China Severance Pay Calculator: Economic Compensation N, N+1 and 2N
China severance under the Labor Contract Law: one month's pay per year of service, N+1 without notice, 2N for unlawful dismissal, and the tax exemption.
Type the local average monthly wage published by your city's statistics bureau to apply the cap and the tax exemption. Service before 2008 and special cases (pregnancy, illness, contract expiry) may follow other rules.
What it does
Under article 47 of China's Labor Contract Law, economic compensation is one month's pay for each full year of service; six months or more count as a year and less than six months as half a month. The pay is the average of the last 12 months. If it is above 3 times the local average monthly wage, the base is capped at 3 times that average and at 12 years. Dismissal without 30 days' notice adds one month's pay (N+1), and unlawful dismissal is paid at twice the compensation (2N). The part up to 3 times the local average annual wage is free of individual income tax.
How to use it
- Type your average monthly pay and your years and months of service.
- Choose the type of termination and, if you know it, the local average wage.
- Read the compensation, the tax-free part and the tax.
The arithmetic runs in your browser. Nothing you type is sent anywhere and nothing is stored, so you can use these with real numbers.
Frequently asked questions
How much is the compensation for 5 years and 8 months on ¥10,000?
8 months count as a full year, so N = 6: ¥60,000. Without notice it is ¥70,000 (N+1), and for unlawful dismissal ¥120,000 (2N).
Is there a cap for high salaries?
Yes. With ¥40,000 a month, 15 years and a local average of ¥10,000, the base is ¥30,000 and the years are capped at 12: ¥360,000, all tax-free.
Is severance taxed?
Only the part above 3 times the local average annual wage, taxed separately with the annual table from 3% to 45%.
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