proceedings, labor unions are also involved in the termination process. They make sure that an employee is terminated reasonably. They look into reasons and see if there are justifiable reasons for termination. The notice is served, and severance is paid? Even there is a notice period for accurate completion; the employer does not need to give employees reasons for dismissal. The labor unions are informed by the employer, and the union determines the purposes and procedure is according to rules and regulations.

You must have to give your employees the right to review. It does not matter the employee is a foreigner or a local recruit. There is no at-will dismissal process in china, unlike the USA, where you can terminate your employee when you do not need it. You cannot terminate an employee unilaterally in china.

  Termination notice

The type of advice depends on the nature of the employment contract. The contract may be fixed or open-ended. Moreover, you need to know whether there is a justified reason for termination. In this way, there are three types of termination notice. You need to determine the type of contract, and accordingly, you will prepare termination notice. You cannot terminate an employee without determining any of these three types of agreement.



 Termination With elaborate Cause

If you have a justifiable cause of termination, you need not require any notice. You must have a valid reason for your employee’s termination. In this type, you cannot terminate your employment on your own.

Without any justifiable Cause

You need to serve a 30-day notice to your employee if there is no cause. In some cases, you may adopt this method, but it is not well with any termination.

Fixed Term Employment Contract

Also, if there is a fixed-term employment contract, no notice is needed. After the contract is expired employee will automatically be terminated if it is not renewed. The company will require paying the severance in the category of termination.

Two concepts

There are two approaches to the termination of the contract. In the first approach, the termination occurs through mutual agreement. In another idea, the unilateral termination is processed. Any party may opt for separation.

Mutual termination

In this type of separation, both the parties agree for completion. The employee and employer part of their ways mutually and amicably. There is the consent of both parties. This is the best option for termination to avoid any issues.

Unilateral termination

Both the parties may opt for termination unilaterally. If you are an employee, you may choose to end the service by resigning. But you need to give a 30-day notice for the purpose. If you are an employer and want to terminate your employee, you need to follow a determined procedure; there are criteria and rules to be developed for this process.  There are some types of terminations which require a solid reason for termination.

  • Lack of qualifications during probation may lead you to the termination.
  • Rule violations also fall under this category.
  • Dereliction of duty may be the Cause of termination of the contract.
  • Invalidated the employment contract
  • Criminal liability

There are some situations where employees cannot be terminated unilaterally. Unilateral termination may have a potential impact on employees, so they cannot be terminated without any reason. Here is some situation where you cannot dismiss your employees at your own will.


Notice for less sever situation

If the employer has less sever reasons, then he must give 30 days’ notice period. It is a requirement which a company needs to follow for the termination in the following situations

  • The employee has got illness, disease or injury, and he cannot perform the required duties. His condition does not allow him to do the job for which he was hired.
  • After training or reassessment, it is found that the employee is incompetent for his job
  • The circumstances change and the specification for the job no longer needed, and agreement cannot be modified through contract.


Severance/Redundancy in China

When you terminate an employee with severance payment, there is a formula for determining the amount of severance. It may be one month salary for each year of employment.  If the first year period is six months or less, then it will be equal to a half month salary. If it is more than six months, it will be count a full month. There are other types of severance. There are various formulas for counting it.

If there is mass dismissal or redundancy, you will pay the severance.



There are some other ways to calculate the redundancy and severance amount. It may be calculated on the base of average monthly salary n a particular region. You may cap severance payment three times at the amount.  If a mutually agreed amount is determined, the employer and employee sign agreement and part their ways. If there is agreed termination, it will work well. Employers and employees may negotiate severance amounts as well.

Terminating Probation Period

What is the process of termination during the probation period? Does china allow completion during probation? Yes, there is an inevitable process. An employment contract may include a probation period in it. It will answer the question of termination during the probation period.

The probation period varies from one to six months. It depends on the length of the contract period. In contrast, the duration of the probation period is specified. The same termination rules and notices period will apply, as for the whole contract period. However, if the employee ends the employment and chooses to resign, he will be required to give only three days’ notice. China’s labor laws specify specific terms and conditions.


Author: Enjoy Shanghai

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