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- Human Resources and Payroll in China 2016-2017 (5th Edition)
• The employer undergoes restructuring pursuant to the provisions of the PRC Enterprise Bankruptcy
Law.
• The employer has serious production and business difficulties.
• The enterprise undergoes a change of production, significant technological reform or change of
mode of operation. Upon variation of labor contracts, there is still a need for mass lay-off.
• The objective circumstances have undergone significant changes and, as a result thereof, the
labor contract can no longer be performed.
To be noted, the following personnel shall be given priority to be retained in a mass lay-off:
• A worker who has entered into a fixed-term labor contract of a longer period with the employer.
• A worker who has entered into a non-fixed-term labor contract with the employer.
• Aworker whose family members are not employed or who needs to support aged or under-aged
family members.
Besides, if an employer that carried out amass lay-off is re-hiring employees within sixmonths of the
mass lay-off, the reduced employees need to be noticed and shall be given priority for employment
under the same conditions.
The detailed procedures of mass lay-off are stipulated in “Reduction of Staff for Economic Reasons
Provisions”(Lao Bu Fa [1994] No.447) and other local level legal documents. Companies are suggested
to pay close attention to these procedures. Failing to fulfill these requirements, the company may be
confrontedwith onerous labor disputes or even potential penalties from labor administrative bureaus.
Where a company definitely has a need to reduce staff, it shall act in accordance with the following
procedures:
Step 1
: Explain the situation to all the employees or to the labor union and provide information
regarding details of its production and business, 30 days in advance.
Step 2
: Submit a mass lay-off scheme to all employees or the labor union, that shall include: a.
the names of the staff to be reduced; b. when and how staff will be reduced; c. the procedures for
economic compensation to the staff to be reduced in accordance with laws and regulations.
Step 3
: Opinions regarding the mass lay-off scheme shall be solicited from the labor union or all
the employees and the proposal shall be revised and improved accordingly.
Step 4
: The mass lay-off scheme together with the opinions of the labor union or all the employees
shall be reported to the local labor administration department and the opinions of the bureaus
shall be heeded.