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alwkeel
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Asked: 2025-05-08T21:45:11+08:00 In:

Can I be laid off by my Chinese employer? What kind of compensation, if any, am I entitled to?

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Can I be laid off by my Chinese employer? What kind of compensation, if any, am I entitled to?
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    1. ROSE HAND
      Begginer

      1. Lawful Grounds for Layoffs

      Chinese labor law permits employer-initiated layoffs—known as “economic redundancies”—only under specific conditions:

      Economic Justifications

      • Restructuring due to bankruptcy (per the Enterprise Bankruptcy Law)
      • Severe operational challenges, such as prolonged financial losses supported by audit reports
      • Job obsolescence from technological advancements or business model transformations

      Procedural Requirements

      • Scale Threshold: Layoffs must involve at least 20 employees or 10% of the total workforce
      • Mandatory Process:
        • Employers must notify the labor union or employees 30 days in advance
        • Submit a detailed redundancy plan to local labor authorities for record
        • Exclude protected groups: Pregnant workers, employees with work-related injuries, and those with over 15 years of service with less than 5 years until retirement cannot be laid off

      2. Compensation Structures

      Lawful Layoffs (N Model)

      • Calculation: 1 month’s salary for each year of service (pro-rated for partial years)
        • Salary Cap: If earnings exceed 3 times the local average wage, compensation is capped at 12 months based on the capped amount
        • Example: A 5-year employee earning ¥20,000/month in a region with ¥6,000 average wage receives 5 × ¥18,000 = ¥90,000

      Unlawful Layoffs (2N Model)

      • Trigger: Violations of procedural rules (e.g., lack of notice, false justifications) or targeting protected employees
      • Compensation: Double the standard N amount (e.g., 3 years of service = 6 months’ pay)

      Additional N+1 Entitlement

      • Applies when: Employers fail to provide 30 days’ advance notice
      • Extra Payment: 1 additional month’s salary on top of the N compensation

      3. Exceptions to Compensation

      No Payment Required

      • Layoffs due to employee misconduct (theft, fraud, serious policy violations)
      • Voluntary resignations not caused by employer fault

      Reduced Payments

      • Settlements reached through mutual negotiation between employer and employee, which may include lower compensation terms

      4. Claiming Your Rights

      1. Gather Evidence: Retain employment contracts, pay slips, layoff notices, and communication records
      1. File Arbitration: Submit a claim to the Local Labor Arbitration Committee within 1 year of the layoff
      1. Legal Appeal: If unsatisfied with arbitration, initiate court proceedings within 15 days of the arbitral decision

      Summary of Key Provisions

      Layoff Classification
      Compensation Formula
      Critical Conditions
      Lawful Economic Redundancy
      N (1 month/year)
      Valid business reason, proper procedure followed
      Unlawful Layoff
      2N (double compensation)
      Violates legal requirements or targets protected groups
      Layoff Without Notice
      N+1
      Employer fails to provide 30 days’ advance notice
      Foreign employees facing layoffs should consult their employer’s HR department or local labor authorities for guidance.