Q:
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If the company terminates the contract with the employee, regardless of the length of service, whether the economic compensation is calculated in accordance with the relevant provisions of the Labor Contract Law?
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A:
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Due to the implementation of the new labor contract law in 2008, the economic compensation for employees before and after Year 2008 needs to be calculated in sections.
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Q:
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What is the difference between the two about the conversion of working years?
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A:
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Before Year 2008, one month’s salary will be converted for every full year of working experience, and no salary will be converted for less than half a year.
After Year 2008, one year of working experience will be converted into one month's salary, and less than six months will be converted into half a month's salary.
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Q:
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Is there a maximum amount of economic compensation?
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A:
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After Year 2008, the Labor Contract Law stipulates that the average wage of employees in the twelve months before the termination or termination of the labor contract is three times the average monthly wage of employees in the previous year. The standard of payment of economic compensation is three times the average monthly salary of employees, and the maximum period of payment of economic compensation shall not exceed 12 years.
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Q:
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If the employee reaches the legal retirement age and terminates the labor contract, is it necessary to pay economic compensation?
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A:
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In accordance with the provisions of Article 44 of the Labor Contract Law of the People’s Republic of China, the employer will not give any economic compensation to the termination of the labor contract because the legal retirement age is reached.
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Q:
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Whether to pay individual income tax for economic compensation?
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A:
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According to the "Notice on the Connection of Preferential Policies after the Amendment of the Individual Income Tax Law" implemented on January 1, 2019, individuals and employers who terminate the labor relationship receive a one-time compensation income, which within 3 times the local average salary of the previous year is exempt from personal income tax; the part exceeding 3 times the amount is not included in the comprehensive income of the year, and the comprehensive income tax rate table is separately applied to calculate the tax.
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