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Employee termination
in China.

SALARY PAYMENT IN Chinese Yuan (CNY, ¥)

CONTRACT LANGUAGES Mandarin & English

PAYROLL TAX 39.50% – 41.20%

PAYROLL CYCLE Monthly 

TIME TO HIRE 12 hours

Valid reasons to terminate employment in China

There are four main reasons to terminate employment in China

  • the employee has suffered from an illness or injury and is unable to take up the original work that was given to them after the statutory medical treatment period expires.
  • the employee is incompetent in their job duties and remains incompetent after training.
  • there was a change to the circumstances with which the employment contract was executed which makes the contract impossible to perform.
  • the employee commits severe misconduct.

Other extraordinary circumstances like, if the employee has committed a crime, can terminate a employment contract.

Unfair reasons to terminate employment in China

Labor laws and regulations in China protect employees against discrimination. For example, employers cannot legally dismiss pregnant employees or make a claim without evidence the employee is in violation of rules.

Dismissal procedure in China

The employer must provide 30 days’ advanced notice for dismissal of an employee. The notice needs to be written and delivered to the employee. Also, the employer must provide notice to the labor union or regulation official before they unilaterally terminate an employee.

Employers can also immediately terminate the employee but they must pay for one months’ salary upon the date of termination.

Resignation procedure in China

If an employee wants to resign, then the employee also must give 30 days’ notice to the employer in written form. This must be delivered to the employer in order to start the 30 days’ period.

Hiring in China, Made Easy

Your business can easily hire employees in China without opening a local entity. We handle local employment law, complex tax regulations, and international payroll in 180+ countries worldwide. All you need to do is focus on your business.

FAQs

In China there are laws and regulations that protect both the employer and employee in order to make for a fair working environment. If you are within compliance and have a legal right to terminate employment then it will be possible. However, there are laws and regulations in place that do not allow termination of employment without a reason.

The risks of illegally terminating employment in China could be heavy fines, or a long severance payment to the employee you terminated. Paying a former employee severance while they do not perform any work for you can be frustrating.

It is crucial to understand the labor laws and regulations if you want to conduct business in China. Staying in compliance will keep you from getting fined or having an unfavorable severance paying circumstance.

Mitigating the risk means you will need to grasp an understanding of the Chinese labor laws and follow the reasons to terminate closely that are stated above.

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