The single rule that governs every EOR termination: do not tell the employee they are being terminated before coordinating with your EOR. Doing so creates a legally defective termination event that bypasses required procedures and generates liability. Call your EOR first, every time.
Because the EOR is the legal employer, the EOR executes the termination. Your role is to initiate, direct, and fund the process — not to run it yourself.
How EOR Termination Works — Roles and Responsibilities
| Step | Client Company (You) | EOR |
|---|---|---|
| Decision to terminate | Makes the decision | Not involved |
| Documenting grounds | Provides reasoning, performance records | Advises on what constitutes valid grounds in the country |
| Notice period | Instructs EOR to begin notice period | Issues formal written notice to employee |
| Severance calculation | Approves the severance amount | Calculates statutory severance |
| Employee communication | May communicate directly or through EOR | Issues statutory termination documents |
| Final payroll | Approves final payslip | Processes final salary, accrued leave, statutory payments |
| Government notifications | Not responsible | Files any required government notices (Japan, Indonesia) |
| Tax documents | Not responsible | Issues annual tax documents for final year |
Notice Periods by Country
| Country | Employee Notice | Employer Notice | Notes |
|---|---|---|---|
| Singapore | 1 day – 4 weeks | 1 day – 4 weeks | Varies by contract; Employment Act minimum |
| India | 1–3 months | 1–3 months | Varies by seniority; confirm in contract |
| Philippines | 30 days | 30 days | Fixed by Labour Code |
| Indonesia | 14–90 days | 14–90 days | Permanent employees: complex; PKWT: end of term |
| Japan | 14–30 days | 30 days minimum | Labour Standards Act; courts may require more |
| Malaysia | 4–8 weeks | 4–8 weeks | Employment Act: based on tenure |
| Vietnam | 3–45 days | 3–45 days | Labour Code; varies by contract type |
| Thailand | 1 pay period | 1 pay period | Labour Protection Act |
| South Korea | 30 days | 30 days | Labour Standards Act |
| Hong Kong | 7 days – 1 month | 7 days – 1 month | Based on tenure and contract |
| China | 3–30 days | 30 days | Labour Contract Law |
| Taiwan | 10–30 days | 10–30 days | Labour Standards Act; based on tenure |
Payment in lieu of notice is permitted in most markets — confirm with your EOR.
Severance by Country
| Country | Severance Formula | When Required | Notes |
|---|---|---|---|
| Singapore | None (statutory) | Not required | Retrenchment benefits market practice |
| India | 15 days salary × years of service | 5+ years service, retrenchment only | Gratuity Act |
| Philippines | 1 month salary or 0.5 month × years | Retrenchment, redundancy, closure | Whichever is higher |
| Indonesia | 1–2x monthly salary × years | Most terminations | Severance multiplied by reason factor |
| Japan | None statutory | Not required | Market practice is 1–3 months |
| Malaysia | 10–20 days salary × years | Retrenchment, dismissal without cause | Based on tenure |
| Vietnam | 0.5 months × years (pre-2009 service) | Most terminations | Two-part calculation |
| Thailand | 30 days – 400 days salary | Various triggers | Based on tenure |
| South Korea | 30 days salary × years | All employees, 1+ year service | Mandatory regardless of reason |
| Hong Kong | 2/3 month × years | Redundancy, dismissal | Min 2 years service |
| China | 1 month × years | Most terminations | N formula or 2N for no-fault |
| Taiwan | 0.5–1 month × years | Various triggers | New vs old pension system |
South Korea and China are the most expensive severance markets. South Korea’s mandatory severance applies regardless of the reason for termination — even resignation. China’s N/2N formula makes no-fault terminations particularly costly. Budget for these markets from the first hire.
Step-by-Step Termination Process
Step 1 — Consult Your EOR Before Any Communication
Call your EOR’s compliance team first. Tell them:
- The reason for termination (performance, redundancy, misconduct, role elimination)
- The employee’s tenure, contract type, and salary
- Any prior documentation (PIPs, warnings, written feedback)
The reason for termination affects the process, costs, and risk level. Redundancy and mutual agreement are simpler and cheaper than misconduct-based terminations in every Asian market.
Step 2 — Agree on Approach and Costs
Your EOR advises on whether the stated reason is valid grounds in that country, the required notice period, the statutory severance amount, any additional statutory payments (accrued leave, outstanding expenses), and the total cost estimate.
