If the employer and the employee reach an agreement through consultation, their labor contract may be terminated. In absence of such an agreement, the laborer is entitled to unilaterally terminate the labor contract under the following conditions/circumstances: when notifying the employer in writing 30 days in advance; when notifying the employer three days in advance during the probation period; due to some fault of the employer (e.g. failing to pay the employee remuneration on time and/or in full, failing to pay social insurance premiums for the employee in accordance with laws,etc.). The unilateral termination of the labor contract by the employer is subject to stricter conditions and must meet certain legal prerequisites, for example, if the laborer is proved to fail to meet the conditions of employment during the probation period, due to some major fault of the laborer, if the laborer is laid off due to economic reasons of the employer, etc. The labor contract is terminated when the labor contract expires, the laborer begins to enjoy basic endowment insurance in accordance with laws, or the employer decides to disband. If the employer proposes to terminate the labor contract through negotiations with the employee, or cancel or terminates the labor contract due to legal circumstances such as the employee's disqualification or layoffs for economic reasons, economic compensation shall be paid. Economic compensation shall be paid to the laborer based on the number of years the laborer has worked for the employer in the amount of one month's salary per year employed. If the laborer has been employed for less than a year but more than six months, the employer shall still pay the laborer one month of salary; if the laborer has been employed for less than six months, the employer shall pay the laborer the equivalent of a half of month's salary.

Updated on Jan. 22, 2024

Source: Foreign Investment Guide of the People's Republic of China (2023 Edition)