China: Redundancy/Layoff

China's employment landscape is evolving rapidly as employers face economic pressures, technological disruption, and shifting workforce expectations. From AI-driven restructuring to rising workplace disputes and alternative labor models, organizations must navigate an increasingly complex regulatory environment while balancing innovation with compliance and employee trust.

Recent Interpretations by the Supreme People's Court (SPC) mean that nternational companies that operate in China need to take notice and prepare for action.

This case illustrates how PRC labor protections severely limit an employer's options and why mutual termination often becomes the only practical solution.

Redundancy has not been defined in any law or regulation in China so far. Article 41 of The Employment Contract Law of the People's Republic of China provides the following sole and exhaustive four situations where employers can reduce their workforce due to "redundancy."

Chinese law stipulates specific grounds under which employers are allowed to dismiss employees, regardless of numbers.

The Ministry of Human Resources and Social Security of the People's Republic of China published Provisions on Enterprise Mass Layoff (Draft for Comments) on December 31, 2014.