The situation
A UK electronics manufacturer consolidating production needed to close one of two Shenzhen lines, eliminating 76 positions — assembly workers, line supervisors and several long-tenured engineers. China has no at-will termination: a unilateral economic layoff of this scale requires a statutory procedure, a report to the labor bureau, and still leaves each dismissal open to individual arbitration. The workforce included two pregnant employees and three on medical leave, all with special statutory protection against unilateral termination. A competitor's recent plant closure nearby had produced over forty arbitration claims and local press coverage; the client wanted neither.
What we did
- Chose negotiation over unilateral action. We designed the exercise around mutual termination agreements rather than statutory layoff — paying a premium of N+2 (and tailored packages for protected employees, who cannot be unilaterally terminated at all) in exchange for certainty and signed releases.
- Sequenced the communication. Announcement scripts, bilingual FAQs and individual calculation sheets were prepared in advance; supervisors were briefed first, then the workforce in small groups on a single morning, eliminating the rumor cycle that drives collective resistance.
- Ran on-site signing days. Our lawyers attended the plant for three days, answering questions one-on-one and adjusting individual terms within a pre-approved matrix — service-year disputes, unused leave, social insurance gaps — so issues were resolved at the table rather than at arbitration.
- Handled the protected employees separately. The pregnant and medical-leave employees received either extended packages or, in two cases, redeployment to the remaining line, fully documented.
The result
74 of 76 employees signed mutual termination agreements within three weeks of announcement; the final two accepted redeployment. Not a single labor arbitration claim was filed, no labor bureau intervention occurred, and the line shut down on schedule. The total separation cost came in approximately 12% above pure statutory severance — the explicit, budgeted price of certainty, and far below the client's modeled cost of contested proceedings, idle payroll and delay.
Results depend on the specific facts of each matter; past outcomes do not guarantee similar results.