The Labor Contract Law clearly stipulates the procedures for employers and employees to terminate the employment contracts ( you may visit our post: Can a Company Fire an Employee Who Failed to Tell the Truth? for more information ). In addition, the law provides specific legal liability (paying compensation to an employee) for employers when they terminate labor contracts illegally. However, it does not specify what legal liability employees should bear if they fail to terminate labor contracts in accordance with the law.
According to the Labor Contract Law, if any employee want to terminate a contract, he must notify the employer in writing 30 days in advance (three days in advance during the probationary period), unless it’s the situation provided in Article 38 of the Labor Contract law, where any employee is forced to work by acts of violence, threats of violence, general threats or by illegally limiting his/her personal freedom, or is forced to perform dangerous operations which may endanger his/her personal safety under illicitly commands or forces of the employer, the employee may immediately discharge the labor contract without informing the employer in advance.
However, some employees refuse to terminate the employment relationship in line with the law. They quit their job at short notice and are unwilling to do anything to help with the transition to a new employee…such behavior badly affects the company and could harm them financially or reputationally.
In response, some companies come up with countermeasures. For example, employees are required to pay a one-month salary as payment in lieu of notice if they do not give a 30 days’ notice to the employer to quit, or the company may refuse to go through the severance procedures for the employee or refuse to pay salary if the employee refuse to handover his/her work cooperatively.
But is it legal to do so? Definitely not!
First of all, the ” payment in lieu of notice” is not a legal concept, but rather a common practice in the Labor Contract Law. The employer is required to “pay one additional month’s wages” to the employee under certain circumstances, however this provision applies only to the employer not the employee.
Secondly, Article 25 of the Labor Contract Law stipulates that an employer may not require any employee to pay any penalty, unless the employer has provided special technical training or signed a non-competition agreement with the employee. Requiring an employee to pay a ” payment in lieu of notice” is in effect a disguised penalty payment, which is in violation of the mandatory provisions of the law and thus invalid.
Then, can the company suspend the separation procedures or withhold wages on the grounds that the employees have not resigned in line with the laws and regulations and have not handled the work handover properly?
Obviously this is impossible as well.
The Labor Contract Law clearly stipulates that the company must pay the wages of its employees in full and on time. In addition, Article 50 of the Law also stipulates: “The employer shall issue a certificate of termination at the time of termination of the labor contract, and shall, within 15 days, handle the procedures for the transfer of files and social insurance relations for the employees.”
Obviously, it’s the company’s obligation to finish all severance procedure in the prescribed time limit for the employees, and to make timely and full payment of employee wages in accordance with the labor contract. Otherwise, the company has to bear relevant responsibility as a consequence.
However, it is not saying that the company can do nothing when the employees quit their job illegally. Article 90 of the Labor Contract Law stipulates that “the employees shall be liable for compensation if they terminate the labor contract in violation of the provisions of this Law, or in violation of the obligation of confidentiality or non-competition stipulated in the labor contract and in the end, cause losses to the employer.” 』
In addition, Article 4 of the Measures on Compensation for Violation of the Provisions of the Labor Law relating to Labor Contracts also stipulates that:
Where an employee rescinds the labor contract in violation of the relevant provisions or the stipulations of the labor contract, causing any loss to the employer, the employee shall compensate the employer for the following losses:
1. Expenses paid by the employer for the recruitment and employment of the employee;
2. Training expenses paid by the employer for the employee, unless otherwise agreed upon by both parties;
3. Direct economic losses caused to the operation of the employer; and
4. Other compensations stipulated in the labor contract.
Therefore, it is highly recommended that the company provides specifically how to calculate the loss caused by the employee who illegally quits the job referenced in the labor contract, such as the cost for employer issuing a recruitment post, wages and benefits for the replacement employee, as well as some of the subsidiary or benefits provided by the company to employees.
If similar provisions are made in the company’s internal regulations, it is important to ensure that these internal regulations are publicly discussed and adopted by the employees or the employees’ congress.
Useful website:
Ministry of Human Resources and Social Security of the People’s Republic of China
