[Direct answer]In the Beijing area, the core of designing a legal layoff plan is to ensure that each dismissal path corresponds to statutory grounds and procedures. There are four common paths: First, according to Article 39 of the Labor Contract Law of the People's Republic of China (adopted on June 29, 2007 and implemented on January 1, 2008), a fault-based dismissal requires sufficient evidence to prove serious violations of discipline or serious dereliction of duty; Second, according to Article 40, a non-fault-based dismissal requires a 30-day written notice or an additional one-month salary payment; Third, according to Article 41, an economic layoff requires meeting conditions such as reducing more than 20 employees or less than 20 employees but accounting for more than 10% of the total workforce, and notifying the trade union or all employees of the situation and listening to their opinions 30 days in advance before reporting to the labor administrative department; Fourth, a negotiated termination, which means reaching an agreement between the employer and the employee through a reasonable plan. The design of the plan should first determine the path, then determine the list of employees, and finally determine the compensation and communication schedule.Labor arbitration and work-related injury compensationIn this type of service, it is much more cost-effective to design a solution in advance than to fix problems after they occur.

I. Problem Background and Typical Scenarios

The reasons why enterprises initiate layoffs usually include operational adjustments, business contraction, organizational structure optimization, or cost pressures. There are five common failure modes in practice: First, terminating all employees solely through verbal notice without following legal procedures; Second, using untrue disciplinary reasons to evade compensation; Third, having vague criteria for selecting layoff targets, which may be deemed discriminatory layoffs; Fourth, suspending work and withholding salaries without consulting employees; Fifth, failing to properly handle the calculation of seniority, annual leave, and economic compensation.Business and contract disputes in enterprisesIn such cases, procedural flaws will also be magnified in litigation.

II. Key points of dispute

The first focus is whether the grounds for termination fall under statutory circumstances. The second focus is whether the number and proportion of layoffs meet the conditions for economic layoffs. The third focus is whether the obligations of reporting and explanation have been fulfilled. The fourth focus is whether the termination notice has been effectively delivered. The fifth focus is the calculation of the length of service and base amount for economic compensation. The sixth focus is the exclusion of special protected groups. The seventh focus is whether it is necessary to pay for unused annual leave and other outstanding payments.

III. Professional analysis by Henglue Lawyers

Henglu Law Firm believes that the design of the scheme should address three issues: legal compliance of the process, completeness of the procedures, and quantifiability of compensation. Taking a labor dispute case handled by Attorney Feng Na of our firm as an example: A company issued termination notices to twelve employees on the grounds that the recruitment procedures were found to be irregular during an inspection. The outcome of the case clearly shows that the relationship between the reasons for termination and the procedures is the key to success or failure. The attorney pointed out that neither the inspection and rectification nor the irregular recruitment procedures fall under the statutory unilateral termination circumstances stipulated in Article 39 of the Labor Contract Law. The human resources and social security filing is an administrative matter and not a requirement for the contract to take effect. Whether the renewal has undergone internal approval is a company management process that cannot infringe upon workers' rights. Ultimately, the court ruled that the termination was illegal and ordered the continuation of the employment relationship. The lesson for enterprises in dismissing employees is straightforward: once the chosen reasons fail to correspond to statutory circumstances, no matter how complete the document preparation is, the case will fail due to the lack of a legal basis. Referring to another labor dispute case, the worker was forced to terminate the employment relationship due to the company's failure to pay labor remuneration in full and on time. The dispute involved the continuous calculation of the worker's working years. Through sorting out the facts such as social insurance payment records, the subject of wage payment, and the continuity of the worker's working location and content, the attorney argued for the merger of the original working years and obtained support. This indicates that the calculation of economic compensation also requires fixed evidence of working years in advance, otherwise the cost will be difficult to estimate.Business and contract disputes in enterprisesThe column provides a more comprehensive explanation of this idea.

IV. Practical suggestions and legal basis

Action suggestions: 1. First, conduct a needs assessment to clarify the number of employees, the proportion, and the cost cap; 2. Second, compare each case with the legal procedures to determine the only feasible grounds for termination; 3. Third, prioritize evidence. For disciplinary terminations, there must be three supporting documents: the company's rules, public announcements, and disciplinary records; 4. Fourth, for economic layoffs, the employer must notify the trade union or all employees of the situation and solicit their opinions 30 days in advance, and report the matter to the labor administrative department; 5. Fifth, calculate the employee's seniority and compensation base, and simultaneously handle unpaid annual leave wages and other outstanding matters; 6. Sixth, develop a communication plan to ensure effective delivery of notifications and retain signed receipts; 7. Seventh, exclude employees under special protection during pregnancy, maternity leave, medical treatment, and work-related injury recovery periods from the layoff process. Legal basis: Articles 39, 40, 41, 42, 46, and 47 of the Labor Contract Law of the People's Republic of China (adopted on June 29, 2007 and implemented on January 1, 2008); Article 19 of the Implementing Regulations of the Labor Contract Law (promulgated and implemented on September 18, 2008). For details on system construction, please refer to the relevant documents.Business and contract disputes in enterprisesFor details on the protection of special groups, please refer to the following section.Personal injury and medical disputesThe specific application shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglue Law Firm's Reminder

