Source: OT-Team(G), 苏州工业园区人民法院
After skipping his handover, a foreign manager found himself unable to leave China on time, caught in a labor dispute.
On November 20 in Jiangsu Province, a local court released a cross-border labor case titled "Foreign Manager Resigns Without Completing Handover, Then Seeks Hundreds of Thousands in Damages?", shedding light on how an expatriate employee's failure to perform required exit procedures led to the dismissal of his compensation claim.
1. Case Summary
A foreign employee, identified as M, signed a labor contract with Company A to serve as a TE Manager. The contract specified that upon contract expiration or termination—whether initiated by either party—M was obligated to complete all handover procedures in accordance with company rules.
M resigned on December 9, 2017. He later claimed that when his work permit and residence permit expired, Company A had still not completed his employment-termination processes, preventing him from leaving China in time to renew his documents. He alleged that this caused work delays and other losses, for which he sought compensation in court.
Company A countered that M had provided no valid evidence of his alleged losses and could not prove that any damages were caused by the company. The employer argued that the primary reason for the incomplete exit procedures was M's own failure to finish required handover tasks.
2. Court Ruling
The court found that both the labor contract and the employee handbook explicitly required M to complete all handover obligations upon departure. As a TE Manager, he was also responsible for submitting a standalone "Project Status Final Report" detailing project progress, existing issues, current status, pending matters and materials required by other departments.
However, the signed handover checklist showed that M had completed only basic item and data transfers. He failed to provide the required project report and did not obtain supervisor confirmation. Despite multiple reminders and instructions from Company A, M did not cooperate in completing the full handover.
The court also noted that on January 16, 2018, Company A accompanied M to the administrative office to process a termination-of-employment certificate. The company added a factual remark stating that M had "not fully completed the required handover obligations." M disputed the note and refused to sign, preventing the certificate from being issued. The court held that the company's factual notation did not infringe M's rights. Subsequent mediation by the labor inspection authority also failed, showing that Company A had fulfilled its duty to notify and cooperate.
As M's claimed losses lacked factual and legal basis, the court dismissed his lawsuit. Neither party appealed, making the first-instance judgment final.
3. Judge's Reminder
Terminating a labor contract ends the parties' rights and obligations, but the process requires cooperation and good faith from both sides. While the law protects employees' right to obtain a separation certificate, it also imposes a "post-contract obligation" on employees to complete work handover.
A separation certificate is essential for confirming the end of an employment relationship and should include contract terms, departure date, job position and length of service. If an employee fails to complete required handover and the employer cannot issue the certificate as a result, claims for related losses will be difficult to support.
Building stable and harmonious labor relations requires both sides to follow the principle of good faith. Fulfilling duties according to law and completing agreed-upon handover tasks demonstrate basic professional conduct and safeguard one's own rights.
4. Relevant Legal Provisions
Labor Contract Law of the People's Republic of China
Article 50:
Employers must issue a certificate of contract termination or dissolution when ending an employment contract and, within 15 days, complete the transfer of personnel files and social insurance relations.
Employees must complete handover procedures as agreed. If severance pay is required, it must be paid upon completion of the handover.
Employers must retain terminated labor contract documents for at least two years for inspection.
Article 90:
Employees who unlawfully terminate a labor contract, or violate confidentiality or non-competition obligations stipulated in the contract and cause losses to the employer, shall bear liability for compensation.
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