Guangzhou clarifies redundancy downsizing procedures

Guangzhou clarifies redundancy downsizing procedures

Guangzhou clarifies redundancy downsizing procedures

Guangzhou governing administration authorities have further more clarified legal treatments to be adopted by businesses implementing economic downsizing.

The permitted situations ended up issued in a coverage update, the Viewpoints on Concerns Relating to Employers’ Workforce Reductions, issued by the Guangzhou Municipal Human Sources and Social Safety Bureau on 30
December 2021.

The update reiterates and emphasises provisions of the Employment Contract Regulation on preconditions for financial downsizing – together with instances in which it is permitted, staff members that could not be downsized, employees to be retained on a precedence foundation, severance payment and charges, and lawful legal responsibility for unlawful dismissal.

Critical Points

  1. Businesses really should demonstrate the predicament to the labour union or all staff members at minimum 30 times in advance, pay attention to their viewpoints and keep a created record of these communication and explanations.
  2. Companies really should place forward a workforce reduction approach. The update specifies that this should really contain: a very clear statutory basis for the reduction positions to be downsized selection and proportion of workforce to be dismissed downsizing standards a checklist of staff members to be dismissed timing of the reduction steps in which it will be executed details of work deal expirations and terminations severance rates and payment approaches and a system for payment of salaries and social insurance premiums owed.
  3. Employers must solicit the belief of the labour union or all staff members on the reduction strategy – and revise and improve it based on responses.
  4. Companies ought to report in producing to the nearby administrative authority for human sources and social insurance policy on the system of its preparations for the workforce reduction and the finalised workforce reduction prepare. The report really should involve: reasons for the reduction standard info on staff members to be dismissed a assertion as to no matter if the employer has discussed the situation to the labour union or all employees, and listened to their views and the title and get in touch with details of the human being in charge. The workforce reduction plan and appropriate supporting documents (these types of as the minutes of the meetings in which the reduction is explained to the union or all the personnel) should really be hooked up to the report. This stage implies the human means and social security authority’s course of action for substantive assessment of downsizing issues. If the authority has responses or proposals concerning the strategy, the employer need to resolve each and every concern and report back again in creating, earning revisions in line with the authority’s feedback, and finalise the prepare.
  5. Finally, on approval, the employer should formally announce the workforce reduction plan, have out employment deal termination processes with the employees to be dismissed, fork out severance to individuals employees in accordance with related rules, and pay out salaries and social insurance coverage premiums, and other this sort of fees owed.


The update carries on to utilize provisions of the Work Deal Regulation and the Implementing Restrictions for the Work Contract Regulation regarding the instances in which downsizing is permitted, devoid of any further rationalization or elaboration of such instances.

Even so, it does specify procedural needs for workforce reductions by companies – this sort of as the reporting system and articles of documentation. It also empowers the authorities to grow to be instantly concerned in the downsizing process, and co-ordinate the approach and solve related troubles.

This further clarification of workforce reduction treatments may perhaps signal standardisation of how this kind of strategies will be managed by area Guangzhou authorities in the long term.

Small business Regulation Digest is compiled with the help of Baker McKenzie. Audience should not act on this facts without trying to get specialist lawful assistance.
You can contact Baker McKenzie by e-mailing Howard Wu (Shanghai) at [email protected] subscripton ad red 2022