I Stopped Counting Severance When My Company Started Running Out of Cash

My former colleague Lao Zhou called me and said his company might not make payroll next month. He asked, “Can I still get my N+1?”

I said, “Don’t calculate your N+1 first. Calculate when this month’s salary is coming.”

Lao Zhou didn’t believe it. He had worked at that company for six years in a technical role and didn’t deal with the boss much. Everything he knew about the company came from the salary SMS that arrived on the tenth of every month. Last month, on the tenth, the SMS didn’t come. HR said in the group chat, “The bank system is being upgraded. There will be a three-day delay.” Three days later, the salary arrived, but only base pay. Performance pay and allowances were missing. HR said, “It will be made up next month.”

Lao Zhou thought it would probably be made up next month.

But he noticed the bottled water in the break room had changed from Nongfu Spring to a cheaper brand. Later, even the cheaper brand stopped arriving. Admin told each floor to fill a kettle from the restroom tap. The paper towels disappeared, replaced by a roll of toilet paper on the sink. Two pothos plants withered, and nobody replaced them.

He saw these things. He didn’t think much about them.

I have been through a company collapse. So I told him: put your resume out now, while you are still employed.

Repayment priority assumes there is money to divide

Lao Zhou started talking about bankruptcy law. He said, “Labor claims have priority. During liquidation, employee wages are at the front of the line.”

True. But the premise is that the company still has something to liquidate.

I have seen what a collapsed company looks like. The office air conditioners were taken away to offset property management fees. The printers were carried off by suppliers. The boss’s Mercedes had been transferred to his brother-in-law three months earlier. By the time employees reacted and filed claims, the company account had a little over three hundred yuan. The only asset was a van with 180,000 kilometers on it, appraised at less than twenty thousand yuan, still mortgaged to a small loan company.

The law can set the order. It cannot conjure money. Repayment priority is a distribution plan, not a payment promise. Treating a priority right on paper as a balance in an account is the first mistake many people make.

The entity you can sue may have no assets

Lao Zhou said, “Then I’ll go to labor arbitration.”

Sure. But think about whom you are chasing.

Many bosses stopped being the legal representative long ago. The legal representative is a warehouse manager, the boss’s hometown friend, or a fresh graduate who was tricked into signing. You win the arbitration. The respondent named in the award is a company with no assets and a nominal legal representative who rides an electric bike to work.

Labor inspectors go looking for the boss. The phone is disconnected. They go to the registered address. The door is locked. Property management says the company owes half a year’s rent. The inspectors suggest arbitration. At the hearing, the legal representative shows up and says, “The accounts aren’t with me. I can’t find the boss either.” The award comes out. You apply for enforcement. The court checks: account balance 360 yuan, car mortgaged, computers five years old and assembled from parts. The legal representative gets consumption restrictions. She doesn’t take high-speed trains anyway. She rides an electric bike.

The boss? Some say Southeast Asia. Some say Yunnan. In a civil case, the court rules, he doesn’t show up, and there is nothing you can do. Unless it becomes a criminal case, making someone hand over real money through “integrity” is hard.

Collective action usually dies in the group chat

Lao Zhou said, “Then let’s all sue together.”

I asked him one question: How many people in your company will go to the labor inspectorate on Monday?

He was quiet for a moment. Then he said, “Let me ask.”

The next day he told me: “The sign-up in the group chat stopped at the fourth person. One said his kid had a fever. One said his wife wouldn’t agree. One said he’d wait and see.”

This is diffusion of responsibility. The more people there are, the thinner each person’s sense of responsibility becomes. Everyone hopes someone else will step forward first. Everyone wants the free ride. Finally two people file a case. Labor inspectors ask around, can’t find the legal representative, and the matter fizzles out. Even if they find the legal representative, that person has no money. The inspectors suggest court. Preparing materials, taking leave, attending hearings, waiting for enforcement: by the time the process ends, three months have passed, you haven’t seen the money, and you have delayed your job search.

Someone close to 40 does not have time to gamble out of spite.

Job hunting while employed is a different game

I told Lao Zhou: You are still employed. That is your biggest advantage.

When you are employed and go to an interview, HR asks, “Why do you want to change jobs?” You can say, “I want to look at better opportunities.” Your tone is calm. You can choose companies. You can wait for offers. You can negotiate salary. You can even say, “I’m currently employed and not in a hurry.”

Once you are unemployed, if you still haven’t found a job by the third month, your mindset changes. You start changing your expected salary from “no less than my last job” to “anything is negotiable.” By the fifth month, you take an outsourcing gig with no social insurance. By the sixth month, you join a small company at 80% of your previous salary, with one day off per week. You can accept it. You are also being pushed into it.

The calm you have while employed is leverage in your next negotiation. The anxiety you have after unemployment is the reason you accept a pay cut.

Keep evidence, but do not build a budget around severance

Lao Zhou asked, “Then what can I do?”

I told him three things.

First, don’t voluntarily write “resigned for personal reasons.” Unless the new job has already signed a contract. The wording affects unemployment benefits and arbitration claims. When you leave, get the termination certificate. It should say “company layoff” or “contract expiration,” not “personal development.”

Second, keep evidence. Labor contract, salary bank records, attendance records, social insurance records, work group chats, unpaid-wage notices, and communications with the boss and HR. Take photos, screenshots, and back them up to your personal cloud drive. The cost is low. Whether you use them later is another matter.

Third, separate unpaid wages from severance. Unpaid wages are labor claims. If the evidence is clear and the company still has an account, arbitration is worth trying. Severance and compensation are hard to enforce. Keep expectations low. If the company is clearly an empty shell, the legal representative is nominal, and the boss is unreachable, cut your losses. Don’t sign an agreement waiving your rights unless you get something real: unpaid wages settled, social insurance made up, or a termination certificate.

You can declare claims in bankruptcy proceedings. Don’t treat that as a lifeline. Cases involving refusal to pay labor remuneration, withdrawal of capital contributions, asset transfer, or embezzlement may move from civil to criminal. For ordinary unpaid wages, don’t fantasize about police intervention.

Ending

Lao Zhou didn’t go to arbitration. Two weeks before the company ran out of cash, he got an offer from a peer company with a 15% raise. On his last day, he went to finance to settle his pay. Finance said, “The boss said the unpaid wages will be transferred next month.”

He smiled and said, “Okay.”

Outside the company gate, he took a photo of the IOU and saved it in his phone. Then he opened the job app and changed his status to “Employed, open to opportunities.”

Do not count a collapsed company’s severance as an asset. It is not money you can use next month. It is a lottery ticket with very low odds. Keep the stub. Do not bet your life on it.

Someone close to 40 should give up illusions. That does not mean giving up all rights. It means lowering expectations for compensation, keeping the lowest-cost rights-preserving actions, and putting your main energy into the next job.

Being realistic means knowing which fights are worth your time and which documents are worth keeping.