A Shanghai mediation committee resolved a cross-border severance dispute using a USD payment and remote video signing, overcoming overseas decision-maker hurdles.
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Source: OT-Team(G), 上海市嘉定区司法局
A foreign director had already left China, a compensation dispute was at a standstill, and an employee feared the money was gone for good. Then mediators stepped in to break the cross-border deadlock.
"The contract has been terminated, but I still haven't received my compensation. The foreign director has already returned overseas. Is the money simply gone?"
That was the concern weighing heavily on Li, a former employee of a foreign-invested company, when the employee sought help from the Labor Dispute People's Mediation Committee of Shanghai's Jiading District.
What appeared at first to be a routine severance dispute soon developed into a complex cross-border case involving disagreements over compensation, overseas decision-makers, international payment barriers, and practical challenges that threatened to leave the matter unresolved.
Following the termination of the employment contract, Li and the company were unable to agree on the amount of severance compensation. While disputes of this kind are not uncommon, the circumstances of this case made resolution particularly difficult.
A key complication was that the company's director—a foreign national responsible for important management decisions—had already left China by the time the dispute emerged. As negotiations stalled, Li became increasingly concerned that the compensation might never be paid.
From the employee's perspective, the situation seemed bleak. The person with decision-making authority was overseas, communication channels were limited, and there appeared to be no clear path toward a timely resolution. What should have been a straightforward employment matter was gradually turning into a cross-border dispute with no obvious solution.
The company, meanwhile, maintained reservations about the amount of compensation being claimed. At the same time, it faced practical difficulties in coordinating with management abroad. With the foreign director unable to return to China in the near future, discussions moved slowly and progress remained limited.
Recognizing that the dispute was approaching a deadlock, mediators chose not to focus on assigning blame. Instead, they worked to identify the core concerns on both sides.
Li wanted a prompt resolution and payment of the compensation believed to be owed. The company disputed the amount and faced operational challenges due to the overseas location of key decision-makers.
The mediators first explained to the company's Chinese representatives that, under China's labor laws and regulations, employers are legally required to fulfill their compensation obligations after the termination of an employment relationship. The departure of a director or executive from China does not relieve a company of its legal responsibilities.
Yet legal obligations alone did not solve the practical problems standing in the way of settlement.
The company pointed to difficulties associated with cross-border payments. Simply demanding immediate payment risked escalating tensions rather than resolving them. Understanding this, the mediators carefully balanced enforcement of legal rights with consideration of the company's operational realities.
To move the case forward, the mediation team established contact with the foreign director overseas through the company's Chinese representatives.
The discussions proved challenging. Distance, language differences, and differing understandings of local regulations created additional barriers. To bridge those gaps, mediators slowed the pace of communication and used clear, accessible language to explain China's rules and restrictions regarding cross-border RMB transfers. At the same time, they conveyed Li's concerns and expectations, helping the overseas director better understand the employee's position.
After multiple rounds of communication, progress finally began to emerge.
Drawing on the circumstances of both parties, the mediators proposed an alternative arrangement that addressed the dispute's most difficult obstacle. Rather than making the severance payment in Chinese yuan, they suggested that the compensation be paid in U.S. dollars.
The proposal offered a practical solution to the core issue. By avoiding complications associated with cross-border RMB transfers, it removed a major barrier to payment. The parties also agreed in advance on the exchange rate to be used, reducing the risk of future disputes caused by currency fluctuations.
The proposal received support from both sides and appeared to put the case on track for resolution.
However, just as an agreement seemed within reach, another obstacle emerged.
The foreign director remained overseas. The company's Chinese representative was also outside China. Li was located in Shenzhen. None of the parties could meet in person to sign a mediation agreement.
Without a properly executed settlement agreement, questions could arise regarding its legal validity and enforceability. The case, which had already overcome legal, logistical, and financial challenges, now faced a procedural hurdle that threatened to delay the resolution once again.
Determined to prevent further setbacks, the mediation committee activated a remote video-signing mechanism.
Through the online platform, all parties were able to participate despite being located in different cities and countries. Li reviewed and signed the agreement electronically. The foreign director joined via video conference, carefully verified the contents of the settlement, and completed the signing process remotely.
The entire procedure was audio- and video-recorded to ensure the legality, authenticity, and effectiveness of the agreement.
With the final signatures secured, the dispute that had once appeared headed for a prolonged stalemate was finally resolved.
The foreign-invested company agreed to make a one-time severance payment to Li, bringing the matter to a close.
After receiving the compensation, Li expressed relief and appreciation.
"I thought a cross-border dispute like this would be extremely difficult to resolve," Li said. "The mediators not only helped secure the compensation I was entitled to, but also found a practical solution to the payment issue. They saved me from what could have been a lengthy and exhausting legal process, and I'm very grateful for their efforts."
The case illustrates how labor disputes can become significantly more complicated when decision-makers, funds, and parties are spread across different jurisdictions. It also demonstrates how flexible mediation mechanisms, combined with patient communication and practical problem-solving, can help overcome barriers of geography, language, and procedure to achieve outcomes acceptable to all parties involved.
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