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Regulations on Retrenchment of Workforce by Enterprises for Economic Reasons - 1994

(Promulgated by the Ministry of Labor on November 14, 1994)


Article 1
With a view to guiding enterprises (employers) to correctly implement their rights in retrenching their workforce according to law, these Regulations are formulated in line with the relevant stipulations of the Labor Law of the People's Republic of China.

Article 2
Retrenchment of workforce may be made by an enterprise, when its serious financial difficulty has pushed it to the brink of bankruptcy and caused the People's Court to announce it as in the period of legal rectification, or when it faces such serious problems in business operation as to meet the standards set by the local government for enterprises in severe difficulty, which are allowed to retrench their workforce.

Article 3
Enterprises shall provide their retrenched personnel with training course or help their re-employment where possible.

Article 4
Enterprises, in retrenching their workforce, shall comply with the following procedure:

(1) making an explanation to the trade union or all employees, 30 days before making such retrenchment, and provide them with information on the enterprise production and business operations;

(2) presenting its program on workforce retrenchment, which includes a name list of the redundant personnel, the beginning date of retrenchment and steps of implementation, and measures of economic compensation to be given to the retrenched personnel that comply with the provisions of law, government regulations and the labor contract;

(3) Soliciting the opinion of the trade union or all employees on the program of retrenchment, and try to revise and improve the said program accordingly;

(4) Reporting to the local labor administrative department on its program of retrenchment and also on the opinion of the trade union and all employees, and listening to suggestions from the labor administrative department;

(5) The enterprise makes public its program on retrenchment of workforce, dissolve labor contracts with the retrenched employees, pay the laid-off workers economic compensations in accordance with relevant regulations, and issue them the retrenchment certificates.

Article 5
Enterprises shall not lay off the following personnel:

(1) Those suffering from occupational diseases or getting injured on job-post and having been confirmed as losing or partially losing their working ability;

(2) Those on leave because of illness or injury and still in their "legal medical treatment period" as specified by relevant regulations;

(3) Those women employees in their periods of pregnancy, maternity and breast-feeding;

(4) Other cases as stipulated by the law and government regulations.

Article 6
Those people, who have been laid off by their employers and become jobless, may go to register themselves with the local labor employment service agency and apply for unemployment welfare.

Article 7
The enterprise, which begins to recruit new employees within six months after concluding its last retrenchment of workforce, must first choose to recruit employees among those laid off by it earlier, and report to the local labor administrative department on the number of recruits, recruiting time, condition and other relevant information.

Article 8
The labor administrative departments shall, in accordance with law, stop and correct enterprises from discharging employees in violation of relevant provisions in the law, regulations and other government stipulations.

Article 9
The enterprises shall listen to and accept the reasonable suggestions concerning retrenchment of workforce, as put forward by the trade union and employees.

The trade union has the power to demand enterprises review and change their decisions on retrenchment of workforce, if the enterprises are found to be discharging employees in violation of the law, regulations and the labor contract.

Article 10
The two parties involved in labor disputes arising from employee retrenchment shall abide by the relevant government regulations governing settlement of labor disputes.

Article 11
The labor administrative departments of provinces, autonomous regions and centrally-governed municipalities may formulate their own implementation measures, in the light of their local conditions, according to these Regulations.

Article 12
These Regulations come into force as of January 1, 1995.

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