China employment settlement agreements: an employer checklist

1. Identify who proposed the exit and what was agreed

Article 36 of the PRC Labor Contract Law (2012 amendment) permits termination by mutual agreement. Where the employer proposes that route and agreement follows, Article 46(2) requires economic compensation. Record the actual sequence of discussions. An employer-led departure should not be described as an employee’s voluntary resignation merely to change the payment analysis.

Identify the China employing entity, the employee, the agreed termination date and the matters still being negotiated. A headquarters budget approval is not the employee’s consent. If the employee declines the proposal, the company must separately assess its lawful options; the draft agreement is not a termination notice.

Retain the offer, revisions and responses. Give the employee a genuine opportunity to understand the proposal, ask questions and obtain advice. Do not invent a statutory cooling-off period or a universal extra month of compensation for this negotiated route.

2. Replace one package figure with a payment schedule

Separate final salary, disputed overtime or bonus items, any payable unused-leave amount, expense reimbursements, statutory economic compensation and additional negotiated consideration. Show the period, calculation, agreed amount and due date for each item. Label disputed items accurately rather than recording an unverified statement that nothing is owed.

Check service history, the wage basis and applicable limits under Article 47, including transitional treatment under Article 97 where relevant. A global severance spreadsheet may use a different service period or pay definition. Reconcile the statutory assessment with the amount being negotiated before seeking final approval.

Specify currency, gross or net treatment, lawful withholding, payer and payment evidence. If an overseas affiliate will fund the exit, confirm the China employer’s obligation and the payment route before promising a date. Finance approval or a scheduled transfer is not proof that the employee received payment.

3. Review the limits of a release of claims

Article 35 of the Supreme People’s Court Interpretation (I) on Labor Disputes, Fa Shi [2020] No. 26, recognizes qualifying exit settlements where mandatory rules are respected and there is no fraud, coercion or exploitation of distress. Material misunderstanding or manifest unfairness can support a request to revoke the agreement. A signature and a broad release clause therefore require scrutiny of both the terms and the negotiation record.

Define the claims and periods actually reviewed, what payment resolves them, and what obligations remain. Avoid a statement that money has already been received when payment is still pending. Keep statutory rights, administrative obligations and obligations under the settlement distinct instead of treating every issue as a waivable private claim.

The SPC Interpretation (II) on Labor Disputes, Fa Shi [2025] No. 12, effective 1 September 2025, provides in Article 19 that an agreement or employee undertaking dispensing with social-insurance contributions is invalid. Identify contribution shortfalls and how they will be handled separately; an exit payment cannot simply purchase that exemption.

Article 17 of that interpretation supports continued performance where an employer has not arranged the required pre-departure occupational health examination for an occupational-hazard worker. Its exceptions apply if, before the close of first-instance court debate, the employer arranges an examination confirming no occupational disease, or arranges an examination which the worker refuses without a justified reason. Check the provision and the actual examination record before treating a release as final.

4. Set handover tasks without postponing statutory duties

Article 50 requires the termination certificate when employment ends and the handling of personnel-file and social-insurance relationship transfers within 15 days. It also links statutory economic-compensation payment to completion of the agreed handover. Put those obligations on a dated checklist rather than combining all of them into an indefinite ‘HR clearance’ condition.

List the devices, documents, accounts and business matters to be handed over; name the recipient and define completion evidence. Separate the last working day from the termination date if they differ, and address the intervening pay and work arrangements. Have any proposed withholding or deduction reviewed rather than using a vague outstanding-handover allegation to hold every payment.

5. Reconcile the bilingual text and signing authority

Use the correct China employer and verify who may sign on its behalf. Where Chinese and English texts are used, compare the termination date, payment table, claims covered, conditions and surviving duties line by line. An agreed prevailing-language clause helps organize interpretation; it does not cure an inaccurate translation or a lack of genuine consent.

Check confidentiality and any existing non-compete arrangement separately. Do not leave headquarters expecting continuing restrictions while the exit agreement appears to release all obligations. Give both sides the complete signed version and attachments; retain version history, authority documents, delivery records and subsequent payment and handover evidence.

6. Prepare the file for a focused employer review

Prepare the contract and amendments, the exit proposal and negotiation chronology, service and payroll records, leave and disputed-payment calculations, contribution status, any occupational-health issues, the draft agreement in both languages, and the proposed handover list. The review should identify what can be agreed now, what needs further evidence and who will perform each remaining step.

For initial contact, provide a non-confidential outline of the China entity, city, proposed departure date, who initiated discussions and the unresolved points. Agree document-sharing arrangements before sending personnel, medical or payroll files.