Employment termination in China is procedure-heavy. The employer needs a lawful ground, the right documents and a calculation that reflects the employee's service and salary. A settlement may still be the practical outcome, but it should be negotiated with a clear view of the legal exposure.
Probation limits
The Labour Contract Law limits probation according to the length of the employment contract. A contract of three months to one year can provide for up to one month of probation; a contract of one to three years can provide for up to two months; and a contract of three years or more, or an open-ended contract, can provide for up to six months.
Probation can only be agreed once with the same employer. A short fixed-term contract, a probation period longer than the statutory limit, or a second probation on renewal is a common source of claims.
Notice and grounds
An employer can terminate immediately for serious misconduct, serious breach of internal rules, fraud or criminal conduct, but the rules and the evidence must be strong. For redundancy, incapacity or a major change in circumstances, the employer generally needs to give 30 days' written notice or pay one month's salary in lieu, and must follow the statutory process.
Employees who resign normally give 30 days' written notice during the contract term and three days during probation. The notice period is not a substitute for a proper handover, and the employer should document the resignation and the final settlement.
Labour Contract Law of the People's Republic of China, Article 19: probation periods are capped according to the term of the employment contract, and the same employer may stipulate probation only once.
Severance
Statutory severance is generally one month's salary for each full year of service, with a half-month for a period of six months or more but less than a year. For high earners, the monthly base may be capped at three times the local average monthly wage, with a separate cap on the number of years.
Severance is not automatic in every termination. It depends on the ground and the procedure. Paying severance does not cure an unlawful dismissal, and withholding it does not create a lawful ground.
Documents to prepare
- Signed employment contract and any amendments.
- Employee handbook and proof that it was adopted and communicated.
- Performance records, warnings and investigation notes.
- Termination notice and the legal ground relied on.
- Severance calculation and final payroll.
- Handover, return of property and release documents.
In a dispute, the employer usually bears the burden of proving the facts behind a misconduct or performance dismissal. Contemporaneous records are far more useful than a reconstruction prepared after the claim is filed.
Practical approach
Review the contract and handbook before deciding on the route. Separate the commercial reason from the legal ground, and test whether the evidence supports the ground. If the file is weak, a negotiated separation with a clear release may be more efficient than defending an arbitration.