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China severence pay law and how to calculate severence pay

Introduction

 

In China, severance pay policy is included in the Labor Contract Law. Severance pay is a kind of compensation pay for the employee when the employer terminates the employment contract; or when the employee terminates the employment contract due to the employer’s breach of the Labor Contract Law. The normal circumstances that could warrant a severance pay include layoffs, job elimination and mutual agreement to part ways, etc.

 

What is severence pay and how to calculate several pay according to China employment law?

I've received several inquiries this week about severance pay. One person I spoke to thought that her employer was required to give her a severance package (they aren't) and that she could negotiate a better deal than was offered. Another person has a very difficult decision to make. He can accept a generous severance package from his 25+ year employer or take his chances on being unemployed at the end of the year. That's a tough one.

 

A New Trend of China Employment Law: Employer Bears Burden to Prove Employees Took Unapproved Leaves of Absences

In several recent cases where employees were terminated for unexcused absence from work, the courts and employment dispute arbitration tribunals held that the employer must bear the burden of proving that such leaves of absence were not approved by management.

In March 2010, an employment dispute arbitration tribunal in Liaoning Province ordered reinstatement of an employee who had been summarily terminated for taking leave without approval by the company. The employee had requested sick leave through text messages and phone calls to the manager, who did not respond explicitly with an approval or a disapproval.

 

Source of Foreign Employee Rights in China employment law

When the economy slows, companies run into difficulties, businesses scale back their workforce, and layoffs increase. Rumors may start flying that lay-offs are imminent and jobs are at risk. In fact, if you look at what has happened with major corporations recently, downsizing is often not predictable.

Contract Rights
Employees who have an individual contract with their employer or employees covered by a union/collective bargaining agreement would be covered under the stipulations in the contract if their employment is terminated.

 

Wrongful dismissal or unfair dismissal in China employment law - A explanation by China employment lawyer

Definition: Wrongful termination happens when an employee is discharged from employment for illegal reasons or if company policy is violated when the employee is fired.

In many cases, unless there is a contract or bargaining agreement, employees are considered covered under employment at will, which means your employer doesn't need a reason to fire you. However an employee can be wrongfully terminated if discrimination is involved in the termination, if public policy is violated, or if company policy states guidelines for termination.

 
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I am a licensed China lawyer. Most clients are foreign nationals and companies. China Lawyer Blog have associates in Beijing, Shanghai, Tianjin, Guangzhou, Suzhou, Nanjing, Qingdao, Fuzhou, Hainan, Hefei, Wuhan, Xian, Changsha, Xiamen and Hangzhou. Learn More

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China Lawyer BLog AuthorPeter Zhu, an experienced China attorney licensed to practice law for more than ten years, the author of this China Lawyer blog, welcomes any enquiry or consultation related to Chinese law.