Terminating Employment of Foreign Staff in China: A Procedural Guide

Foreign employees working in China are generally covered by Chinese labour law in the same way as local employees, subject to the additional immigration requirements attached to their status.

An employer that terminates without a lawful ground, evidence and the required procedure may face reinstatement claims or compensation. The fact that an employee is a foreign national does not create a simpler route.

Identify the lawful ground

Termination may be based on mutual agreement, serious misconduct, incapacity after medical treatment or training, a material change in circumstances, or economic restructuring. Each ground has its own evidential and procedural requirements.

“Poor performance” is not a standalone ground. It usually needs to be connected to a documented process, a failure to meet measurable targets, training or adjustment, and the contractual terms. The file should be built before the decision is communicated.

Notice and severance

Some terminations require 30 days’ written notice or payment in lieu, together with statutory severance. Others, such as dismissal for serious misconduct, may not. The calculation depends on the employee’s length of service and salary, and local practice should be checked for the applicable caps and basis.

Final payments, unused leave, bonuses and expense reimbursements should be addressed in the termination documents. A settlement agreement can resolve disputed amounts, but it should be drafted carefully and should not be used to disguise an unlawful termination.

Procedure and evidence

• Collect the contract, policies, performance records and correspondence.
• Confirm whether the employee handbook and disciplinary process were validly adopted and communicated.
• Check whether the union or employee representative body must be notified.
• Prepare a written termination notice that states the ground and the effective date.
• Document the handover of company property, data and access.

Timing and wording matter. A notice that states the wrong ground can undermine an otherwise defensible decision.

Immigration consequences

The work permit and residence permit are tied to the employment. When the employment ends, the employer and employee need to address cancellation or change of sponsorship within the applicable timeframes. The employee’s ability to remain in China, change employer or leave and re-enter depends on the permit status.

If the employee is being transferred within the group, the new entity may need to apply for a new permit. If the employee is leaving China, the exit timeline should be planned before the last working day.

Practical considerations for foreign staff

Foreign employees often have housing, schooling, tax and repatriation arrangements connected to the role. The contract and any assignment letter may allocate some of these costs. A termination that ignores them can turn a clean exit into a broader dispute.

Confidentiality, non-solicitation and intellectual-property clauses should be reviewed at the same time. Their enforceability depends on the drafting and on Chinese law, and they should not be assumed to operate in the same way as in the employee’s home country.

Before you act

• Confirm the contractual and statutory basis for termination.
• Assemble the evidence and check the internal procedure.
• Calculate notice, severance and final pay.
• Plan the work-permit and residence-permit steps.
• Prepare the handover and communications sequence.

A structured process protects the company and gives the employee a clear, documented exit. It is usually easier to achieve both objectives before notice is given than after a dispute has begun.