China Employee Resignations: The Dos and the Don’ts

China employees during their employment contract term can generally resign by giving 30 days’ written notice. China employees during their probation period generally can leave their employment by giving a mere 3 days’ notice. Under China’s employment law, when an employee voluntarily resigns, the employee’s resignation is deemed to have been a “unilateral termination” initiated by the employee and no statutory severance is owed to the employee. Even when dealing with an employee’s voluntary resignation, it still behooves employers in China to proceed with care. In this post, I discuss a few dos and don’ts China employers should keep in mind when dealing with a resigning employee.

First, do keep clear written records documenting what led to your soon-to-be former employee’s departure. One of the common problems our employment lawyers see in our China employer audits is a failure to maintain good records regarding employee separations of all kinds. It is not unheard of for employees in China who voluntarily resign to eventually flip around and sue for unlawful termination. Because your documentary record could determine the outcome of that employee’s litigation, the best practice is for you to document all employee terminations in writing, no matter how amicable things appear at the time of the employee departure.

Do not handle employee resignations via email. Use hard copies (written documents) because hard copies make for much better evidence than emails. In the experience of our China lawyers, the longer the string of email correspondence relating to an employee’s resignation, the more likely the employee will at some later date sue to revoke the resignation claiming the employer gave the employee reasons to believe it never accepted the resignation. These long email chains also will make it harder for you to prove there were no unresolved issues with the employee. Think of it this way: anything you say in an email chain can and will be used against you in a Chinese court of law.

Do use a China-centric employee resignation form. This employee resignation form will “force” your employee to “come forward” with a clear written reason for his or her resignation. If the reason listed by your resigning employee is unclear or even hints at employer wrongdoing, do seek clarification with your employee and document that in writing and resolve those issues with the employee if possible.

Do resolve all outstanding matters with your departing employee, including and especially any bonus payments. Contrary to popular belief, in many instances and in many locales in China, the employer is required to pay bonuses to resigning employees. For example, many Chinese courts have held that even if the employer has a written policy stating that resigning employees will not  receive a year-end bonus, the (former) employee is entitled to a prorated bonus based on the actual time worked in the applicable year. Chinese employees do not hesitate in pursuing legal action to secure some or all of their employee bonus, regardless of the circumstances under which they left. The key is prevention. You should research right now — based on 1) your locale, 2) your employment contracts, 3) your employer rules and regulations — whether your resigning employees are entitled to a bonus or not. And when you figure out your answer, you should also consider modifying what you have if you both did not like your answer and if the applicable laws will allow you to change it. If you are facing an actual employee resignation, you should also review the specific situation and any communications regarding that particular employee, before making your bonus determination.

Regardless of what you conclude regarding the need to pay an employee bonus, do try to secure a written agreement with the departing employee that directly addresses this issue.

Bottom line: Handle all employee resignations with care.

We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.