A Spotlight on China

We have significant experience in providing strategic legal support for matters in jurisdictions all over the world. The following snapshot is an example of a recent issue we have dealt with in China.

Tricky Exits

Exits in China often require advance strategic planning to ensure an employer avoids a lengthy and arduous process, or disruptive behaviour from outgoing employees. It is not unusual for exiting employees to make threats, ignore termination arrangements or otherwise look to cause as many difficulties as possible to try to create pressure on their employer. The best way to combat this is to plan well in advance, both legally and commercially (e.g. with respect to IT access), to minimise the avenues open to an employee to disrupt the rest of the workforce. 

The burden of proof on an employer to demonstrate a legitimate basis for termination is very high, even in cases of gross misconduct. For example, it is crucial for work policies to be drafted carefully and comprehensively, taking both local law and industry considerations into account, because if any type of misconduct is not covered by the rules, then the employer will struggle in being able to justify the basis for termination. 

In addition, it is vital to ensure that the process followed for terminating employment is in accordance with PRC law (as well as being aligned with the business’s work rules), and that the employer collates as much evidence as possible to support the basis for termination. We have assisted in some highly sensitive cases recently and, armed with our strategic input in advance, the employers were able to achieve the exits with significantly reduced risks. 

There may also be a need to consider a negotiated exit deal, in particular if there is a risk that expensive arbitration processes would be triggered (which is more common in China than many other jurisdictions). We have extensive experience of preparing dual-language settlement agreements that protect the interests of the employer whilst also providing the employee with a reasonable financial incentive to waive employment related claims and allow for an amicable departure. We are also aware of the strict local execution requirements needed to ensure a legally binding agreement, so that there is no risk to the employer of the agreement not being valid. 

Our Experience