Can the Employer Fire Employees because Business has declined?
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Due to COVID-19 and recent policies in the education and training sector, many training companies are having a difficult time. One way out is to fire employee(s).
Can they just let the employee(s) go because of the bad situation?
The answer is no.
It is the legal duty of the employer to pay employees in full, within a timely manner according to the law.
In addition, if more than twenty employees or more than 10% of the employees have to be fired, the employer has to inform all employees 30 days in advance, and submit a report to the local labor administrative authority.
Related provisions in Labor Contract Law of the PRC:
Article 41 In the case of any of the following circumstances, if the employer needs to cut down more than 20 workers, or if it needs to cut down less than 20 workers but which accounts for 10 percent or more of the total number of workers, the employer shall make an explanation to the labor union or to all workers 30 days in advance. After it has solicited the opinions of the labor union or of the workers, it may have the reduction after reporting the plan to the labor administrative department:
(1) It is under revitalization in accordance with the Enterprise Bankruptcy Law;
(2) Serious problems in production and business operation occurs;
(3) The enterprise has changed products, made significant technological renovation or adjusted the form of business operation, and it still needs to have reduction after the labor contract is altered; or
(4) The objective economic circumstance, on which the labor contract is based, has altered significantly and it is unable to perform the labor contract.
…
第四十一条 有下列情形之一，需要裁减人员二十人以上或者裁减不足二十人但占企业职工总数百分之十以上的，用人单位提前三十日向工会或者全体职工说明情况，听取工会或者职工的意见后，裁减人员方案经向劳动行政部门报告，可以裁减人员：
（一）依照企业破产法规定进行重整的；
（二）生产经营发生严重困难的；
（三）企业转产、重大技术革新或者经营方式调整，经变更劳动合同后，仍需裁减人员的；
（四）其他因劳动合同订立时所依据的客观经济情况发生重大变化，致使劳动合同无法履行的。
…
Article 46 In the case of any of the following circumstances, employers shall make economic compensation to the workers:
(1) Any worker discharges the labor contract according to Article 38 of this Law;
(2) Any employer intends to discharge the labor contract with the workers according to Article 36 of this Law and reaches consensus with the workers through consultations;
(3) The employer discharges the labor contract pursuant to Article 40 of this Law;
(4) The employer discharges the labor contract subject to the first Paragraph of Article 41 of this Law;
(5) The labor contract is a contract with a fixed period, which is terminated in accordance with Paragraph (1) of Article 44 of this Law, except that the worker disagrees to renew the contract even though the conditions offered by the employer are the same as or better than those stipulated in the current contract;
(6) The labor contract is terminated in accordance with Subparagraphs (4) and (5) of Article 44 of this Law; or
(7) Other circumstances as prescribed by laws and administrative regulations.
第四十六条 有下列情形之一的，用人单位应当向劳动者支付经济补偿：
（一）劳动者依照本法第三十八条规定解除劳动合同的；
（二）用人单位依照本法第三十六条规定向劳动者提出解除劳动合同并与劳动者协商一致解除劳动合同的；
（三）用人单位依照本法第四十条规定解除劳动合同的；
（四）用人单位依照本法第四十一条第一款规定解除劳动合同的；需要裁减人员二十人以上或者裁减不足二十人但占企业职工总数百分之十以上的，用人单位提前三十日向工会或者全体职工说明情况，听取工会或者职工的意见后，裁减人员方案经向劳动行政部门报告，可以裁减人员：
（五）除用人单位维持或者提高劳动合同约定条件续订劳动合同，劳动者不同意续订的情形外，依照本法第四十四条第一项规定终止固定期限劳动合同的；
For the full text of the law in English version, please check:
http://english.www.gov.cn/archive/laws_regulations/2014/08/23/content_281474983042501.htm
For the full text of the law in Chinese version, please check:
http://www.gov.cn/zhengce/2007-06/29/content_2602202.htm