[Direct answer]It all depends on the nature of the termination. If the employer terminates the contract in accordance with Article 40 of the Labor Contract Law of the People's Republic of China (e.g., the employee is ill, unable to perform his/her duties, or there are major changes in objective circumstances beyond the employee's fault), the employer shall give written notice 30 days in advance or pay an additional month's salary (as compensation in lieu of notice) and pay economic compensation (N) in accordance with Articles 46 and 47; if the employer fails to give 30 days' notice in advance, the employee may claim "N+1". If the termination is not in accordance with Article 40 but is carried out under the guise of layoffs, it constitutes an illegal termination. The employee may, in accordance with Article 48, choose to demand the continuation of the contract or, in accordance with Article 87, claim compensation (2N) at twice the standard of economic compensation. For specific solutions, please consult a professional.Labor arbitration and legal services for work-related injury compensation.

1. Problem background and typical scenarios

Under the influence of economic fluctuations and business adjustments, layoff notifications come swiftly and unexpectedly. It's not uncommon for employees to be told to leave the next day after a conversation with their supervisor. The most common confusion among workers includes: the company verbally notifying them of termination the next day without providing written documents or mentioning compensation standards; HR representatives confusing terms like "N", "N+1", and "2N", leaving workers unsure which compensation package they qualify for; the company citing poor performance as the reason for layoffs but failing to present an evaluation system or supporting evidence; forcing employees to sign voluntary resignation applications under the guise of "negotiated departures", only to later refuse to compensate them; and requiring employees to sign documents before discussing compensation, only to discover afterward that their rights have been completely restricted. The legality of the layoffs directly determines whether compensation will be calculated based on N, N+1, or 2N, and also determines the outcome of arbitration proceedings.

II. Key points of contention

  • Determining the nature of the termination: Whether it falls into the three no-fault circumstances specified in Article 40 of the Labor Contract Law of the People's Republic of China; whether there is a system basis and factual evidence (if the employee fails the assessment and still cannot perform the job after training or being transferred to another position); and whether the employer has fulfilled the procedure of giving 30-day notice in advance, with each decision providing guidance on compensation.
  • The applicable scope of the substitute notice pay: "+1" only applies to the termination without 30-day notice under Article 40, and there is no substitute notice pay for termination by mutual agreement, termination due to the worker's fault, or unlawful termination; its standard is determined according to the worker's monthly salary as stipulated in Article 20 of the Implementing Regulations of the Labor Contract Law of the People's Republic of China.
  • Calculation of economic compensation: According to Article 47, for each year of service, the employer shall pay one month's salary; for a period of more than six months but less than one year, it shall be calculated as one year; for a period of less than six months, it shall be paid half a month's salary. If the monthly salary is more than three times the average monthly salary of workers in the previous year announced by the municipal people's governments of the direct-controlled municipalities or cities at the prefectural level where the employer is located, it shall be paid at three times the average monthly salary, and the service period shall not exceed 12 years.
  • The consequences of illegal termination: According to Article 48, the worker may request to continue the performance of the contract; if the worker does not request to continue the performance or the contract can no longer be performed, the employer shall pay compensation of twice the standard of economic compensation in accordance with Article 87.

III. Professional analysis by Henglue Law Firm

In arbitration and litigation, it is the employer who bears the burden of proof for the legality of the termination: the rules and regulations on which the termination is based must be formulated and publicized through democratic procedures, there must be objective assessment records for unsatisfactory performance, and major changes in objective circumstances must prove that the basic conditions at the time of contract conclusion have indeed been lost and that prior consultation on amendments failed. For employees, the key is to turn the "dispute over interpretation" into a "dispute over numbers": the wage base should be calculated based on the average earned wages of the 12 months preceding the termination, and bonuses, allowances, and subsidies are generally included. Claims that the base is lowered solely by the basic salary are usually not supported; for work years spanning before and after the implementation of the Labor Contract Law, they are counted continuously according to relevant regulations. According to Henglue Lawyer's experience in handling similar cases, the key to winning or losing most disputes lies in documents and procedures: whether the termination notice states the reasons, whether the recorded conversations can restore the true interpretation, and whether the resignation documents mention "personal reasons". A minute of caution before signing is often more valuable than months of arbitration afterwards. For compensation disputes that enter the enforcement stage, it can be combined with other evidence to strengthen the case.Creditor-debtor relations and enforcement case servicesAdvance.

IV. Practical suggestions and legal basis

At the legal basis level: Article 36 of the Labor Contract Law of the People's Republic of China (amended in 2012) stipulates that the termination of the contract by mutual consent; Article 40 stipulates three circumstances of termination without fault and the choice of 30-day notice or compensation in lieu of notice; Article 43 requires the employer to notify the trade union of the reasons for unilaterally terminating the labor contract, and procedural defects may affect the determination of the legality of the termination; Articles 46 and 47 stipulate the circumstances and calculation standards of the economic compensation payable; Articles 48 and 87 stipulate the continued performance and double compensation for illegal termination; Article 20 of the Implementing Regulations of the Labor Contract Law of the People's Republic of China (implemented on September 18, 2008) stipulates that the compensation in lieu of notice shall be determined according to the worker's salary standard of the previous month; Article 27 of the Labor Dispute Mediation and Arbitration Law of the People's Republic of China (implemented on May 1, 2008) stipulates that the statute of limitations for labor disputes is one year. At the practical advice level: When receiving the layoff talks, do not sign any "voluntary resignation" or "mutual consent" documents first. Require the employer to issue a written notice of termination and specify the reasons and date; preserve the labor contract, payroll records, attendance records, social insurance records, and recording of the talks; first negotiate the compensation plan with the company in writing, and if unsuccessful, apply for arbitration within the one-year statute of limitations; if the employer refuses to pay after the arbitral award takes effect, you can apply for court enforcement. For resignation arrangements involving multiple legal relationships, you can consult a lawyer for advice.Special services and other case-related servicesTeam.

