Article 39

An Employer may terminate an employment contract if the Employee: 

(1) Is proved during the probation period not to satisfy the conditions for employment; 

(2) Materially breaches the Employer’s rules and regulations; 

(3) Commits serious dereliction of duty or practices graft, causing substantial damage to the Employer; 

(4) has additionally established an employment relationship with another Employer which materially affects the completion of his tasks with the first-mentioned Employer, or he refuses to rectify the matter after the same is brought to his attention by the Employer; 

(5) causes the employment contract to be invalid due to the circumstance specified in item (1) of the first paragraph of Article 26 hereof; or 

(6) Has his criminal liability pursued in accordance with the law. 

Article 40

An Employer may terminate an employment contract by giving the Employee himself 30 days’ prior written notice, or one month’s wage in lieu of notice, if: 

(1) after the set period of medical care for an illness or non-work-related injury, the Employee can engage neither in his original work nor in other work arranged for him by his Employer; 

(2) The Employee is incompetent and remains incompetent after training or adjustment of his position; or 

(3) A major change in the objective circumstances relied upon at the time of conclusion of the employment contract renders it unperformable and, after consultations, the Employer and Employee are unable to reach agreement on amending the employment contract. 

Article 41

If any of the following circumstances makes it necessary to reduce the workforce by 20 persons or more or by a number of persons that is less than 20 but accounts for 10 percent or more of the total number of the enterprise’s employees, the Employer may reduce the workforce after it has explained the circumstances to its Trade union or to all of its employees 30 days in advance, has considered the opinions of the Trade union or the employees and has subsequently reported the workforce reduction plan to the labor administration department: 

(1) Restructuring pursuant to the Enterprise Bankruptcy Law; 

(2) Serious difficulties in production and/or business operations;

(3) The enterprise switches production, introduces a major technological innovation or revises its business method, and, after amendment of employment contracts, still needs to reduce its workforce; or 

(4) Another major change in the objective economic circumstances relied upon at the time of conclusion of the employment contracts, rendering them unperformable. 

When reducing the workforce, the Employer shall retain with priority persons: 

(1) Who have concluded with the Employer fixed-term employment contracts with a relatively long term; 

(2) Who have concluded open-ended employment contracts with the Employer; or 

(3) Who are the only ones in their families to be employed and whose families have an elderly person or a minor for whom they need to provide. 

If an Employer that has reduced its workforce pursuant to the first paragraph hereof hires again within six months, it shall give notice to the persons dismissed at the time of the reduction and, all things being equal, hire them on a preferential basis. 

Article 42

An Employer may not terminate an employment contract pursuant to Article 

40 or Article 41 hereof if the Employee: 

(1) is engaged in operations exposing him to occupational disease hazards and has not undergone a pre-departure occupational health check-up, 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 with the Employer; 

(3) Has contracted an illness or sustained a non-work-related injury, and the set period of medical care therefore has not expired; 

(4) Is a female employee 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 his legal retirement age; 

(6) Finds himself in other circumstances stipulated in laws or administrative statutes. 

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      ● 中华人民共和国劳动合同法（英文版） ( 2015-08-11 )

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