The Ministry of Human Resources and Social Security of the People's Republic of China published Provisions on Enterprise Mass Layoff (Draft for Comments) (the "Draft Provisions") on December 31, 2014, and requested the submission of public comments and opinions on the Draft Provisions by January 31, 2015.
Currently, Article 41 of the Labor Contract Law (the "LCL") regulates enterprise mass layoffs. The Draft Provisions further supplement the procedural requirements under Article 41. In particular, the Draft Provisions set forth specific information that an enterprise is required to provide to the trade union or all employees prior to the mass layoff, content that a layoff plan must cover, and specific documents that must be filed with the local labor authority.
Moreover, the Draft Provisions provide for certain new articles not covered under Article 41 of the LCL. Article 18 of the Draft Provisions states that if an enterprise intends to terminate 20 or more employees through mutual agreement under the circumstances listed in Article 41 of the LCL, the enterprise must notify the labor union or all employees 30 days in advance and report the number of employees that the enterprise is intending to terminate to the local labor authority.
Currently, if an enterprise intends to terminate 20 or more employees, it may be more willing to adopt the approach of termination through mutual agreement rather than going through the mass layoff procedure under Article 41 of the LCL. This is because mutual termination is more straightforward in terms of process and may avoid the imposition of other obligations, including notifying the labor union and filing with the local labor authority. However, Article 18 of the Draft Provisions will further tighten the procedure of termination through mutual agreement if it involves 20 or more employees. It remains to be seen whether these additional obligations will be included in the final version of this regulation.
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