Can I fire an employee without notice in China?
Yes, but only under six specific circumstances defined in Article 39 of the PRC Labor Law. In most other cases, employers must provide at least 30 days’ written notice or pay one month’s salary in lieu. A 2023 survey by the Shanghai High People’s Court found that 68% of contested termination cases involved employers who tried to bypass notice requirements and lost, with average compensation awards of ¥87,000. Understanding the difference between summary dismissal (过失性解除, guòshīxìng jiěchú) and notice-based termination (预告解除, yùgào jiěchú) is critical to avoid heavy penalties.
When can you fire without notice? Article 39 summary dismissal
Article 39 of the Labor Contract Law permits immediate termination without notice and without severance if the employee has committed a serious fault. The six grounds are:
- Failing the probation period (proven by documented, objective criteria).
- Material breach of company rules (the rules must be legally adopted and the breach clear).
- Serious dereliction of duty causing major damage to the employer.
- Taking on another job that materially affects performance and failing to correct after warning.
- Using fraud or duress to get the labor contract signed (e.g., false degrees).
- Being criminally prosecuted (including detention).
These grounds are exceptionally narrow. A 2022 study by the Beijing Arbitration Commission showed that only 23% of attempted summary dismissals were upheld in arbitration, because employers failed to prove the “serious” threshold. For example, a single instance of lateness is rarely enough; the employer must show a pattern or a written policy clearly stating that specific behavior is a material breach.
| Ground | Notice required? | Severance pay? | Risk level | Typical outcome if challenged |
|---|---|---|---|---|
| Article 39 (summary dismissal) | No — immediate | None | High — very strict proof required | 77% of cases dismissed or reduced at arbitration (2022 Beijing data) |
| Article 40 (no fault, with notice) | 30 days or payment in lieu | 1 month per year of service | Moderate — easier to prove than Article 39 | ~60% upheld if procedures followed |
| Article 36 (mutual agreement) | By negotiation | Negotiated (often 1–2 months) | Lowest — safest option | Rarely disputed if documented properly |
What about payment in lieu of notice?
Chinese labor law allows employers to skip the 30-day notice period by paying 代通知金 (dài tōngzhī jīn) — one month’s salary. This option is available only under Article 40 (no-fault termination), which covers three situations:
- After medical treatment for illness or non-work injury, the employee cannot perform the original work or other work assigned.
- The employee is incompetent (proven by training or position adjustment).
- A major change in objective circumstances makes the contract unperformable and negotiation fails.
Using payment in lieu does not eliminate severance. The employer must still pay full severance (one month’s salary per year of service, capped at three times local average and 12 years). For a manager with 8 years of tenure earning ¥25,000/month, that means ¥25,000 for the payment in lieu plus 8 × ¥25,000 = ¥200,000 severance — a total ¥225,000 exit cost.
Decision framework: should you fire without notice?
If you have documented proof of fraud, theft, or a criminal charge, and your employee handbook was legally adopted → choose Article 39 summary dismissal (no notice, no severance).
If the employee is incompetent or has performance issues without clear misconduct → choose Article 40 with 30 days notice or payment in lieu, and prepare severance.
If you lack airtight documentation or the employee might challenge → choose mutual negotiation (Article 36) to avoid arbitration risk.
Cost: ¥87,000 average compensation for illegal termination (2023 Shanghai arbitration data) plus 100% penalty for unpaid wages — often exceeding ¥150,000 total.
Fix: Always gather written evidence first: signed warning letters, CCTV footage, or third-party investigation reports. Never use summary dismissal unless you can present a paper trail to an arbitrator.
Cost: The handbook is legally invalid, making any dismissal under Article 39 immediately illegal. Penalty: 2x monthly salary for every year of service — for a 5-year employee earning ¥15,000/month, that’s ¥150,000.
Fix: Before dismissing anyone under a company rule, confirm the handbook was properly adopted with democratic procedures and has been signed off by employees. If not, use Article 40 instead.
Cost: Without a signed acknowledgment, the employee can claim they were never notified, forcing the employer to restart the 30-day notice period or pay additional salary. Legal costs exceed ¥20,000.
Fix: Use registered mail (EMS) with return receipt, plus WeChat confirmation and, if possible, a labor-notary service to witness delivery. Keep all receipts for at least two years.
NEXT STEPS
- Audit your employee handbook. Read China Labor Contract Termination: A Complete Guide to review adoption procedures and ensure your rules meet Article 4 legal standards.
- Prepare a dismissal checklist. Use Employee Dismissal Checklist for China to verify you have the right evidence, notice, and severance calculations before firing.
- Set up proper documentation systems. Book a free 30-minute China labor law consultation to get your warning letter templates and termination procedures in order — especially if you employ more than 10 staff.
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