Refer China: Foreign Manager Unable to Leave China Due to Incomplete Handover

Court Ruled...

Court Ruled | Foreign Manager Unable to Leave China Due to Incomplete Handovers

Welcome to our new column, where we share real court ruling cases related to expats & mostly foreign employment in China. We hope these cases provide valuable insights into arbitration and judgments concerning foreign workers!

*Disclaimer: This English version (especially legal terminology) is for reference only. In case of any discrepancies, please refer to the original Chinese court decision. For formal legal advice, consult a qualified attorney.

Key Takeaways

Termination of an employment relationship requires good faith and cooperation from both employer and employee. While labor laws protect employees' rights to obtain termination certificates, they also obligate employees to fulfill post-contractual duties—such as completing work handovers.
A termination certificate serves as a key proof of the end of an employment relationship and should include the contract period, termination date, position held, and duration of service. If an employee fails to complete the handover, making it impossible for the employer to issue the certificate, claims for damages may not be supported.

Case Summary

Mr. M, a Canadian national, entered into an employment contract with Company A as a TE Manager. The contract explicitly stipulated that upon termination—whether due to the expiration of the term or unilateral dissolution—Mr. M was obligated to complete all company-prescribed handover procedures prior to formal departure.

On December 9, 2017, Mr. M submitted his resignation. However, he later filed a lawsuit claiming that Company A failed to complete the necessary offboarding formalities before the expiration of his work permit and residence permit, which resulted in his inability to exit the country and caused financial losses due to missed work opportunities.

Company A defended itself by arguing that Mr. M had neither submitted valid evidence of his alleged losses nor proven that the company was responsible for them. The company further asserted that the delay was due to Mr. M's failure to fulfill his contractual obligation to complete the work handover process.

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Court's Findings

The court found that the employment contract and employee handbook clearly required Mr. M to complete a proper handover upon resignation. As a TE Manager, Mr. M was specifically instructed to submit a detailed "Project Status Final Report," which had to include project progress, existing issues, current status, pending tasks, and materials required by other departments.

Upon review, although Mr. M had completed the basic transfer of physical and data assets as noted in the signed checklist, he failed to provide the required project report or obtain confirmation from his supervisor regarding the completion of the handover.

Despite multiple notices from the company, Mr. M did not cooperate to fulfill the outstanding requirements. On January 16, 2018, Company A accompanied Mr. M to the relevant administrative office to issue a termination certificate. However, since the company truthfully included a remark stating "handover not fully completed,"Mr. M refused to sign the document, leaving the process incomplete.

The court determined that Company A's truthful notation did not violate Mr. M's rights, and further mediation attempts via the labor authority failed. The company had fulfilled its duty of cooperation and notification.

Final Decision

The court ruled that Mr. M's claims lacked sufficient factual and legal basis and dismissed the lawsuit. Neither party appealed the decision.

Stay tuned for more real-life cases that shed light on foreign employment legalities in China!