Managing employment disputes and terminating employment contracts in China

Managing employment disputes and terminating employment contracts in China

In the PRC, labor disputes have increased dramatically in recent years and employers are facing an uncomfortable new reality that employees know their rights and will challenge management to defend them.

Furthermore, due to the better protection of employees and the more efficient labor dispute solving mechanism, labor disputes will be characterized by an increase in collective disputes and conflicts between competing interests.

– How to resolve labor disputes in China?

Either the employer or the employee may refer a dispute to the relevant Labour Dispute Arbitration Committee within the Municipality where the company is registered for settlement. The limitation period for application for arbitration of a labor dispute is one year, which shall be calculated from the date a party comes to know or is expected to have known the infringement of its rights.

– Under which circumstances can an employer dismiss an employee?

Without notice: an employer can dismiss an employee without notice and no severance payment only in limited circumstances, such as serious violation of workplace’s rules or if the employee is convicted of a criminal offence or during the probation period if the employee is shown not to satisfy the conditions of employment.

With notice: an employer may dismiss an employee with a 30-day notice or by paying one month of salary in the following circumstances:

  • If the employee is unable to assume his/her original duties or any new duties after returning from treatment for illness or injury;
  • If the employee is not qualified for the position, and remains unqualified even after receiving training or being transferred to another position;
  • After mutual consultation, if the employer and the employee cannot reach an agreement to modify the employment contract when the purpose for which the employee was originally hired does not exist anymore.

– How to dismiss an employee with poor performance?

To know more, do not hesitate to contact us and download our legal handbook related to Employment in China under

Bruno Grangier
Charlotte Mantoux 

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