Get this in writing before proceeding.
Step 3 — Prepare Documentation
Your EOR prepares:
- Termination letter (compliant with local law, in local language where required)
- Any statutory notice forms required by government agencies (Japan, Indonesia)
- Final payslip and settlement agreement
You should prepare:
- Performance documentation or redundancy rationale (in case of dispute)
- Return of company property checklist (laptop, access cards, data)
Step 4 — Conduct the Termination Meeting
For performance or conduct terminations, a meeting is usually required. Follow your EOR’s script. In Japan and Indonesia, premature or undocumented termination meetings can be cited as evidence of constructive dismissal — this is not theoretical risk.
Step 5 — Notice Period
The employee continues working (or is placed on garden leave). Payroll continues as normal. The EOR handles any government filings triggered by the termination — for example, Indonesia’s bipartite negotiation records.
Step 6 — Final Settlement
Your EOR processes final salary, accrued but unused annual leave (paid out in most Asian markets), statutory severance, and any agreed additional separation payments.
Some markets require the employee to sign a settlement agreement (mutual separation deed) waiving future claims. Your EOR prepares this.
Step 7 — Offboarding
Benefits and insurance coverage ends on last working day. BPJS, CPF, EPF, and other social insurance memberships updated. Tax documents prepared for the final year.
Country-Specific Risk Notes
Japan — Highest Risk
Japanese courts regularly reinstate employees whose dismissal was found unjust. Even with a valid reason, expect a 2–4 week process minimum. Never terminate for performance without a documented PIP process. Mutual agreement (“Gōi taishoku”) is the safest route — expect to pay 1–3 months additional salary as an incentive.
Indonesia — Most Complex
The Manpower Law’s severance formula can reach 20+ months’ salary for employees with 5+ years of service, once the multiplier for reason of termination is applied. This is not an exaggeration — budget for it before you hire your first Indonesian employee.
China — Expensive and Procedurally Strict
30-day notice period or payment in lieu. Severance follows the N formula (1 month per year). Terminations during pregnancy, sick leave, or occupational disease treatment are prohibited entirely.
South Korea — Mandatory Severance for All
Every South Korean employee with 1+ year of service is entitled to 30 days salary per year of service upon any termination — including voluntary resignation. Factor this into your South Korea headcount budget from day one.
India — 5-Year Gratuity Trigger
Employees with 5+ years of continuous service are entitled to gratuity (15 days salary per year of service) under the Payment of Gratuity Act. Applies regardless of whether the termination is voluntary or involuntary. Your EOR should provision this monthly.
What to Avoid
- Do not tell the employee they are being terminated before coordinating with your EOR. This can constitute a legally defective termination and creates additional liability.
- Do not reduce salary or change job duties as a precursor to termination. In most Asian jurisdictions, this constitutes constructive dismissal.
- Do not use fixed-term contracts to circumvent permanent employee protections — particularly in Indonesia and China, where courts void such arrangements.
- Do not terminate during protected periods — maternity leave, sick leave, occupational injury treatment, or (in China) during pregnancy or nursing periods.
Frequently Asked Questions
Who is responsible for paying severance when using an EOR? You are. The EOR processes the payment and includes it in your invoice, but the obligation flows from your business decision to terminate. The EOR does not absorb severance costs.
How long does EOR termination take in Asia? Singapore and Hong Kong are fastest: 2–4 weeks end-to-end. Japan and Indonesia are slowest: 4–12 weeks or longer if disputed. China typically takes 4–8 weeks.
Can my EOR refuse to terminate an employee? Your EOR will flag if a proposed termination is legally problematic and advise on the correct approach. In cases involving serious misconduct, they may require additional documentation. They will not refuse to process a compliant termination.
What happens if an employee disputes their termination? Your EOR manages the dispute resolution process — labour mediation, conciliation, and if necessary industrial tribunal proceedings. The EOR bears the operational burden, though financial settlements are passed through to you.
Is mutual separation cheaper than formal termination in Asia? Often yes. Mutual separation agreements — where the employee resigns in exchange for a negotiated payment — are typically faster, less legally risky, and avoid full statutory severance in some markets. Your EOR can model the total cost difference for your specific situation before you commit to an approach.
