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Labor Contract Law

Article 41 If any of the following circumstances make it necessary to reduce the workforce by 20 persons or more, or less than 20 persons but accounting for 10% or more of the total number of employees of the Employer, the Employer may only do so after it has explained the situation to the labor union or to all of its employees 30 days in advance, has considered the opinions of the labor union or the employees, and has submitted its workforce layoff plan to the labor administrative department: 

(1) restructuring pursuant to the Enterprise Bankruptcy Law;

(2) serious difficulties in production and/ or business operation; 

(3) the enterprise switches production, introduces significant technological innovation or adjusts its business model, and still needs to reduce its workforce after amending the labor contracts; or

(4) a material change in the objective economic conditions relied upon at the time of conclusion of the labor contracts renders it impossible for the parties to perform. 

When reducing its workforce, the Employer shall retain in priority personnel:

(1) who have concluded a fixed-term labor contract with the Employer with a relatively long term;

(2) who have concluded an open-ended labor contract with the Employer; or

(3) who are the sole bread winner in the family and dependent family members who are elderly or minors.

If an Employer that has reduced its workforce pursuant to the first paragraph hereof intends to hire new employees again within 6 months, it shall notify the employees dismissed at the time of the layoff and such employees shall have priority to be re-hired under the same conditions. 

Article 42 An Employer shall not terminate a labor contract under Articles 40 and 41 of this Law if the employee:

(1) is engaged in operations that would expose him to occupational disease hazards and has not undergone a occupational health check-up before leaving work, or is suspected of having contracted an occupational disease and is being diagnosed or under medical observation;

(2) has been confirmed as having lost or partially lost his capacity to work due to an occupational disease contracted or a work-related injury sustained during his employment with the Employer;

(3) has contracted an illness or sustained a non-work-related injury and the prescribed period of medical treatment has not expired; 

(4) is a female worker in her pregnancy, confinement or nursing period;

(5) has been working for the Employer continuously for not less than 15 years and is less than 5 years away from the legal retirement age; or

(6) falls into any other circumstances stipulated by laws or administrative regulations.

Article 43 If an Employer is to terminate a labor contract unilaterally, it shall first inform the labor union of the reasons. The labor union shall have the right to demand that the Employer make the necessary adjustment if the Employer violates laws, administrative regulations or the labor contract. The Employer shall consider the opinions of the labor union and notify the labor union in writing of the outcome of its handling of the matter. 

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