Laying off is hard to do

China is an emerging economic power, and has maintained rapid growth over recent years. But inevitably it is also suffering from the present global economic downturn. In order to save costs and survive, many companies across China have laid off, or will soon lay off, large numbers of employees. Labour disputes have become more frequent with the increase in such lay-offs. In order to better regulate the implementation of lay-offs, the State Council issued a statement on February 11 2009 which reiterated that employers must comply with the consultation and reporting procedures relevant to lay-offs. Some local governments have also issued guidance in this regard. On January 8 2009, for example, the Shanghai labour authority issued a Notice on Report of Implementation of Lay-offs by Employers.

It is necessary for the management and legal counsel of companies with employees in China to understand the PRC labour law regime before implementing mass lay-offs in order to reduce any legal and commercial risks.