What Is an Employee Buyout?

Buyout period refers to a method used by some state-owned enterprises in China in the early stages of reform and opening up to resettle redundant personnel, which refers to the actual working conditions, salary levels, and positions of employees in the company and the actual situation of the enterprise. After negotiation between the enterprise and employees, and reporting to the relevant departments for approval, the enterprise pays the employees a certain amount of currency at one time, thereby dissolving the labor relationship between the enterprise and the redundant employees and promoting employees to the society.

Buyout

Buyout duration refers to

According to the current national laws and regulations, it is illegal to buy out working age. However, under special circumstances, buyout of working age is an effective means to protect the reasonable interests of workers, as evidenced by countless practices in the 40 years of reform and opening up.

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The policies and laws related to "out of service" are:

The ninth point of the document of the "Central Committee's Decision on Several Major Issues concerning the Reform and Development of State-owned Enterprises" adopted by the Fourth Plenary Session of the Fifteenth Central Committee of the Communist Party of China on September 22, 1999 puts forward the following point: To give full play to the political core role of corporate party organizations. Strengthen the construction of corporate party organizations and ideological and political work, improve the quality of business managers, adhere to and improve the democratic management of enterprises based on the workers' congress, and effectively safeguard the legitimate rights and interests of employees. " In the third paragraph of the twelve items, it is stated: "To do a good job in the reform and development of state-owned enterprises, we must earnestly respect the status of the protagonists of employees, and give full play to the enthusiasm, initiative, and creativity of the employees. We must uphold the economic interests of employees and protect their benefits. Democratic rights, further streamlining labor relations, conducting equal consultations according to law, conscientiously implementing labor contract and collective contract systems. Giving play to the role of trade unions and employee congresses in democratic decision-making, democratic management, and democratic supervision. "

In order to protect the legitimate rights and interests of workers and ensure the smooth progress of corporate reforms, the 1998 Ministry of Labor Notice on the implementation of labor contracts during the implementation of joint-stock and joint-stock cooperative transformation of enterprises stipulated that after the implementation of joint-stock or joint-stock cooperative transformation, After the employer's subject changes, the changed employer should continue to perform the original labor contract with the employee. If the original labor contract cannot be performed due to the restructuring of the enterprise, the enterprise and the employees shall change the labor contract according to law. During the implementation of shareholding and joint-stock cooperative system reforms in enterprises, where there are major issues of labor relations involving the vital interests of employees, such as collective changes or termination of labor relations, the role of democratic management and democratic supervision of the workers' congress should be brought into play to maintain harmonious labor relations stable.

The Communist Party Central Committee and the State Council s June 9, 1998 Notice on Effectively Doing a Good Job in the Basic Living Security and Re-employment of Laid-off Workers in State-owned Enterprises stated: "Enterprises are not allowed to evade social responsibility Employees are responsible. "

As early as 1998, the person in charge of the Ministry of Labor and Social Security clearly pointed out: the so-called "buy out of service" approach (that is, the company terminates labor relations with employees after one-time financial compensation according to the employee's working age, and no longer provides social insurance for employees Treatment) is never allowed and illegal.

The Ministry of Labor (Ministry of Labor issued document No. 262 of 1995) pointed out that the practice of "buying out seniority" is wrong and must be corrected.

The "Emergency Notice" published by the State Economic and Trade Commission in the "People's Daily" on July 10, 1998 states: "No matter what type of corporate restructuring is adopted, you must not mobilize the General Assembly for mobilization. Forced orders, not pressure targets, fixed tasks. "

The editorial of "People's Daily" on August 5, 1998 pointed out: "The reform of state-owned enterprises must fully solicit opinions from the masses, and must not be forced to order. The programs that resist and oppose the majority of employees cannot be enforced based on the intentions of a few leaders.

