As a general rule, collective dismissals are not permitted, unless individual dismissals are covered by one of the reasons mentioned in point (i) above, or in the case of economic redundancies (as defined below) when employer procedures are followed. This type of dismissal requires a reason based on the employee`s benefit or misbehaviour, including: in this way, the employer is not obliged to prove the reason for the termination of the employment relationship, with or without the employee`s fault. For more information, see Article 46 of the Employment Contract Act of the People`s Republic of China. Trial periods may be included in the employment contract which raises the issue of dismissal during the trial period. The trial period varies between one and six months depending on the length of the contract. If dismissal is considered illegal by an employment court or a PRC tribunal, the worker is either allowed to be reinstated (in this case, the employer must constitute compensation for the period during which the employment was allegedly terminated), or demand dual legal compensation. Under CPP legislation, if an employment contract is terminated by mutual agreement or unilaterally by the employer on the basis of a legal reason for dismissal or under the redundancy scheme, the employer must pay legal compensation to the worker. As a general rule, statutory severance pay is calculated within certain limits, taking into account the length of service of the employer. Given the strict requirements imposed by the employer on unilateral termination of an employment contract and the serious consequences of unlawful dismissal under Chinese law, most Chinese employers choose to negotiate a dismissal agreed upon by mutual agreement with each worker.
In practice, employers would generally propose a redundancy scheme higher than the amount the worker absolutely wants to receive under the law, in order to induce the worker to accept dismissal. Although there is a general requirement in Chinese law that the union must be informed in advance in the event of a unilateral termination of the employment relationship by employers, this requirement has not been seriously implemented in practice, as most private companies in China do not have a union. An employment contract can be terminated at any time by mutual agreement between the employer and the worker. In this case, the employer is obliged to pay the employee the legal compensation if the dismissal is agreed by the employer (details of the calculation of the legal compensation are available below). The law on the protection of dismissals provides that employers have the possibility of offering, in the letter of dismissal, the worker`s severance pay in case the employee does not file an appeal against the dismissal. In some situations, this can be useful to avoid labour court proceedings. In general, it is difficult for the employer to resign unilaterally. Therefore, the most common way for the employer to terminate employment is to approach mutual negotiations. If the worker accepts the increased compensation, both parties sign the termination contract and terminate the employment by mutual agreement.