If you are laid off, calculate N first: one month’s wage per full year, half a month if under six months
Grade ABig benefitMoneyFreeLittle timeNo willpower
When you are laid off, statutory economic compensation is calculated like this: one month’s wage for each full year worked; at least six months but less than a year counts as a year; less than six months gets half a month. Monthly wage here is the average over the 12 months before you leave, including bonuses, allowances, and subsidies. If wages exceed three times the local average monthly wage for the prior year, pay is capped at three times that average, and years of service count for at most 12 years.
- Cost
- No cost. Run the numbers once with a calculator; about ten minutes.
- Benefit
- Statutory economic compensation under the Labor Contract Law is what the employer owes when you are laid off—commonly called N. The formula: “one month’s wage for each full year of service … six months or more but less than one year counts as one year; less than six months, half a month’s wage to the worker.” If monthly wage exceeds three times the local average monthly wage of employees for the prior year, use triple that average as the cap, and count at most twelve years of service.
- Notes
- Monthly wage means average wage over the twelve months before the labor contract is terminated. Bonuses, allowances, and subsidies all count—not base pay alone. That is what employers most often understate. Whether this sum is subject to personal income tax is in Item 18 of this section (tax on compensation).
Sources · 1
- 全国人大常委会 (2007). 中华人民共和国劳动合同法（2008 年 1 月 1 日施行）（第四十七条）. gov.cn/gongbao/content/2007/content_711013.htm