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大成中国劳动法资讯速递第201604期-DissolutionLiquidation
大成 Salans FMC SNR Denton McKenna Long
PRC Labor and Employment Law Newsflash
April 2016
Solutions for Employment Relation during Corporate
Dissolution/Liquidation
Not a few shareholders determine at their discretion to withdraw investment and dissolve their
foreign-funded companies as a result of economic downturn in China. Employment relation
settlement, employee placement and severance pay constitute an important part of the work of
corporate dissolution and liquidation and what the shareholders and the liquidation group
concern most. Now I analyze and study on relevant legal issues as below.
I. Legal Basis for Ending of Employment Contract
Pursuant to item (5) of Article 44 of the Employment Contract Law, an employment contract
shall end if the employer has its business license revoked, is ordered to close or is closed down,
or decides on early dissolution. It is likely to figure out that a company going through
dissolution and liquidation will be closed down eventually and disqualified as a party to the
employment contract so that the contract will no longer be performed but cease to be valid.
II. End Date of Employment Contract
For corporate dissolution upon the shareholders’ decision or resolution, no end date of
employment contract is defined in any law or regulation. In practice, “end date” is deemed as,
different in opinion: (1) the date when the shareholders make a decision or the shareholder
meeting adopts a resolution on dissolution; (2) the date when deregistration is completed with
the administration for industry and commerce; (3) the date of formation of the liquidation
group; and (4) the
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