During the term of an employment contract, a China employee generally can resign by giving 30 days’ written notice. Probationary employees generally can leave their employment by giving a mere three-day notice during their probation period.
Under China employment laws, when an employee voluntarily resigns, their resignation is deemed to have been a “unilateral termination” initiated by the employee, and no statutory severance is owed to the employee. Nonetheless, even when dealing with an employee’s voluntary resignation, it still behooves employers in China to proceed with care.
In this post, we’ll discuss a few things employers should keep in mind when dealing with an employee resignation in China.
1. Keep Clear Written Documentation
First, 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. Keep hard copies of the following documents at a minimum:
- The employee’s resume, cover letter and any interview notes you took during the hiring process
- The employee’s job offer letter and any written acceptance letters
- Any employment-related agreements or contract addendums
- Reference check notes, drug test results and other important verification from employee onboarding
- The employee’s original signed employment contract
- The employee’s basic information, including an up-to-date address and phone number
- Any documented write-ups, disciplinary actions or other notable records from their time of employment
- Benefits and payroll records, including any awarded bonuses
It is not unheard of for employees 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’s departure.
Written documentation is essential for resignation and termination cases, but it’s also helpful for other parts of the employer-employee relationship. The documents and information you keep records of can also be useful when evaluating employee compensation, raises, bonuses or promotions.
Do not handle employee resignations via email. Use hard copies of written documents because they make for much better evidence than emails if an unemployment case gets taken to court. In our China employment lawyers‘ experience, the longer the string of email correspondence relating to an employee’s resignation, the more likely the employee could sue to revoke the resignation at some later date, claiming the employer gave them reasons to believe they never accepted the resignation.
Long email chains also make it harder 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.
2. Use a China Employee Resignation Form
Do use an up-to-date, China-centric employee resignation form instead of a general resignation template. China-specific forms will ensure the resignation process is compliant with all current employment laws, and it’s an effective way to track each step of the process that you and the resigning employee must complete.
Review the resignation form before moving forward with the resignation process so you can verify any critical information or get clarification on unclear details. If the reason your resigning employee lists for leaving is unclear or even hints at employer wrongdoing, seek clarification with your employee, document all interactions in writing and resolve those issues with the employee if possible.
Contact a business and employment lawyer with experience in Chinese law if you’re unsure about any part of the resignation form or process.
3. Resolve All Outstanding Matters With the Employee
Do resolve all outstanding matters with your departing employee, including — and especially — any bonus payments. 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 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.
Employees may pursue 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 your locale, employment contracts and employer rules and regulations — whether your resigning employees are entitled to a bonus or not. When you figure out your answer, consider modifying what you have to strike a better compromise for you and your former employee if the applicable laws allow changes.
If you face an employee resignation, 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, try to secure a written agreement with the departing employee that directly addresses this issue and keep it for your records.
Other outstanding matters to resolve might include:
- Negotiations: If your employee resigns at a critical time for your business or provides an essential service that might be challenging to replace, consider negotiating. You could ask them to consider staying a few extra weeks to better train their replacement, assuring them the additional time will work around their new career plans, if necessary. Depending on the employee’s reason for leaving, you may consider negotiating a pay raise or more flexible scheduling to keep them on the team.
- Exit interviews: Exit interviews can be formal or informal — the important part is having a clear picture of why the employee is resigning so you can address any necessary changes in your existing policies or workflow. Encourage honesty and be open to accepting their feedback without reacting too strongly.
- Replacement plans: If the resigning employee had special expertise or held a significant position in your company, work with them to create a plan for replacement. While finding and hiring a new employee is your responsibility, the resigning employee may be willing to create a list of characteristics to look for in a new hire or assemble a package of important notes for a smoother transition.
How Best to Handle a China Employee Resignation
Losing an employee is rarely easy, but it’s an unavoidable part of operating a business. The bottom line is to handle all employee resignations with care and document every step of the process.