Managing Corporate Exit Deadlocks and Tooling Repossession in China
Managing corporate deadlocks and tooling repossession in China demands registered bailment contracts, court asset preservation orders, and formal liquidation.
Double Severance Penalty
Meaning
Statutory punitive remedies under labor legislation compel employers to execute formal written employment agreements with workers within statutory time limits. The double severance penalty arises under the Employment Contract Law when an employer delays written contract execution beyond one month from the start of work, requiring payment of double the monthly wage for each uncontracted month up to one year. Labor dispute arbitration committees and courts enforce this financial sanction against noncompliant enterprises.
The scope covers all domestic and foreign invested employers, stopping at the twelve month maximum mark where an open ended contract forms automatically by operation of law.
Penalty Trigger
Failure to secure signatures on labor contracts within thirty days of work commencement activates mandatory compensation duties. Employers cannot substitute offer letters, email correspondence, or verbal promises for a formal employment contract under statutory standards.
Wage Calculation
Calculations base monthly penalty amounts on the employee actual earnings rather than basic base salaries alone. Bonus payments and overtime compensation count toward the monthly wage calculation when establishing total financial liability.
Dispute Resolution
Labor arbitration tribunals handle double wage claims as primary mandatory proceedings before judicial appeals. Workers bring attendance records and bank payment statements to prove employment duration without written contracts.