Pay attention to the Employee’s Departure

After resigned from the company, Lee found that the company failed to fill in the reason for termination of the labor contract in the proof of termination of the labor contract, so he filled in the resaon with “layoff”. Then, he submitted a file to the labor arbitration committee, and required the company to pay the compensation amount to RMB10, 000 for terminating the labor contract in violation of the Labor Contract Law. Finally, due to the failure to prove that Lee had applied for resignation, the labor arbitration committee supported Lee’s request.

In practice, due to the defective management on the employee’s departure, those similar cases are not rare. For example, an employee fails to handover the work, then the employer refuses to pay the compensation, but finally the employer would lose the lawsuits for lacking of evidence to prove the rationality of its action; or, an employer fails to handle the transferal procedures of the concerned employee’s files and social insurances on time, then the employee requires compensation, and etc..

“Labor Contract Law” has stipulated articles on dealing with the relevant issues related to the employee’s departure. According to Article 50 of “Labor Contract Law”, in which prescribes that the main responsibilities of the employer include: (a) issue a proof of termination or expiration of the labor contract; (2) handle the transferal procedures of the concerned employee’s files and social insurances within 15 days after employee’s departure; and (3) if there is any compensation shall be paid, such compensation shall be paid upon the completion of the procedures for work handover. In addition, Article 24 of “Regulation on the Implementation of the Labor Contract Law” has prescribes that the proof aforesaid shall state the term of the labor contract, the date when the contract is dissolved or terminated, the position of the employee and the working time of the employee with this employer.

In accordance with the above laws and regulations, based on the lessons learnt from the practical cases, we recommend the employers to pay attention to the following issues related to the employee’s departure.

Firstly, in order to avoid the moral hazard, it would be better to state the reason for termination the labor contract, the compensation and other relevant information.

Secondly, to strengthen the management on the work handover. It would be better to prescribe the detailed requirements, procedures and so on, for the work handover in the employer’s regulations, and strictly conduct these requirements and procedures. If an employee fails to handover the work accordingly, the employer shall be entitled to refuse to pay the compensation, which has been prescribed in “Labor Contract Law”.

Thirdly, to properly draft and keep those documents related to the departure, including the resignation letter, the proof of termination of the labor contract, documents related to work handover, time sheet, the records of the exit interview and hereinafter etc.. This suggestion could not only the way to perform the responsibility as the employer as prescribed in “Labor Contract Law”, but also help the employer to keep evidence, and deal with the related disputes in case.

Fourthly, to pay attention to the exit interview. The exit interview is the procedure which would be normally ignored by the employer. In fact, a well-designed procedure and relevant documents for the exit interview could supplement the requirements as stipulated in Article 39, 40, and 41 in “Labor Contract Law”, e.g. the communication record for the termination reason. In addition, the records of the exit interview could be useful in the trade secret disputes or non-competition disputes, if any.