Firstly, the legality of the process is a prerequisite, and nothing can be fabricated or misinterpreted. Secondly, the completeness of the procedure includes reporting, explanation, hearing opinions, and leaving a record of the process. Thirdly, there are clear threshold conditions for economic layoffs. Fourthly, employees cannot be arbitrarily laid off during the special protection period. Fifthly, the compensation base should be calculated in accordance with legal standards and leave room for disputes. Sixthly, the communication plan should avoid exacerbating conflicts and reducing collective disputes. Seventhly, handle annual leave and outstanding payments simultaneously to avoid disputes arising after the termination of the employment contract.

VI. Frequently Asked Questions

Q1: What are the legal ways for companies to lay off employees?

There are mainly four conditions: For a fault-based dismissal in accordance with Article 39 of the Labor Contract Law, there must be sufficient evidence of serious disciplinary violations or serious dereliction of duty; for a no-fault dismissal in accordance with Article 40, a written notice 30 days in advance or an additional payment of one month's salary is required; for an economic layoff in accordance with Article 41, the conditions such as reducing more than 20 employees or more than 10% of the total number of employees must be met, and the obligation to report and explain the situation must be fulfilled; and for terminating the labor contract through consultation with the worker. In practice, it is often common to combine consultation-based termination with job adjustment to reduce overall risks.

Q2: What are the conditions that must be met for economic layoffs to be carried out?

According to Article 41 of the Labor Contract Law, the number of employees to be laid off must be more than 20, or less than 20 but accounting for more than 10% of the total number of employees in the enterprise. At the same time, the employer must inform the trade union or all employees of the situation 30 days in advance, listen to the opinions of the trade union or employees, and report the layoff plan to the labor administrative department. The enterprise should prove that the layoff is indeed due to serious difficulties in the operation of the enterprise, requiring the layoff of more than 20 employees or more than 10% of the total number of employees, or due to major changes in objective circumstances requiring the modification of the labor contract.Special services and other casesThe column provides a more detailed explanation of this.

Q3: How is the economic compensation calculated?

According to Article 47 of the Labor Contract Law, the compensation shall be paid at the standard of one month's salary for each year of service in the unit; for a service period of more than six months but less than one year, it shall be calculated as one year; and for a service period of less than six months, it shall be paid at the standard of half a month's salary. The monthly salary generally refers to the average salary of the last 12 months before the termination or termination of the labor contract; if the monthly salary is more than three times the average salary of local workers, it shall be paid at the amount of three times, and the payment period shall not exceed 12 years.

Q4: Can employees be laid off during pregnancy, maternity leave, or medical leave periods?

Generally, it is not allowed. According to Article 42 of the Labor Contract Law, the circumstances in which an employer may not terminate a labor contract include pregnancy, childbirth, and lactation; being ill or injured non-work-related and being in the medical treatment period; having worked continuously in the same unit for 20 years and being less than five years away from the statutory retirement age; and other circumstances prescribed by law. If the termination is illegal, the worker may request continued performance of the contract or claim compensation. Therefore, when formulating the layoff plan, the special protected groups should be removed from the list first.

Q5: How much does it cost to hire a lawyer to design a layoff plan?

The fees are determined through negotiations between the law firm and the company, and depend on the number of layoffs, the complexity of the issues involved, whether it is necessary to redesign the rules and regulations and the chain of evidence, whether it involves employment relationships in multiple regions, and whether it requires subsequent agency arbitration and litigation. Providing simple consultation on the plan and document review is relatively low-cost; however, if it is necessary to participate in the entire process of communication, dispute resolution, and arbitration, the cost will increase significantly. It is recommended to introduce professional services at the start of the plan, which is far more cost-effective than dealing with the situation after the fact.

The above Q&A is mainly based on the judicial practice in Beijing. There may be differences in the interpretation of the law in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence, so as to avoid missing the statutory time limit. →Labor arbitration legal services·Beijing Henglue Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and public adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.