You are here: Home Law Topics Employment Law How to terminate an employment contract in China legally and avoid legal problems

China Lawyer Blog - We answer your questions

How to terminate an employment contract in China legally and avoid legal problems

Article Index
How to terminate an employment contract in China legally and avoid legal problems
legally terminate an employment contract in China
All Pages

I write this article not to encourage a China employer to fire employees, neither to infringe the legal rights of employees. I believe a legal termination will benefit both employer and employees. Therefore, please read this article with a object perspect.

The decision to terminate an individual’s employment carries with it the risk of a possible legal challenge. Depending upon an employer’s policies or whether an employee has an employment contract, an employee may, for example, have a breach of contract or “wrongful discharge” claim.

An “at-will” employer - that is, an employer who reserves the right to terminate employees without cause - generally does not need to worry about such claims. Like all other employers, however, an at-will employer still must be concerned about many other possible claims.

Possible Claims of Discrimination Upon Employment Termination

All employers need to be cognizant of possible discrimination claims arising from employment termination. To prevail, the former employee would have to prove that he or she was terminated, at least in part, because his or her employee’s protected status (gender, religion, race, national origin, age, disability, etc.). In addition, discharged employees could claim that their former employer defamed them by:

  • making false, disparaging comments about them to coworkers or other parties;
  • treated them in a manner intended to cause emotional distress;
  • invaded their privacy by improperly disclosing the reason for an involuntary termination; or

  • terminated them in retaliation for exercising a legal right, such as reporting discriminatory or other unlawful employment practices or taking a leave under the Family and Medical Leave Act or the Military Leave Act.

Legitimate Business Reasons for Employment Termination

Even though at-will employers may terminate employees for any reason – or for no reason at all – terminations are easier to defend when they are justified by a legitimate business reason. Legitimate business reasons could include problems, misconduct, a reorganization resulting in elimination of the employee’s position, or financial considerations.

Regardless of the nature of the employment relationship, an employer should consider establishing work rules that list conduct that could result in discipline or termination.

At-will employers should include a disclaimer in the rules making clear that the existence of company rules does not nullify or in any way change an employee’s at-will status.

Moreover, employers (at-will or otherwise) should include a disclaimer stating that the reasons listed are not all-inclusive and that the employer retains the right to terminate employees who, in the employer’s discretion, have either engaged in misconduct or who have not performed at an acceptable level.

In addition, if progressive discipline is provided for, the employer should retain the flexibility to discharge employees immediately when circumstances warrant.

Questions Employers Need to Ask Before Employment Terminations

Before deciding to terminate an employee, the employer should ask themselves the following questions:

  • Does the employee have a legitimate explanation for his/her actions or poor performance? Before deciding whether to terminate an employee, conduct a thorough investigation of the events in question and get the employee’s version or explanation. Consider whether a neutral third person would find the employee’s explanation plausible.

  • Does the punishment “fit the crime”? Consider whether a neutral third party would agree that termination was fair given the nature of the conduct or the seriousness of the performance problems.

  • Is the decision to terminate inconsistent with previous actions of the company? For example, has the employee recently received a favorable performance review, promotion or pay increase? If yes, this would make it more difficult for an employer to justify terminating an employee for performance related reasons.

  • Is the decision to terminate premature? Determine whether alternatives to termination are more appropriate, such as giving an employee a “last chance” or placing the employee on a “performance improvement plan.”

  • Does the employee have any pre-termination rights? Ensure that any pre-termination procedures provided for by the company are followed (Note: special procedures may exist for public sector employees who have certain due process rights not accorded to private sector employees).

  • Has the company administered discipline in a consistent manner? Ensure that members of a protected classification are treated the same as employees outside the protected classification who engaged in similar conduct, under similar circumstances (severity of conduct, prior offenses, length of employment, etc.).
  • Assuming that you have taken steps to help an employee improve his work performance - and they are not working - it may be time to fire the employee. These are the legal, ethical steps in how to fire an employee.

    Ensure that the company's actions, as you prepare to fire an employee, are above reproach. How you fire an employee sends a powerful message to your remaining staff - either positive or negative. So, always fire an employee as a last resort.

    But, do not jeopardize your company's success, a department's success, or your employees' success, to retain an underperforming or non-performing employee. Fire an employee to ensure the success of your other employees and your business.

    Provide Feedback so the Employee Knows That He Is Failing

    The steps that you take when you prepare to fire an employee matter. Unless the actions of the employee require immediate dismissal from the premises, progressively more intense feedback to the employee about his or her work performance is in order. Make sure that you are communicating with the employee by obtaining feedback from the employee that you are communicating effectively. Keep in mind that the goal of the feedback is to help the employee succeed and improve.

  • Goal

  • Fees

The law blog is running by a China lawyer working for a full-service law firm, offering practical, results-driven advice on employment law, divorce, company law, and other legal issues. Our goal is to manage these issues effectively so that our clients can focus on what they could do best.

China Lawyer Blog will charge you under your specific circumstances in the following styles:
(1) Hourly fee arrangements
(2) Contingency fee arrangements
(3) Flat fee arrangements
(4) Percentage fee arrangements

Learn More...


China Lawyer Blog China Lawyer Society

China Lawyer

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

Latest Comments


China law society award

Style of Service

This China Lawyer Blog is aiming at providing better knowledge and understanding of Chinese law for foreigners. Should you have any legal issue in China, do not hesitate to contact China Lawyer Blog for consultation. Preliminary consultation is free. Further legal service, however, will be charged in due rate and in due course.

You are welcomed to ask for a quotation pursuant to your specific circumstance.

About author

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.