Severance Payment for Termination of Labor Contracts—Bilingual

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<Labor Contract Law of the People's Republic of China>     

Article 40: Under any of the following circumstances, an employer may terminate the labor contract with an employee by giving thirty days' advance written notice to the employee or by paying the employee an additional month's salary:

(1) If the employee is ill or injured not related to work and, after the expiration of the prescribed medical treatment period, is unable to continue in their original job and also unable to perform alternative work arranged by the employer;

(2) If the employee is unable to meet the job requirements and, after training or adjustment of their position, still fails to meet the requirements;

(3) If there has been a significant change in the objective circumstances under which the labor contract was originally signed that renders the contract unfulfillable, and negotiations between the employer and employee fail to reach an agreement on changes to the terms of the contract.          

Article 46: Under any of the following circumstances, the employer shall pay economic compensation to the employee:

... (3) When the employer terminates the labor contract in accordance with Article 40 of this law;          

Article 47: Economic compensation shall be calculated based on the number of years the employee has worked at the company, with one month's salary paid for each full year of service. For periods of more than six months but less than one year, it shall be calculated as a full year; for periods of less than six months, half a month's salary shall be paid as compensation.

If the employee's monthly salary exceeds three times the average monthly salary of workers in the municipality directly under the central government or in the city where the employer is located for the previous year, then the standard for payment of economic compensation shall be capped at three times the average monthly salary of local workers, and the maximum number of years for which compensation can be paid is twelve years.    

The term "monthly salary" as used in this article refers to the average salary of the employee over the twelve months preceding the termination or expiration of the labor contract.

Original text:

第四十条 有下列情形之一的,用人单位提前三十日以书面形式通知劳动者本人或者额外支付劳动者一个月工资后,可以解除劳动合同:         

第四十六条 有下列情形之一的,用人单位应当向劳动者支付经济补偿:


第四十七条 经济补偿按劳动者在本单位工作的年限,每满一年支付一个月工资的标准向劳动者支付。六个月以上不满一年的,按一年计算;不满六个月的,向劳动者支付半个月工资的经济补偿。         

 Note:In order to make sure a better understanding of the law, we planed to provide the English translation and original text of the legal provisions on a certain legal issue regularly, stay tuned.


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