Draft regulations on mass lay-offs released for public comment

The Ministry of Human Resources and Social Security released draft regulations on mass layoffs for public comment on 31 December 2014. The draft mass layoff regulations reiterate the requirements on mass lay-offs – defined as terminations of 20 or more employees, or 10% or more of the workforce – under the Employment Contract Law (ECL), and also provide additional detailed requirements on mass lay-off procedures, as summarised below.

In the event that a company meets one of the statutory grounds allowing for mass lay-offs, companies may consult with the company union or employee representatives about measures that may be taken to avoid terminating employees, or reduce the number of employees to be terminated. Depending on the applicable statutory mass lay-off ground, companies may take measures such as transferring impacted employees to other job positions, enhancing worker skills, reducing working hours, making salary adjustments, etc. For those companies that have taken effective measures to avoid or reduce the impact of mass lay-offs, the labour bureau will provide an allowance to fund employees’ living subsidies, social insurance contributions and worker training.

Business Law Digest is compiled with the assistance of Baker & McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker & McKenzie by e-mailing Danian Zhang (Shanghai) at: danian.zhang@bakermckenzie.com