Q: I am going to reduce the workforce of my company. Someone told me that I had to pay some compensation to the staffs. Is that compulsary under the PRC laws? Please give me more details.
A: Under the PRC Employment Contract law, in the case that the employer is to terminate the employment relationship, unless there are defaults on the employee's side, the employer shall pay the emplyee the severance pay.
(1) If the term of the employment contract has not expired yet, the serverance pay shall be based on the number of years worked with the employer at the rate of one month's wage for each full year worked.
(2) If the term expires, the number of compensation year shall be from January 1st,2008, when the PRC Employment Contract Law took effect, to the end of the employment contract, also at the rate of one month's wage for each full year worked.
However, if the employer is to reduce the workforce by more than 20 people, or 10% of the total number of the employees, the employer has to report the workforce reduction plan to the labor administration department.
Q: I am the owner of a Shenzhen foreign-invested enterprise. I think that my enterprise was treated unfairly by the government and its officials. May I take any actions against them?
A: You may bring the Administrative Review or the Administrative Lawsuit. If you think that the government department's material activities, which are legally stipulated, have infriged on your legal rights and interests, you may
(1) request the higher government department to review the issue (i.e. Administrave Review), or
(2) suit the government to the court directly (i.e.Administrative Lawsuit, similar to the Judicial Review in the common law jurisdicion), or
(3) do the Administrative Review first then the Administrative Lawsuit. In both review procedures, the government party has to burden the proof adducing responsibilities, adducing their administrative activities' legality. Otherwise the government party will lose the case.
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