In China, a locally ratified employee handbook is essential for lawful terminations, redundancies, and discipline. Learn why it matters, what to include, and how to adopt it properly.

Talking about terminations is never fun, especially when many companies are downsizing. But there’s one “housekeeping” document that makes all the difference when you’re dealing with a troublesome employee in China: a local employee handbook.

A China-specific handbook is your company’s policies adapted to local law and formally adopted with employee participation through required “consultations.” Most of it may look like standard HR boilerplate—workplace safety, communications, values. But inside are workplace rules that become crucial when you need to execute cost-cutting redundancies, performance-based exits, or terminations for misconduct.

Why the Handbook Matters Under Chinese Law

China is not an at-will jurisdiction. Under the Labor Contract Law, you generally need cause to terminate—grounds that are narrowly defined. Clear, documented violations of company policy (e.g., theft, commercial bribery) can qualify, but most day-to-day cases rely on violations of workplace rules set out in your handbook.

Attempts to use “change in objective circumstances” as a basis for unilateral termination usually fail. Without a solid hook in the law—anchored by your handbook—employees will push for higher settlements (often up to 2 × monthly salary × years of service) or even seek reinstatement to increase leverage.

“Obvious” Rules You Still Need to Spell Out

Don’t assume common sense will carry the day. Seemingly basic expectations must be explicit to be enforceable, for example:

• Working hours (e.g., 9:00–18:00) and attendance requirements
• Performance standards and evaluation cycles
• IT, data security, and confidentiality rules
• Conflict-of-interest and anti-bribery provisions
• Progressive discipline steps (warnings, PIPs, termination triggers)
• If it isn’t written—and properly adopted—it’s hard to rely on.

Big or Small, Every Employer Needs One

Back in 2008 when the current regime took hold, many small companies (under ~50 employees) skipped handbooks. Today, even small teams understand the ROI: one or two tricky exits can more than justify the cost of putting a compliant handbook in place.

You can:

• Localize your global policy into a China handbook, or
• Start from a local template and tailor it to your business (often easier and safer)
• Either way, local legal review is essential to align with current practice and enforcement realities.
• The Adoption Process: Don’t Skip “Consultations”

For a handbook to hold up, it must be ratified through employee “consultations.” Practically, that means:

• Circulate a draft to employees (or the employee representatives/union, if any).
• Collect and respond to comments; keep a record.
• Adopt the final version via an internal resolution.
• Have employees sign acknowledgments confirming receipt and understanding.
• Train managers and roll out communication (in Chinese and English if bilingual).
• Maintain a version-control log and archive all evidence of the process.
• These steps defeat the argument that an employee “never saw” the rules.

Terminations and Redundancies: How Handbooks Help

• Misconduct: Tie the action to a specific, cited rule violation. Preserve evidence.
• Poor performance: Use documented standards, warnings, and PIPs referenced in the handbook.
• Economic layoffs/redundancies: Follow statutory procedures; the handbook clarifies criteria and process, reducing dispute risk.

When we help companies terminate employees, the handbook is one of the first documents we ask for—because it frames both the legal basis and the process.

Practical Tips

• Keep the handbook bilingual (Chinese prevails in practice) and ensure the Chinese text accurately reflects intent.
• Include discipline procedures and documentation protocols (who signs, where records live).
• Align with related documents: labor contracts, confidentiality/IP agreements, data policies, and codes of conduct.
• Refresh annually or upon legal changes; log employee re-acknowledgments for major revisions.

Bottom Line

If your local HR team is urging you to create a China-specific employee handbook, take it seriously. This isn’t something to write once and file away. Properly drafted, localized, and ratified, the handbook has real legal value in China—and can be the difference between a clean, defensible termination and a costly dispute. You need it.

Need help terminating employees in China? Contact us at inquiries@chinalawsolutions.com