Labor Law & Employee Policies · ROWINT BLOG

"Don't Come In Tomorrow": The Call That Doubled Severance

A ten-minute Zoom call replaced a written termination. It cost Company D ten months' salary instead of five.

2026-10-12 · how to lawfully terminate an employee in China

One Sentence Can End the Relationship, Just Not Lawfully

In China, one spoken sentence can end an employment relationship. It just cannot end it lawfully. When that sentence is don't come in tomorrow, the price is often double the statutory severance.

The gap between what a manager says and what the law requires is where most of the expensive cases live. This one is a fair illustration of how quickly it closes.

The Setup: A Budget Cut and a Manager Who Skipped the Paperwork

Company D, a UK-based fintech, employed a product marketing manager in Beijing through an EOR. Five years in, she was a solid performer. Then HQ cut the China marketing budget and decided her role had to go.

The regional VP disliked corporate process and prided himself on doing things personally, so he skipped the paperwork and booked a ten-minute Zoom call. The company was restructuring, he told her; this was her last week and she did not need to come in after Friday. She said she understood. He promised she would be paid through the end of the month. Company D then told the EOR to process her final pay, and the next morning IT switched off her accounts.

The Turning Point: One WeChat Message

That afternoon she sent one WeChat message confirming that the company was ending her employment as of Friday. The VP replied that this was right and thanked her for understanding.

Six weeks later an arbitration claim landed at the EOR: unlawful termination, with damages of twice the statutory severance. Company D was baffled. It had been a friendly conversation, she had said she understood, and she had been paid through month-end. Surely that was a mutual parting?

What the Tribunal Asked For

The tribunal asked for one of two things: a signed termination agreement, or a written notice that stated a lawful ground and followed the statutory procedure. Company D had neither. Its argument that she agreed rested on a spoken I understand on a video call, while her side had the WeChat reply, the switched-off accounts and, as many employees now do, a recording of the call.

Because the EOR had processed her exit on Company D's instruction, the tribunal treated the decision as the employer's own.

What the Law Actually Says

An employer can end a labor contract in China in only two lawful ways.

  • By mutual agreement, under Article 36 of the Labor Contract Law.
  • Unilaterally, on a statutory ground and through the statutory procedure, under Articles 39 to 41.

Why a Budget Cut Is Not a Ground

A budget cut is not, on its own, a statutory ground. The nearest routes are Article 40(3), a major change in objective circumstances after failed negotiations to change the contract, and Article 41, economic layoffs. Both come with strict conditions, and neither can be satisfied retrospectively.

Procedure is not optional either. For Article 40 terminations the employer must give 30 days' written notice or pay one month's salary in lieu. Where a union exists it must be told the reason in advance under Article 43. And when the contract ends, the employer must issue a written termination certificate under Article 50.

Acting before the paperwork exists is what turns a restructuring decision into an unlawful termination. Switching off accounts and stopping pay are the acts tribunals read as proof that the relationship has already ended.

What Courts Have Said About Verbal Dismissal

Nothing was in writing is not a defence. In a Beijing Haidian District court case reported in late 2025, a company executive told an employee in a meeting room that he no longer needed to come in, then shut off his system access. When the employee asked why, he was told to go home and wait for notice. The company later dismissed him for absenteeism. The court found that the relationship had ended on the day of the verbal notice, at the company's initiative, so the later absenteeism dismissal was invalid and damages for unlawful termination were owed. Termination is not limited to written form, and later fixes or fresh notices cannot reverse what has already taken effect.

It is not automatic, though. In a Sichuan case from the same report, a hospital director said in the heat of an argument that he would fire an employee. The employee kept working for a week, HR repeatedly told him to come to work, and when he stopped showing up the hospital dismissed him for absenteeism. The court held that the director's words were not a genuine expression of the hospital's intent and rejected the damages claim. The difference was what the employer did after the words: in Beijing the company shut off access and moved on; in Sichuan HR kept asking the employee to come back.

One more point works against employers. In dismissal disputes the employer carries the burden of proof under Article 44 of the Supreme People's Court Interpretation (I) on labor disputes. She said she understood is unlikely to carry it.

The Cost: N Versus 2N

The arithmetic is the reason this case is worth retelling.

  • Statutory severance (N) is one month's salary per year of service under Article 47. For a five-year employee, N is five months.
  • Damages for unlawful termination (2N) are twice that under Article 87, so ten months. On an illustrative salary of RMB 25,000 a month, below the local cap of three times the average local wage, that is RMB 250,000 instead of RMB 125,000.
  • Damages replace severance rather than adding to it under Article 25 of the Implementation Regulations, and month-end pay for work already done does not offset them.
  • She could instead have asked to be reinstated under Article 48, a messy outcome for a role that no longer exists.

What Skipping the Paperwork Bought

Skipping the paperwork did not save money. Company D paid RMB 250,000 where a written mutual termination agreement would have cost RMB 125,000 plus a modest premium for a signed release, and it added months of arbitration, legal fees and management time.

Legally the EOR, as employer of record, carried the liability. Under typical service agreements the cost flowed back to Company D.

What To Do Instead

Five habits prevent this outcome, and the first two cost nothing.

  • Decide the route before anyone says a word. There are two lawful routes: a negotiated exit in a written mutual termination agreement, or a statutory termination with real grounds, evidence and procedure. If the honest reason is that the role is no longer needed, the route is negotiation.
  • Put a negotiated exit in writing before the last day. When the employer proposes the exit, statutory severance is the floor under Article 46, and most companies add a premium for a fast, signed release. Have both sides sign, and cover final pay, unused leave, bonus, social insurance and handover.
  • Script the first conversation. The manager's job is to open the discussion, not to end the contract: the company is reviewing the role, and HR and our employer of record will follow up with a written proposal. No dates, no last week, no you don't need to come in. A friendly yes, that's right in a chat is a decision in writing.
  • Do not act out the dismissal before it is papered. Switching off accounts, stopping payroll or social insurance, or announcing the departure to the team are the kinds of conduct courts have treated as evidence that the relationship has already ended.
  • If someone has already said it, act the same day. If it was a slip and the company does not intend to end the contract, HR should say so in writing and ask the employee to keep working, which is what protected the employer in the Sichuan case. If the decision is real, do not pretend otherwise: bring in PRC counsel and move quickly to a written agreement. Either way, never backdate documents.

Bottom Line

In China, you're fired is not a sentence. It is a procedure. Say it without the procedure and you do not save time or money; you buy the expensive version of the exit.

Company D is a composite, illustrative case, not any specific client. Consult qualified PRC employment counsel for case-specific guidance.

About Rowint

Our company is a China-based, one-stop recruitment + EOR provider, helping international companies hire, employ, and manage teams in China, compliantly and efficiently, from drafting employment contracts and social insurance compliance to termination and layoffs. If any of this sounds familiar, reach out to us for a free compliance check-up.

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