N, N+1, 2N severance: the complete lawful guide

N vs N+1 vs 2N

N: statutory severance — one month's pay per year of service, paid on lawful termination.

N+1: N plus one month's pay in lieu of notice, owed when no 30-day notice is given.

2N: damages for unlawful termination under the Labor Contract Law — double severance.

How the Monthly Salary for N Is Computed

The monthly salary = average gross pay over the prior 12 months (base salary, bonus and allowances included).

• No lower than the local minimum wage
• Capped at 3x the local average wage

7 Lawful Scenarios Paying N

1. Mutual termination proposed by the company
2. Contract expires and the company won't renew
3. Layoffs meeting the economic-layoff criteria
4. Bankruptcy, license revocation or ordered closure
5. Company fails to provide working conditions
6. Unpaid wages or unenrolled social insurance
7. Unlawful company rules — employee resigns and claims

3 Unlawful Scenarios Paying 2N

1. Dismissal without valid cause
2. Firing during pregnancy, maternity or nursing leave
3. Firing during work-injury, occupational illness or medical leave

A Real Ledger: CNY 10K Salary, 5 Years

Lawful (N): 10,000 × 5 = CNY 50K

No notice (N+1): 50K + 10K = CNY 60K

Unlawful (2N): 10,000 × 5 × 2 = CNY 100K