[Direct answer]In the Beijing area, the calculation basis of the economic compensation for the termination or dissolution of a labor contract, namely "monthly wages", is defined in Article 47 of the Labor Contract Law of the People's Republic of China as the average monthly wage of the worker over the past 12 months before the termination or dissolution of the contract. Accordingly, monetary income such as hourly wages, piece-rate wages, bonuses, allowances, and subsidies should be included in the calculation. Therefore, year-end bonuses, quarterly bonuses, and performance bonuses are usually included. However, "wages" are limited to those earned and constituting labor compensation. Reimbursements and welfare payments unrelated to normal work are generally not included in the calculation. The calculation is based on the average monthly wage over the past 12 months before the termination of the contract. If the average monthly wage is lower than the local minimum wage, the minimum wage shall be used as the calculation basis. It is recommended to check the wage structure and consult a lawyer if necessary. For more details, please refer to the following link:Labor arbitration and work-related injury compensation services.

I. Problem Background and Typical Scenarios

When calculating economic compensation, employers often exclude bonuses and performance-based pay, only calculating it based on the basic salary, resulting in reduced compensation. Typical scenarios include: whether the year-end bonus is included in the average monthly salary; how to allocate the large performance-based pay received just before leaving the company; whether sales commissions count as salary; and whether overtime pay is included. Many disputes have arisen in this regard in the Beijing area. For cases involving the composition of wages, relevant provisions can be referenced.Business and contract dispute services for enterprisesAnalyze them together.

II. Key points of contention

There are four main points of contention. Firstly, whether the bonuses should be included in the total salary amount, according to the "Regulations on the Composition of Total Salary". Secondly, the calculation method of the 12-month average and the items to be excluded. Thirdly, how to calculate the salary during the medical leave and waiting period before resignation. Fourthly, whether the calculation should be based on the salary due or the actual salary received. For more details, please refer to the relevant documents.Special services and other case services.

III. Professional analysis by Hengluo Law Firm

Based on the similar cases handled by our firm, the determination of economic compensation first depends on whether a labor relationship exists, and secondly, it depends on the wage base standard. In one case handled by our firm, Liu Lei, a technical supervisor, claimed that he had a labor relationship with Company A and demanded 212,000 yuan in wages and economic compensation. Attorney Xue Suhua of our firm firmly argued against the claim based on the "personal dependency" and "economic subordination" defense. Both the first-instance and second-instance courts determined that the parties only had a cooperative relationship and did not have a labor relationship, rejecting all of his compensation requests. This shows that if a labor relationship does not exist, there is no basis for compensation. However, in the case where a labor relationship is clearly established, whether the wage base includes bonuses and performance-based pay directly determines the amount of compensation. In two other cases handled by our firm, one worker's monthly basic salary of 7,917 yuan included floating performance-based pay. The court calculated the economic compensation based on the worker's earned wages, resulting in a total of 295,207.08 yuan. In another case involving a skin management specialist, the arbitration committee determined and supported the economic compensation of 8,000 yuan based on the worker's guaranteed minimum wage of 8,000 yuan. This case was handled by Beijing Henglu Law Firm.Xue SuhuaThe attorney (practice license number: 11101201211769926, subject to the document issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

The legal basis is Article 47 of the Labor Contract Law of the People's Republic of China (implemented on January 1, 2008 and amended on December 28, 2012), which stipulates that economic compensation shall be calculated according to the length of service, with one month's salary paid for each completed year of service, and the monthly salary shall be the average salary of the last twelve months before the termination or expiration of the contract. Article 27 of the Implementing Regulations of the Labor Contract Law of the People's Republic of China (implemented on September 18, 2008) specifies that monthly salary shall be calculated based on the actual salary, including hourly wages, piece-rate wages, bonuses, allowances, and other monetary income. If the employment period is less than twelve months, the average monthly salary shall be calculated based on the actual number of months. Practical suggestions: Calculate all monetary income of the last twelve months; keep pay slips, bank statements, and bonus payment records; refuse to calculate only based on the basic salary; and apply for arbitration in case of disputes. For evidence of wages, it can be combined with other evidence.Labor arbitration and work-related injury compensation servicesAndCreditor-debtor relations and enforcement case services.

