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PRC Labour Law - Bitesize: If an employee resigns today, can I ask him to leave the company’s premises immediately?

1 April 2010
Mayer Brown Newsletter

If an employee resigns today, can I ask him to leave the company’s premises immediately?

The Labour Contract Law requires an employee to provide written notice to the employer of 30 days after the probation period and three days during the probation period to terminate his labour contract.

As such, strictly speaking, an employer cannot unilaterally require an employee to cease employment and leave the company’s premises on the resignation date as the employee is entitled to work out the 30 days notice.

In practice, some employees may request or agree to terminate their employment with the employer prior to the expiry of the notice to be able to join their new employer earlier. Some employees may be prepared to leave immediately if they are paid 30 days’ salary without being required to work out their notice.

What are my legal entitlements if the employee resigns and leaves without providing 30 days’ prior written notice?

If the employee leaves employment without providing the required notice, the employee has unlawfully terminated the labour contract. In these circumstances, according to article 90 of the Labour Contract Law, if the employee’s violation causes the employer to suffer losses, the employee will be liable for damages.

However, in practice it is usually difficult for an employer to prove its losses and the link between the losses and the employee’s unlawful termination. Hopefully this can be addressed by law in the future.

Do I have to pay one month’s salary in lieu of notice in a mutual termination situation?

In a mutual termination scenario, neither prior notice nor payment in lieu of notice is required under the Labour Contract Law. However, in our experience many employers pay one month’s salary in lieu of notice to an employee who agrees to terminate the employment relationship.

Is there any issue if the employee agrees to be paid economic compensation at an amount lower than the statutory amount for a mutual termination scenario?

Yes, generally the employee may claim the balance between the statutory amount and the agreed amount. Such a claim will be supported by the labour arbitration committee and the court.

However, in some places such as Beijing, if the employer has clearly informed the employee of the statutory amount in the mutual termination agreement and the employee has clearly confirmed that he agrees to waive his rights, the court will not usually support the employee’s claim.

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