Indemnity possible for the laid-off at the bottom     08/02/2012 10:17

Foreign investors tend to develop mechanism to enhance efficiency, but now they should watch out for the mechanism of laying off the staff who is graded at the bottom in the performance evaluation, as Chinese Supreme Court published the drafted Forth Interpretation on Application of Law for Labor Dispute ("Interpretation") on June 28, 2012. This Interpretation makes the indemnity available to the employee who is dismissed for being the last one.

The Interpretation specifies that during the employment, if the employer unilaterally terminates the labor contract by the mechanism of laying off the bottom, the laid off employee may claim indemnity at the ground that the employer breaches the labor contract. The court will sustain such claim.


Elimination of the bottom shall be justifiable. This mechanism does promote efficiency but may also bring problems. In the circumstance that the employee does not infringe upon employer's interest, the employer shall terminate the contract provided that "the employee is incompetent and is still unable to fulfill the job after training or position adjustment", and the employer shall give prior written notice of 30 days or pay additional one month salary. It is unjustifiable to fire an employee just because he is evaluated as the bottom.

(This information is provided by Lawyer Kelly Xie from Guangdong KaiTong Law Firm in friendship. It is not any legal opinion or legal grounds addressed to any organization or individual. For inquiry, please contact Kelly via email at or by phone on 13926185641.)

来源:News GD     Editor:谭晶