5. Henglu Law Firm's Reminder

Bonuses, performance bonuses, and commissions are part of the total salary and should be included in the compensation base. If the employer only calculates the basic salary, they are underpaying. Pay attention to the 12-month average calculation, the allocation of bonuses just before leaving the job, and the application of the minimum wage if the salary is lower than the minimum wage. Keep income receipts and, if necessary, claim the difference in accordance with the law. You can seek legal help for this.Special services and other case servicesConsult a professional lawyer.

VI. Frequently Asked Questions

Q1: Does the monthly salary for economic compensation include bonuses? If the employer only calculates it based on the basic salary, can I get a refund?

Including. According to Article 47 of the Labor Contract Law and Article 27 of the Implementing Regulations of the Labor Contract Law, the monthly wage is calculated based on the worker's earned wages, covering hourly wages, piece-rate wages, bonuses, allowances, and subsidies, etc. Monetary income such as year-end bonuses, quarterly bonuses, and performance bonuses should generally be included. If the unit only uses the basic wage as the base, it is an underpayment. You can claim to recalculate the average earned wages for the twelve months prior to the termination or termination and make up the difference. However, reimbursement funds and welfare-based non-labor compensation are generally not included. In case of disputes, you can apply for labor arbitration and submit payroll records and bonus payment records to prove the true base amount.

Q2: If I argue that the compensation base should include bonuses, what evidence do I need to prepare?

Core evidence: ① Labor contract and certificate of termination or cancellation (to determine the length of service and the base period); ② Bank salary statements (to prove the actual monthly income including bonuses and performance-based rewards); ③ Bonus and performance payment records and system documents (to prove that bonuses form part of the salary); ④ Pay slips or personal income tax breakdowns; ⑤ Communication records regarding bonus agreements. The organization of evidence should prove that "the bonuses are part of the employee's earned salary and occurred within the previous twelve months," thereby including them in the average base period. The more complete the materials are, the easier it will be to recover any under-calculated amounts.

Q3: How much does it cost to hire a lawyer to recover the under-calculated economic compensation?

The attorney's fees are not standardized nationwide. They are usually charged on a per-case basis or as a percentage of the litigation amount, subject to the specific provisions of the retainer agreement. Labor dispute arbitration is free of charge, but filing a lawsuit in court costs 10 yuan per case. The amount of the dispute in such cases depends on the size of the difference. The smaller the amount, the less work it involves. It is recommended to clarify the fee calculation method and upper limit with the law firm before entrusting them with the case, and to conduct a one-time base calculation and evaluation first. After weighing the difference and the cost, you can decide whether to proceed with arbitration to avoid arbitrating over small differences due to the high cost being uneconomical.

Q4: How long does it usually take to recover the under-calculated economic compensation?

Labor arbitration cases are generally concluded within 45 days from the date of acceptance, and the time limit can be extended by 15 days in complex cases. If the parties are dissatisfied with the arbitration award, they can file a lawsuit within 15 days. The first-instance ordinary procedure shall be concluded within six months, and the simplified procedure within three months. Cases with clear calculation bases and facts have controllable timeframes. If the employer denies the nature of the bonus and needs to provide evidence, the corresponding time limit will be extended. Generally, it takes several months from the application to the first-instance judgment. It is recommended to assert rights in a timely manner within the arbitration statute of limitations (within one year from the date of knowing that rights have been infringed) to avoid exceeding the time limit.

Q5: If I find that my employer only calculates the economic compensation based on my basic salary, what should I do first?

First step: Keep all materials, including the labor contract, bank statements of salary, records of bonuses and performance awards, and termination certificates. Never sign a severance agreement that states "calculated based on the basic salary". Second step: Calculate the compensation due based on the wages (including bonuses and performance awards) earned over the previous twelve months, and compare the difference with the company's proposal. Third step: Request the company in writing to explain the calculation method and make corrections. Fourth step: If no agreement is reached, file a labor arbitration within the arbitration time limit and submit income evidence to claim the compensation based on the corrected base amount.

This article is written based on the common judicial interpretations in the Beijing area. If the case occurs in other regions, it is recommended to consult local lawyers to verify the regional differences.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Labor arbitration legal services·Attorney Xue Suhua·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on current laws and regulations and publicly available adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.