Legal Risk Prevention in Labor Contract Termination and Expiration
[5] Unilateral termination of a labor contract by the employer is divided into immediate termination and advance notice termination. Immediate termination applies when the employee has committed serious disciplinary violations or other fault-based circumstances, and the employer may terminate the contract without prior notice. However, the employer bears the burden of proof regarding the employee's misconduct and must notify the labor union of the reasons for termination in advance. Failure to notify the union may result in the termination being deemed illegal.
[6] Advance notice termination applies when the employee is incompetent, unable to perform the original work after the medical treatment period expires, or when significant changes in objective circumstances occur. The employer must notify the employee in writing 30 days in advance or pay an additional month's salary before terminating the contract. When applying incompetence as grounds, the employer must provide sufficient evidence proving the employee's incompetence and that training or job reassignment has been carried out.
Economic layoffs must meet strict legal conditions. Layoffs of 20+ employees (or 10%+ of staff) require 30 days notice to the union or all employees, hearing their opinions, and reporting to the labor administrative department.
Circumstances for the termination of a labor contract include the expiration of the contract term, the worker beginning to receive basic pension insurance benefits according to law, the worker's death or being declared dead or missing by a people's court, and the employer being declared bankrupt according to law. It should be noted that termination of the labor contract is restricted under specific circumstances; for example, if the worker is pregnant, in childbirth, or nursing, the labor contract shall be extended until the corresponding circumstances cease to exist.
The management of non-competition agreements is also an important issue in labor law practice. Non-competition restrictions apply only to senior management, senior technical personnel, and other personnel with confidentiality obligations of the employer. The scope, territory, and duration of non-competition restrictions shall be agreed upon by the employer and the worker, but must not violate laws and regulations. The non-competition period shall not exceed two years, and the employer shall provide the worker with monthly economic compensation during the non-competition period.