The "Notice on Implementing the Two Regulations, Expanding Social Insurance Coverage, and Strengthening Fund Collection" issued by the Ministry of Labor and the Ministry of Social Security in 1999 stipulates: "No unit can be terminated in the form of 'out of service' Social insurance relations for employees. "

Article 90 of the Contract Law of the People's Republic of China stipulates that if the parties merge after entering into a contract, the merged legal person or other organization shall exercise contract rights and perform contract obligations. If the parties divide after the conclusion of the contract, unless otherwise agreed by the creditor and the debtor, the separated legal person or other organization shall enjoy joint claims for the rights and obligations of the contract and assume joint liabilities. By analogy, in the case of merger or division of the employer, the original labor contract shall continue to be valid, and the labor contract shall continue to be performed by the employer and the employee who continue to have their rights and obligations after the merger or division. If the employer changes its name, the employer shall change the name.

The Ministry of Labor of the People's Republic of China issued [1996] No. 354 on "Notices on Several Issues Concerning the Implementation of the Labor Contract System", which states that if an employer meets with one of the following conditions, if it proposes to enter into a labor contract without a fixed term, it should Concluding labor contract without fixed term: (1) in accordance with the provisions of the "Labor Law", working continuously for more than ten years in the same employer, both parties agree to renew the labor contract; (2) the working period is longer and the legal distance Retirement age within ten years; (3) First employment of demobilized and transferred military personnel; (4) Other circumstances required by laws and regulations. The regulations point out that a labor contract without a fixed term only specifies the start date of the contract and does not specify a termination date. It is a labor contract with a fixed term. China s Labor Law stipulates that for the conclusion of an open-term labor contract, during the implementation process, if there are no major special circumstances (such as the bankruptcy of a company, the merger of a foreign company) or the circumstances prescribed by laws and regulations, no party may terminate or Termination of the contract may not be terminated until a statutory termination condition occurs.

Article 3 of the General Principles of the Civil Law stipulates that parties have equal status in civil activities. Article 4 stipulates that civil activities shall follow the principles of voluntariness, fairness, equivalent compensation, and good faith. Article 58 provides that "a party's use of fraud, coercion, or the danger of a person to invalidate the other party's civil behavior against the true intentions". Article 59 states that "perpetrators have the right to request revocation if they have a material misunderstanding of the content of the act and apparently lose their fairness."

Article 48 of the Labor Contract Law stipulates that if an employer terminates or terminates a labor contract in violation of regulations, the employer shall continue to perform the labor contract; the employer shall continue to perform the labor contract; the laborer shall not continue to perform the labor contract or the labor contract may no longer perform If it is, the employer shall pay compensation in accordance with Article 87 of this Law. Article 17 of the Labor Law shall conclude and change labor contracts in accordance with the principles of equality, voluntariness and consensus, and shall not violate the provisions of laws and administrative regulations. The labor contract concluded in accordance with the law is immediately legally binding, and the parties must perform their obligations under the labor contract. Article 24 of the Labor Law can be terminated if the parties to the labor contract reach consensus. Article 27 of the "Labor Law" If the employer is on the verge of bankruptcy and undergoing statutory rectification or serious difficulties in production and operation, and it is necessary to reduce staff, it shall explain the situation to the union or all employees 30 days in advance, and listen to the opinions of the union or employees After reporting to the labor administrative department, staff may be reduced. The employing unit shall reduce staff in accordance with the provisions of this Article. If it recruits staff within six months, it shall give priority to the staff that have been laid off.

Regarding the validity of the labor contract: Article 18 of the Labor Contract Law stipulates that the following labor contracts are invalid: labor contracts that violate laws and administrative regulations; labor contracts concluded by fraud, threats and other means. Invalid labor contracts are not legally binding from the time they are concluded. If part of the labor contract is confirmed to be invalid, if the validity of the remaining part is not affected, the remaining part is still valid. The invalidity of a labor contract shall be confirmed by the labor dispute arbitration commission or the people's court.