don't act in haste, think it over twice, and be careful!

I agree completely, Turnoi. Furthermore, I think he should try to cut a deal with his present employer. Dunno about running to SAFEA or the local Foreign Affairs Office. That could be counterproductive. The most important thing for him is to get a letter of release that is satisfactory so that he can move on without being under a cloud. Pulling a runner is dumb for someone teaching with a Z visa and a Residence Permit.
I'd add that Shanghai is flooded with foreigners. Not a good city to teach in unless you're an excellent teacher. Chinese employers there are spoilt for choice there when it's hiring time for foreign teachers, or indeed at any time of the year. If I were him, I'd try a third-tier city or a town or a county. Job security there is generally much better, sand so is the way Chinese employers treat their foreign teachers. Better to be a big fish in a small pond.