How Is Severance Calculated in China?

N = years × average monthly wage, then apply rounding, the 3×/12-year cap, and any +1 or 2N.

Step 1: confirm the exit article actually requires economic compensation. Step 2: service years — each full year is 1, six months or more counts as 1, under six months is 0.5. Step 3: average monthly wage is generally the payable wage over the 12 months before the exit, including bonuses that were wages, not only basic salary. Step 4: if that average is above three times the local prior-year average wage, cap the base at 3× and cap years at 12. Step 5: add one extra month if you are buying out Art. 40 notice (N+1). Step 6: if the dismissal is unlawful and the employee claims compensation instead of reinstatement, the figure is typically 2N, not N. City average-wage notices change every year.