If the resignation certificate is not issued in a timely manner, causing the employee to miss a job opportunity, should the company compensate for the expected loss?

After a worker resigns, if the employer fails to issue a termination-of-employment certificate in a timely manner in accordance with the law, resulting in the worker being unable to start employment with a new company on schedule, who should bear the resulting loss from unemployment? Recently, the Jinan Intermediate People’s Court concluded a labor dispute case and clarified that where the employer fails to timely fulfill statutory obligations, thereby obstructing the worker’s normal reemployment and causing losses, the employer shall bear liability for compensation in accordance with the law. This case has strong warning significance for enterprises to regulate resignation/termination management and to prevent risks in labor employment management at the front end.

(Image source: online, infringement removed)

Case Overview

Cui entered a company’s Jinan branch in June 2022, after which a labor dispute arose between the two parties. A previously effective legal document had already confirmed that the company’s Jinan branch unlawfully terminated the labor contract; the parties’ labor relationship was terminated on March 15, 2023, and the company’s Jinan branch had the obligation to issue to Cui a certificate confirming the termination of the labor contract. Later it was found that Cui only actually received the certificate confirming termination of the labor contract on June 10, 2023.

On April 19, 2023, a Zhejiang company sent Cui a “Job Offer,” stating that it had passed an interview and that the official start date was April 22, 2023, with a probation period salary of 25,000 yuan per month before tax. At the same time, the “Job Offer” explicitly stated a reminder: upon joining, the employee must terminate the labor contract with the former employer and obtain a written resignation/termination certificate; if the resignation certificate cannot be provided normally, the company cannot process the onboarding, and the employment agreement will automatically become void.

On April 20, 2023, Cui sent the “Notice of Termination/Rescission of Labor Contract” issued by the former employer to the Zhejiang company, asking whether onboarding could be processed. The other party replied that because the submitted materials stated that Cui was dismissed due to disciplinary reasons and did not comply with the company’s employment system, the offer would automatically become void and onboarding could not be processed. After that, the Zhejiang company issued an “OFFER Non-Employment Notification,” stating that because in the termination notice of Cui’s former company, it was recorded that he had seriously violated the company’s rules and regulations and other matters, which did not match the company’s employment system, the company decided to cancel the employment.

Cui believed that the company’s Jinan branch did not, in accordance with the law, timely issue the certificate confirming termination of the labor contract, and that the contents recorded in the termination notice had been determined by an effective judgment to have no factual basis, directly causing him not to be able to start employment with a new company on time, resulting in losses from unemployment. He therefore applied for arbitration and filed a lawsuit, requesting the company’s Jinan branch to compensate him for the economic losses caused by not issuing the resignation/termination certificate in a timely manner.

Court’s Holding

After trial, the court held that Article 50 of the Labor Contract Law of the People’s Republic of China provides that an employer shall, when it terminates or rescinds a labor contract, issue a certificate confirming the termination or rescission of the labor contract, and handle the transfer procedures for employment records and social insurance relationships for the worker within the prescribed time limit. Article 89 provides that if an employer violates the above provisions and causes damage to the worker, it shall bear liability for compensation. It can be seen that timely issuing a certificate confirming termination of the labor contract is not only a statutory obligation of the employer, but also an important condition to ensure the worker’s smooth reemployment.

In this case, an effective judgment had already confirmed that the company’s Jinan branch issued the certificate confirming termination of the labor contract to Cui only as late as June 10, 2023. The evidence submitted by Cui, including the “Job Offer,” the email correspondence between the parties, and the “OFFER Non-Employment Notification,” can corroborate each other and form a relatively complete chain of evidence, sufficient to prove that the Zhejiang company had issued a job offer to him and clearly required him to submit a written resignation/termination certificate upon joining. Since Cui failed to submit a lawful and standardized certificate confirming the termination of his labor contract before April 22, 2023, it objectively affected his ability to start employment at a new company on time. Based on this, the court found that there is a causal relationship between the company’s Jinan branch’s failure to timely issue the resignation/termination certificate and Cui’s inability to smoothly achieve reemployment, and the company’s Jinan branch should bear the corresponding liability for compensation.

