N, N+1 or 2N in China: grounds, wage bases and a complete example

Which route determines the payment?

Under the national Labour Contract Law, ordinary employee resignation under Article 37 generally does not trigger statutory economic compensation. Employee termination for a qualifying employer breach under Article 38 can trigger compensation, but the stated ground and evidence matter. Employer-initiated agreed termination, a qualifying Article 40 dismissal or a lawful Article 41 redundancy usually trigger compensation. A lawful Article 39 dismissal, including proven failure to meet recruitment conditions during probation, normally does not. Expiry of a fixed-term contract has its own rule, including the exception where the employer offers renewal on maintained or improved terms and the employee refuses. The name on a resignation form is evidence to assess, not a substitute for the actual events.

When does the extra month apply?

Article 40 covers specified situations: inability to work after the medical period and inability to perform another arranged job; continued incompetence after training or reassignment; or a major objective change after unsuccessful consultation on the contract. Its conditions must be met. The employer can give 30 days’ written notice or pay an additional month instead. Compensation is separate. The extra month is not automatic for Article 41 redundancy, probation, contract expiry or agreed termination. Paying it does not make an otherwise unlawful dismissal lawful. Under Article 20 of the Implementing Regulations, this notice-payment basis is the previous month’s wage standard, rather than automatically the 12-month compensation average.

Calculate N using service and the correct monthly wage

Article 47 gives one month of compensation per completed year at the employer. A remaining period of six months or more counts as a year; less than six months counts as half a month. Use average wages due before deductions for the 12 months before termination, including relevant monetary pay components; with under 12 months’ employment, average the actual months. A below-minimum average is raised to the local minimum under Article 27 of the Implementing Regulations. Where monthly wages exceed three times the published prior-year local average, that three-times amount caps the basis and the counted compensation years are capped at 12. The 12-year cap is not universal. Work before 1 January 2008 and recognised transferred service can require a separate calculation.

A complete example with three possible outcomes

Assume all service is after 2008, service is 5 years 4 months, the qualifying 12-month average is 8,000 yuan, and the previous month’s wage standard is 9,000 yuan. Assume no cap, minimum adjustment or service dispute. Compensation units are 5 + 0.5 = 5.5, so N is 44,000 yuan. For a lawful Article 40 termination without 30 days’ written notice where the employer uses pay instead, add 9,000 yuan: total 53,000 yuan. If unlawful termination is established and damages under Article 87 are the remedy, 2N is 88,000 yuan. Do not add N again to 2N, or automatically add the notice-payment month. Outstanding wages, qualifying unused-leave pay and reimbursements remain separate lines. These are conditional comparisons, not three payments owed together.

If dismissal during probation or its legality is disputed

A probation label does not remove the employer’s burden to identify a lawful reason. For claimed failure of recruitment conditions, compare the original conditions, how they were communicated and the evidence of failure; a newly invented target is not the same record. If you want the job restored after allegedly unlawful termination, Article 48 provides for continued performance where legally possible; if you do not request it or the contract cannot continue, the statutory damages route is considered. The missing-written-contract double-wage remedy is a separate issue, not the same as 2N. Write down which remedy you seek and avoid signing a voluntary-resignation statement that does not reflect your decision.

Build an itemised proposal before signing

Keep the contract, start and end dates, 12 months of gross-pay records, previous month’s wage record, dismissal notice and the messages showing who proposed the ending. A useful request is: “Please state the termination ground and effective date, compensation service units and monthly basis, whether written notice or notice pay is used, the calculation of each item, and payment dates. Please separate wages, leave, expenses, statutory compensation and any negotiated extra.” If the amount is agreed, check the actual release text and whether payment timing or instalments change what you are accepting. An employer’s deadline for signing is not the statutory filing deadline.

Move from a disputed figure to a specific claim

Use the settlement tool below once the legal route and inputs are identified. Save its inputs alongside your own calculation. If the ground, service or wage basis remains disputed, list each disputed fact and supporting document, and request the employer’s records for the missing inputs. A labour arbitration request should identify the remedy and monetary items rather than merely demand “N+1” without a basis. Check the linked time-limit page now; negotiation does not safely replace a filed application. Obtain the relevant local committee’s filing requirements and keep the receipt.

Need to take the next step?

Continue with related questions