Dismissal from a Chinese company – what’s next

Basically, employment in China implies the employee’s connection with a single company (in contrast to some Western countries, where a work visa suggests free employment and dismissal). Naturally, this does not apply to holders of Chinese green cards, but they are still a minority. Therefore, when resigning and leaving China, when switching jobs, when changing the type of visa from work to study/family, and so on, first of all, you need to quit your current job.

Regardless of whether you are going to move to work in another Chinese company, or leave China permanently – the initial procedures are the same.

First of all, you need to go through the general civil dismissal procedures, which are identical for both Chinese and foreigners – accountants must remove you from the list of employees in the company’s personal account in the tax agency and Social Security Fund (减员). All this is done on the basis of a dismissal document. It can be called differently – 离职报告 (if the employee is dismissed at the initiative of the employer), 离职协议 (if the dismissal occurs by agreement of the parties), and so on.

Since contributions are deducted automatically at the beginning of each month for the previous month – it is in the employer’s interest to remove you from the lists as early as possible – so as not to pay for air.

You should pay attention to the following details:

1. The only confirmation of dismissal is a record in the bowels of the SSF system and nothing is handed to the employee. To be more precise, s/he has a social security card on hand.
2. If you are going to transfer to another Chinese company or ever work in China at all – the statement on termination of relations with the SSF should contain 转出. In this case, your account with the SSF with everything accumulated remains in China and the new employer simply has to add it to their database. If the matter is within the framework of one administrative-territorial unit – without further ado, if not – then within the framework of the 社保转移 procedure
3. If you are going to leave China and want to take these savings with you, there should be 终止. In this case, your account with the SSF is closed and upon arrival in China, you will need to reopen it from scratch.

The terms of termination of the employment contract must be spelled out in the dismissal document. Regardless of whether the employee leaves of their own free will, for some kind of violation, or simply the term of the contract has expired. This determines the type of the document and the data indicated in it, but the following points must be mentioned:

1. date of termination of the employment contract
2. date of actual termination of employment relations
3. remaining payments – regarding both salaries and taxes/contributions to the SSF
4. amount of severance pay

According to the legislation of the PRC, and specifically – the Law of the PRC “On Employment Contracts”, Article 46, upon dismissal under Articles 24 (by agreement of the parties), 26 (after injury through no fault of the employee, if this position is no longer required – redundancy/reorganization), in case of changes that make it impossible to continue the contract, 27 (reduction of staff due to impending bankruptcy, difficult situation, etc.) of the Labor Law of the PRC, the employee is paid 离职补偿金 (severance pay) in the amount of the employee’s monthly salary for each year worked. This is the minimum amount, the amount of severance pay can be set as desired, usually this is discussed when getting employed. But this amount cannot be less.

At the same time, a period of up to six months is equal to half a year, while a period of more than six months is considered a whole year. That is, for 17 months of work you must be paid one and a half monthly salary, and for 19 months – two monthly salaries.

Remember to remind the accountant to handle the severance pay properly. They usually do it themselves, but it doesn’t hurt to be reminded either. This is necessary in order to avoid paying extra personal income tax. Severance pay of up to RMB 282,744 is not taxable, whereas ordinary income is. So, do not forget to make sure that this receipt is treated as severance pay.

After the dismissal document is produced, the employer submits an application for 外国人来华工作许可证注销证明. As always, according to the regulations, it takes up to 10 working days, after which the former employee must have two documents on hand:

1. dismissal document (original). In my case, it was a bilateral dismissal agreement 离职协议书

 2. Work permit revocation certificate (original)

And after that, the employee is not in any way connected with the former employer and can act of their own free will. Now, further steps depend on whether s/he plans to move to a new job in China or wants to leave China.

P.S. If the employment relationship is terminated due to the expiration of the contract (and, as a result, the expiration of the work permit), the work permit is cancelled automatically, but the cancellation certificate is still issued and it is strongly recommended for the employee to pick it up.

Bear in mind that each employee has their own 编号 (serial number) in the SAFEA system. And this number stays with them for a long time. Without a cancellation certificate on hand, you cannot be sure that this 编号 and you are no longer linked with the previous employer (which will make it impossible to re-employ in China)

If the employee leaves China

In this case, the employee must, within 10 days after receiving the cancellation certificate, contact the immigration office of their city, which will cancel their current residence permit (if it is still valid) and, on the basis of the work permit cancellation certificate, will issue a monthly residence permit on the grounds of 停留(stay permit). After that, the employee will have a month to finish all their business in China and leave peacefully. There is no point in writing guides on departure, just make sure that you do not leave behind you any loose ends (and things that can generate potential debts or problems) and, if further work with China is planned, to make it easier to return.

