Providing legally compliant and timely HR services for your employees is essential to operating successfully in a new international market. Working in a foreign country is never easy, especially when you’re dealing with unfamiliar labor and employment laws around things like severance pay in Macau. Here, even the smallest mistake can result in having to pay expensive fees and fines.
That’s why having an expansion partner like INS Global can help streamline the process at every step of the way. We support you from recruitment to payroll to employee termination. With our guidance, you can ensure the legal security of you and your employees, and cut down on unnecessary expenses.
In this article, we explain how to ensure proper employee termination and severance pay in Macau. We also outline the different kinds of employee dismissals so that you can make an important decision confidently and securely.
How to Safely Terminate an Employee Contract in Macau
Contract termination and the calculation of severance pay in Macau must be done in line with the Labor Law.
Unless specifically written and agreed upon in the contract, an employer cannot terminate an employee without notice or compensation. There are several kinds of dismissal, including dismissal with just cause and dismissal without a case.
All contracts in Macau require a written notice before being terminated. This written notice must include a reason for the termination.
Notice periods are 15 days if the dismissal is begun by the employer and 7 days if begun by the employee.
Alternately, if there is a clause which states a notice period length in the employees contract, this clause must be respected unless it falls below the legal minimum.
Dismissal in Macau where both parties agree
In cases where both the employee and employer agree to the termination of the contract, a written agreement should be signed by both parties. This should include the date of the termination, amount of notice (or pay in lieu), and any other agreed upon terms.
The agreement should also include a clause stating that the employee has received all the necessary documents and payments before the termination. If the agreement is not signed, then the notice period should still be respected. The employee must also be given a certificate of termination. This is especially useful for foreign employees who require this for seeking new jobs.
Dismissal during the probation period
Employers are not required to give notice to employees dismissed during the probation period, unless otherwise specified in the contract, or the probation lasts for longer than 90 days. In the latter case, 7 days notice is required.
Dismissal with just cause
Just cause dismissals are only for cases of severe misconduct, such as the violation of company rules, giving away confidential information, prolonged unexplained absences, etc.
If the employee termination is done with just cause, the employer must give written notice within 30 days after the inciting event.
There is no need for severance pay in Macau when firing an employees dismissed with just cause. However, if the employer fails to provide the written notice or the just cause is determined to be invalid, the employer will have to pay double the amount of statutory severance pay in Macau.
Contract termination by the employee
If the employee believes there is just cause to end the contract, they must also give written notice within 30 days. Some examples where an employee might have just cause to rescind the contract are:
- a failure by the employer to make payments
- a violation of the employee’s rights and safety
- a change in the working conditions as specified in the contract.
Compensation for an employee rescinding a contract with just cause is calculated at the same rate as severance pay, which is detailed further below.
Severance Pay in Macau
Severance pay in Macau is required for any dismissal without just cause, meaning a dismissal that is not due to misconduct or violations by the employee. The amount of severance pay in Macau differs according to the employee’s seniority, as shown in the chart below:
–Â Â Â Â Â 7 days of wages for those who have worked for less than 1 year.
–Â Â Â Â Â 10 days of wages per year for those who have worked for 1-3 years.
–Â Â Â Â Â 13 days of wages per year for those who have worked for 3-5 years.
–Â Â Â Â Â 15 days of wages per year for those who have worked for 5-7 years.
This continues to rise to a maximum of 20 days’ wages each year for those who have worked for more than 10 years.
Severance pay in Macau is also capped at 12 times the monthly wage of the employee at the time of termination. The maximum amount of monthly wage for severance pay calculation is MOP21,000 unless another amount is agreed upon by both parties.
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