As to the compensation amount, the court held that it should comprehensively determine it by considering the degree of fault of the company’s Jinan branch, the reasons for the expansion of the losses, the worker’s original wage level, and the principle of fairness. Ultimately, the court exercised discretion and ordered the company’s Jinan branch to pay Cui economic losses of 25,563.22 yuan for the period from April 22, 2023 to June 10, 2023. The court of second instance held that the facts found in the first instance were clear and the law applied was correct, and it dismissed the appeal in accordance with the law and upheld the original judgment.

Judge’s Remarks

Presiding Judge

Zeng Qingshu

Jinan Intermediate People’s Court

First-Level Judge of the First Civil Division

1. A resignation/termination certificate is not an “incidental formality,” but a statutory obligation that enterprises must fulfill in a timely manner. After a labor relationship is terminated or rescinded, timely issuing a certificate confirming the termination of the labor contract to the worker is a duty explicitly stipulated by law. In practice, some enterprises believe that as long as they have notified the termination of the labor relationship, whether the resignation/termination certificate is issued a few days early or late has little impact, and they even treat it as a routine procedural matter. In fact, the resignation/termination certificate directly relates to whether the worker can smoothly handle onboarding at a new employer, social insurance linkage, transfer of records, and other matters. Once an enterprise is negligent in fulfilling this obligation, causing the worker to miss employment opportunities and suffer unemployment losses, a minor procedural defect can potentially turn into liability for substantive compensation.

2. Where a worker misses an employment opportunity due to not obtaining a resignation/termination certificate in a timely manner, the worker has the right to claim reasonable expected economic losses. In this case, the court did not simply stop at whether the enterprise “supplemented and issued” the resignation/termination certificate. Instead, it further examined whether the enterprise’s delayed fulfillment of statutory obligations hindered the worker’s reemployment, and whether there is a causal relationship between this and the worker’s unemployment loss. After review, the worker had already presented evidence proving that the new company issued a real job offer, stipulating a specific start date and compensation standards, and taking the resignation/termination certificate as one of the conditions for onboarding; because the enterprise failed to timely issue a lawful and standardized resignation/termination certificate, the worker was unable to start employment on schedule, and therefore the worker was entitled to claim reasonable compensation for the loss of expected benefits during that period. This ruling reflects the judiciary’s protection of workers’ right to reemployment, and it also reminds enterprises that the risk of compensation arising from the delayed issuance of a resignation/termination certificate must be given full attention.

3. In order to help enterprises prevent and resolve legal risks, a compliance mechanism for the entire resignation/termination management process should be established. This case shows that enterprise labor employment risks are not limited to “whether a labor relationship has been terminated or rescinded,” but extend to the subsequent management stages after termination. When an enterprise terminates or rescinds a labor relationship, it should simultaneously do the following: First, strictly examine the grounds and procedures for termination to avoid chain disputes arising from unlawful termination; second, timely and in a standardized manner issue a certificate confirming the termination or rescission of a labor contract, ensuring that the contents are objective and cannot affect the worker’s reemployment due to improper phrasing; third, improve supporting procedures such as resignation/termination handover, social insurance transfer, records handling, and document delivery with audit trails to form closed-loop management. For enterprises, issuing a resignation/termination certificate in a standardized manner may seem like a “small detail,” but in fact it is an important “key point” for preventing the escalation of labor disputes and reducing the risk of compensation liability. Only by implementing employment compliance all the way to the endpoint of resignation/termination management can labor disputes truly be prevented at the front end and resolved substantively.

Source: Jinan Intermediate People’s Court

【Source: Jinan City Lixia District People’s Procuratorate】