MHRSS repeals Circular No. 481 on employee compensation


On 24 November 2017, the Ministry of Human Resources and Social Security (MHRSS) issued a notice declaring the Fifth Batch of Documents as invalid and repealed.

The list of repealed rules includes the Measures on Economic Compensation for Violating or Terminating Labour Contracts 1994, which was the seminal rule for calculating economic employee compensation for violating or terminating a labour contract.

Provisions of the 1994 measures were largely superseded by the Labour Contract Law 2012 that was originally adopted in 2008 and subsequently amended and issued anew in 2012. However, the continued existence of the 1994 measures led to differing interpretations of some compensation issues in practice. By repealing the 1994 measures, the MHRSS has clarified that an employee’s economic compensation is determined:

The repeal of the 1994 measures puts an end to the dispute of whether the special rules in the 1994 measures would apply when determining the employee compensation for the service period after 1 January 2008.

The 1994 measures also provided a system for determining medical subsidy on the termination of employment where an employee suffered illness or non-work-related injuries and is unable to perform the original duties or the duties of another reassigned position. However, the repeal of the 1994 measures would not affect the effectiveness of that medical subsidy system as the system can continue to exist under other legislation with paralleling provisions.