Situation & Details
Notice Result
How notice periods work in China
Employer no-fault termination under Article 40 covers three situations, such as incompetence after training or job adjustment. The employer must either give 30 days' prior written notice or pay one month's salary in lieu of notice โ this payment is the โ+1โ commonly discussed in N+1.
Employer summary dismissal under Article 39, such as serious misconduct, generally requires no notice and no payment in lieu, but the grounds and evidence must be solid or the dismissal may be found unlawful.
Payment in lieu of notice is not severance. It only replaces the missing 30-day notice. Statutory severance (N) is calculated separately and depends on the termination ground.
Employee resignation notice periods
Under Article 37 of the Labor Contract Law, an employee may terminate a labor contract by giving the employer 30 days' written notice. During the probationary period, the employee may terminate by giving 3 days' notice. These are the statutory minimum notice periods; employment contracts may specify longer periods but not shorter ones.
Employer no-fault termination notice (Article 40)
When an employer terminates an employee under Article 40 grounds (illness after medical treatment, incompetence after training, or material change in circumstances), the employer must either:
- Give 30 days' written notice in advance, OR
- Pay one month's salary in lieu of notice (ไปฃ้็ฅ้)
The payment-in-lieu amount is typically the employee's salary for the previous month. This is the source of the commonly discussed "N+1" formula โ the N represents the economic compensation for years of service, and the +1 represents the payment in lieu of notice.
Summary dismissal without notice (Article 39)
Under Article 39, an employer may immediately terminate the contract without notice or severance if the employee:
- Fails to meet employment conditions during probation
- Seriously violates the employer's rules and regulations
- Commits serious dereliction of duty, causing significant harm to the employer
- Establishes a labor relationship with another employer that materially affects the completion of current tasks, and refuses to correct
- Uses fraud, coercion, or exploitation to cause the employer to conclude or amend the contract against its true will
- Is subject to criminal liability
Special situations affecting notice
Certain situations require special handling:
- Fixed-term contract expiry: No formal notice is legally required, but 30 days' notice is customary and required in some localities.
- Economic layoff (Article 41): The employer must give 30 days' notice to the trade union or all employees and explain the situation.
- Protected periods: During medical treatment, pregnancy, maternity leave, nursing leave, or work-injury suspension, the employer generally cannot terminate the contract without the employee's consent.
Consequences of insufficient notice
If an employee resigns without proper notice and causes economic loss to the employer, the employer may claim compensation for the actual loss caused. If an employer terminates without proper notice or procedure, the termination may be deemed unlawful, potentially resulting in 2N damages.