1. Return the apartment to the landlord against signature and in the presence of the agent
2. Terminate the contract for the Internet (in order to avoid the use of the Internet by other people for unclear purposes under your name)
3. Deactivate the SIM card (or transfer to the cheapest tariff)
4. Take care of maintaining access to various services (for instance, Alipay and WeChat can be linked to a foreign phone number)

Well, think for yourself – what kind of unfinished stuff is left.

After that, if you paid contributions to the SSF (or to be more precise, the employer paid them for you), you can take them away. However, it will require severing relations with the SSF, which is not recommended if you plan to return to China, as difficulties may arise later on. If there are no plans to return to China, then why leave money stuck on the Chinese pension and insurance account. Go to your local 社保基金管理中心 and write an insurance relationship termination statement, attach your dismissal certificates, passport and get your honest savings.

If you plan to move to another company

Then you stop at the step “obtain a cancellation certificate” and proceed differently. Since the concept of “ a work permit transfer” does not exist in China, you will still have to go through employment procedure again, but with significant relief – the employer simply creates a new application in SAFEA, but no longer in the section 境外申请工作许可通知, which implies the registration of the whole shebang over again, but in the section 境内申请工作许可. The list of documents there is much shorter, specifically you need to find out in the local 外专局, but in general, you will need (and, most likely, everything will be limited to this). In my case, I needed the following documents:

1. new employment contract
2. previous work permit cancellation certificate+dismissal document from the paragraph above
3. passport
4. application
5. certificate of similarity of positions. In Chinese it is called 补充说明 and is written in free form “in the previous job, the employee did this and that, in the new job s/he will do this and that”. If the new position coincides with the old one, or the employee will perform similar duties, then the original diploma without legalization and a certificate of similarity of positions certified by the seal of the new employer are also required. If the positions are different, then it will be necessary to confirm 2 years of work experience in the new profession, and, most likely, to legalize the diploma again.

P.S. However, for the sake of saving money and time, I advise everyone who works/worked in China to legalize their diploma on the website of the Ministry of Education of the PRC and get an electronic legalized copy of it. It has no expiration date, is accepted on a par with paper legalization and makes life much easier.

It is advisable to create an application for a new work permit with a new employer the next day after receiving the cancellation certificate.

In fact, all this paperwork was set in motion in order to change the two characters “Beijing” to “Shenzhen”.

According to the letter of the law, you are obliged to inform the migration office about all changes in your status within 10 days. Accordingly, the most correct option would be to apply for a monthly 停留 residence permit immediately after receiving the cancellation certificate, and after obtaining a new work permit – for a new 工作-residence permit.

But in fact, those who do not exceed the time limit too much are treated flexibly, and if, for example, you change your place of work within the same administrative-territorial unit, then you can (after receiving a new work permit) just go to them and fill out an application about the change of information (in your case – the employer). After that, they will simply make changes in their system and there will be no need for a new paste-in slip in the passport. For example, I arrived in Shenzhen as a matter of fact and made myself a registration here with a Beijing residence permit. Then, upon obtaining a work permit, I simply applied for a re-issue (换发) and received the same residence permit, but in Shenzhen.

If the administrative-territorial unit changes, then, most likely, you will have to follow the procedure from the first paragraph. In any case, it is better to ask on the spot at the immigration office of your city.

Transferring insurance savings is also quite simple. If everything happens within one administrative-territorial unit, then nothing needs to be done. The previous employer has already 减员, you just need to bring your social security card to the new job and the employer will do 增员.

If you plan to move, then you need to contact the district SSF and write an application for 社保转移 – transferring the balance of your insurance account to a new location. Where to transfer specifically and what to provide – it is recommended to check with the responsible employee at the new place of work.

Essentially, that’s it. As we remember, the employment checklist consists of four documents. You got a new work permit, you sorted out your insurance, and you also changed your residence permit. The only thing is that you need to go to the place where you did the registration at the place of residence with the old residence permit (or go to the appropriate APP if you live in an advanced city) and give the police a new number and the validity period of the residence permit.

If something goes wrong

Alas, dismissal does not always happen amicably and in agreement. If there are any disagreements (and even if you are right in them from the point of view of the law), well, labour disputes are something that can drag on for years and feed more than one generation of lawyers. That is why it is strongly recommended to contact the labour inspectorate, court, SAFEA, immigration office only in cases where you are completely sure of what you are doing. Otherwise, I hate to say it, it is better to stomach it.

The main problem is not even with the Chinese government agencies – on the contrary, they are loyal to employees and, most likely, will side with them. The problem is that the Chinese can live on in peace and wait for decisions. While over every foreigner hangs a sword of Damocles materialized in the number of “expiration of the residence permit” and “illegal stay in the country”.

I chanced to hear about a foreigner whose stay in the PRC was extended by a court order for the duration of the trial. But this is almost news from a parallel universe.