5. Henglu Law Firm's Reminder

The core of the layoff negotiation is to turn vague verbal promises into enforceable written agreements: compensation standards (N, N+1, or 2N), salary base, payment schedule, deadlines for social insurance and housing provident fund, and severance letters. It's crucial not to sign impulsively when emotions run high, and not to accept HR's verbal offers without putting them in writing. If the company has unilaterally terminated the contract, pay attention to the one-year arbitration statute of limitations. First, secure evidence and then negotiate. If negotiations fail, apply for arbitration immediately. For case-specific evaluation of compensation packages or preparation of arbitration materials, you can consult throughBeijing Henglu Law FirmMake an appointment for consultation to avoid being put on the defensive in terms of time limits and evidence.

Q1: What is the "1" in "N+1"? Does everyone have one?

"1" refers to the notice pay, which is a month's salary paid by the employer in addition to the 30-day written notice under Article 40 of the Labor Contract Law of the People's Republic of China; according to Article 20 of the Implementing Regulations of the Labor Contract Law of the People's Republic of China, it is determined based on the worker's salary in the previous month. It is not a universal benefit: it does not exist in cases of consensual termination, termination due to the worker's fault, or compensation for illegal termination (2N). Therefore, when negotiating, it is important to clarify the nature of the termination first, and then determine whether you can claim "+1". Don't be misled by the claim that "everyone gets N+1".

Q2: How is the monthly salary base for economic compensation calculated? Do bonuses and subsidies count?

According to Article 47 of the Labor Contract Law of the People's Republic of China, the monthly wage shall be calculated based on the average monthly wage earned by the worker in the 12 months preceding the termination of the labor contract, including hourly wages, piece-rate wages, bonuses, allowances, subsidies, and other monetary income. The amount of wages payable is usually higher than the actual amount paid. Generally, the company's claim to calculate the wage based only on the basic wage will not be supported. For workers who have worked for less than 12 months, the average monthly wage shall be calculated based on the actual number of months worked. If the monthly wage is more than three times the average monthly wage of workers in the municipality directly under the Central Government or the municipal-level people's governments where the employer is located in the previous year, it shall be paid at three times the average monthly wage, and the maximum compensation period shall not exceed 12 years.

Q3: The company asked me to sign a "voluntary resignation" application. If I sign it, can I still claim compensation?

After signing the voluntary resignation application, the nature of the termination is usually fixed as the worker's voluntary resignation, and it will be much more difficult to claim economic compensation or damages unless it can be proven that the signing was fraudulent, coerced, or based on a significant misunderstanding. Therefore, in the negotiation stage, do not rush to sign any documents containing words such as "personal reasons" or "mutual agreement". If you have already signed such documents, you should collect evidence such as audio recordings, chat logs, and layoff notification emails as soon as possible to prove that the resignation was actually initiated by the company. Then, assess the possibility of reversing the qualification and claiming compensation through arbitration. Any acceptable solutions reached during the negotiation should also be put in writing to avoid oral promises being broken.

Q4: Can the 2N and N+1 compensation for unlawful termination be claimed together?

You can't have it both ways. "2N" refers to the compensation determined in Article 87 of the Labor Contract Law of the People's Republic of China for unlawful termination (twice the standard of economic compensation); "N+1" applies to lawful termination without fault and without giving 30-day notice in advance. Termination must either be lawful or unlawful, and you can only choose one of the two approaches: if the termination is lawful but without advance notice, you can claim N+1; if the termination is unlawful, you can claim continued performance or 2N, without adding the compensation for notice. If you write the arbitration request with the wrong approach, you may lose the potential benefits. It is recommended to determine the claim path based on the evidence with the help of a lawyer.

Q5: How long does it take for labor arbitration? Can claims still be made after the statute of limitations has passed?

According to Article 43 of the Mediation and Arbitration Law of the People's Republic of China on Labor Disputes, the arbitration tribunal shall conclude the arbitration of labor disputes within 45 days from the date of accepting the arbitration application. Where the case is complex, the time limit may be extended by no more than 15 days upon approval; if the party is not satisfied with the arbitration decision, he/she may file a lawsuit in accordance with the law, and the overall timeframe will depend on the progress of the proceedings. Regarding the statute of limitations, Article 27 stipulates that the arbitration statute of limitations is one year, starting from the date when the party knows or should have known that his/her rights have been infringed; disputes arising from arrears in labor remuneration during the existence of the labor relationship are not subject to the one-year limitation, but where the labor relationship terminates, the claim must be raised within one year from the date of termination. Failure to comply with the statute of limitations will result in the loss of the right to win the case, so it is essential to assert your rights as soon as possible.

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·Beijing Henglue Law Firm