By Yin Juquan and Zhang Yuanhao King & Wood Mallesons’ Commercial & Regulatory group

yin_juquanA document that certifies the cancellation or termination of an employment contract is known as a severance of employment certificate. Pursuant to Articles 50 and 89 of the PRC Labor Contract Law, if an employment contract between an employer and an employee is canceled or terminated, the employer must issue a document promptly certifying the cancellation or termination of the contract; if the employer fails to perform this obligation, it shall be liable for compensating the employee for any losses incurred therefrom. Apart from the aforementioned provisions, there are no further requirements stipulating how an employer is liable for compensation in any existing laws, administrative regulations or rules. This article analyzes through case study an employer’s compensation liability for withholding a severance certificate.

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