China Law on Employee Resignations

Because employer-initiated terminations are generally so difficult in China, employers (especially foreign companies doing business in China) tend to focus so much on terminations that they overlook the problems that can arise from employee resignations. Just a super brief summary of China’s laws on employee resignations: in many places, an employee can leave with 30 days’ written notice during the contract term and 3 days’ notice during a probation period.

Consider this hypothetical: Employer and Employee enter into an employment contract. Employee sends a resignation letter to Employer via email on 1/1, stating a final departure date of 1/31. Employer accepts by replying to that resignation email and schedules a meeting on 1/15. Employee then seeks to retract his resignation letter because Employer persuaded him to stay on at the company. Employer disputes this version of events during proceeds with processing Employee’s 1/31 separation. Employee sues for unlawful termination. How will a Chinese court likely rule?

In the real case on which this hypothetical is based, the employer prevailed primarily because the employee failed to produce evidence to prove that the employer had ever talked to him about staying or that the parties had essentially mutually revoked the effect of the employee’s initial resignation letter. The court held that the resignation letter sent to the employer on 1/1 took effect even before the employer formally accepted it because under Chinese law an employee does not usually need the employer’s consent to resign. The law provides that unless an exception applies (e.g., the parties have agreed to a service period agreement), the employee can leave employment by providing 30 days’ written notice and that’s it. An important note here: do not assume you get to say no to an employee resignation simply because the employee signed a fixed-term employment contract or even an open-term contract. Generally speaking, you as an employer do not get to say no to your China employees trying to leave early.

Even though it ultimately turned out to be a good day for the employer (after several layers of legal proceedings, including labor arbitration, a trial, and an appeal), there were a couple of things the employer could have done differently to avoid being sued in the first place. First, the employer probably should not have handled the employee resignation by emails, because having hard copy evidence is usually better than email evidence. Second, the employer should have made clear in writing to the employee that the resignation had been accepted and this was the case no matter what they might discuss orally later. Also, when it became clear the employee had changed his mind and was not going to leave voluntarily as he initially said he would, the employer should have considered settling with the employee so as to avoid the pitched and expensive legal battles that followed.

Bottom line: Be careful with your employee resignations throughout the separation process.