Negotiating Employee Resignation in China
Because the Chinese labor law is very tough on employers, negotiating employee resignation is tough.
The first rule of thumb is you have lost all leverage if you have not done everything legally. The candidates we provide will not accept work unless you hire then legally and pay all legal benefits. Why do they not accept? They know that if you do not do things legally, that you are not trustworthy and may have other tricks that hurt them or even get them in legal trouble. Why would they touch you? The Chinese Labor Law is no joke.
Of course, candidates from other recruiting companies might join you as they do not know that you do not pay. That mismatch will cost you engagement with that new hire, and will also make him or her feel they can cheat you as you are cheating them.
Some hires are glad to hear you do not pay legal benefits or otherwise make a legal hire. They know that because of this you now work for them and not the other way around. If you fire them, they can go to the government to have them punish you. So they do wrong and you are left in trouble. Actually, they secretly do things wrong and when you catch them, the trap is sprung. You are in no position to say they are cheaters.
Negotiating Employee Resignation When You Are Legal
So, now you are legal and have a chance to actually negotiate them out. They have worked for themselves while working for you. Do you have to pay them severance? What does your employees’ handbook say? Did employees have a chance to comment on your handbook? Did they all sign saying they have read it? Does it say no working for yourself or no severance? If you have done all things well, you may be able to not pay severance. If you have any gap here, you have lost your leverage. They will win in arbitration. See China Bad Hire Costs.
If you have not done things legally, they can ask you for more than standard severance. If you refuse and they take you to arbitration, you are busted. The tail wags the dog as soon as you fail to pay all benefits and follow all employment rules. See also Hire Legally.
The law says that you own the employee until they sign saying they accept leaving, So the whole process is one where you are trying to get the person to sign. Be nice to them. Say nice things in the letter to have them sign and leave. If you hire people like we supply, they will sign and leave if you have done things legally. Very hard to say what the tricky person you hired will do. He or she lied to get the job with you, hard to say what it will take to get them to sign so you are free. Really we need to think ahead when we hire, and how we employ, and how that will finally look when they leave. Then we will not be fighting when they leave.