questions and answers

What are the legal consequences if an employer/employee unilaterally terminates the labor contract illegally?

(i) When the employee unilaterally terminates a labor contract illegally, the legal consequences are:

    • The employee is not entitled to receive a severance allowance.
    • The employee is required to pay the employer compensation equal to half of their monthly wage in accordance with the labor contract plus an amount equivalent to their wage stated in the contract for the days they terminated the contract without providing prior notice.
    • The employee is required to reimburse training costs to the employer.

(ii) When an employer illegally terminates a labor contract, the legal consequences are:

    • The employer must reinstate the employee in accordance with the signed labor contract; to pay the wage and social insurance, health insurance and unemployment insurance premiums for the days the employee did not work, plus an amount equal to at least 2 months’ wages as stated in the labor contract.

      After being reinstated, the employee shall reimburse any received severance allowance and job-loss allowance to the employer.

      If the position or job agreed upon in the labor contract is no longer vacant, and the employee still wishes to work, the two parties shall agree to modify the contract.

      If there has been a violation of the provision on the period of prior notification, the employer shall pay an amount which is equivalent to the employee’s wage stated in the labor contract for the days that notice was not provided in advance of the contract termination.

    • If the employee does not wish to continue working, in addition to the compensation stated above, the employer shall pay a severance allowance in order to terminate the labor contract.
    • Should the employer not wish to reinstate the employee and the employee agrees, in addition to the compensation stated above and the severance allowance, the two parties shall negotiate an additional compensation package for the employee which must be equivalent to at least 02 months’ salary in accordance with the labor contract in order to terminate the labor contract.

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