Q:
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What is severance pay in China?
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A:
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Severance pay (or economic compensation) in China is the amount of financial aid an employer has to pay to an employee that is lawfully terminated.
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Q:
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Can I receive severance pay when my employment contract expired?
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A:
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Yes. In accordance with the Labour Contract Law of the PRC, the employer shall make severance pay to the employee upon the expiration of the labour contract except in cases where the employee chooses not to renew the contract despite that the same or even better terms and conditions are being offered by the employer.
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Q:
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Can I receive severance pay when I have reached a mutual termination agreement with the employer?
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A:
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Yes. The employer shall make severance pay to the employee when the labour contract is terminated through mutual agreement.
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Q:
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Can I claim for severance pay and compensation for unlawful termination at the same time?
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A:
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It is not allowed. According to the Regulation on the Implementation of Labour Contract Law of the PRC, if the employer has paid a compensation for unlawful termination according to Article 87 of the Labour Contract Law of the PRC, it is not required to make severance pay to the employee.
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Q:
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How to calculate the severance pay?
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A:
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According to the Labour Contract Law of the PRC, severance pay shall be paid to an employee based on the number of years of service of the employee and based on the standard of one month's wage for each completed year of service. Where the period of service is more than six months but less than a year, it shall be deemed as a completed year of service; where the period of service is less than six months, the employer shall pay half a month's wage to the employee as severance pay.
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