Economic Compensation For Layoffs: How To Calculate The Working Life Before 2008

Xiaomou worked for a Steel Corp in July 1990.

In July 2016, Steel Corp decided to start economic redundancies because of its "capacity to go".

In October 2016, after implementing the corresponding statutory procedures, the Steel Corp issued a notice of termination of the labor contract to more than 200 employees, including Xiao Mou.

However, in the payment standard of compensation, Xiao Mou and Steel Corp had a dispute.

Xiao Mou thinks, Steel Corp should calculate economic compensation according to his actual working life.

However, Steel Corp believes that the working life of Xiao Mou before 2008 is over 12 years, but it can only be calculated at 12 years.

Then, is there a limit of 12 months' salary for the calculation of the economic compensation before 2008?

The forty-sixth provision of the labor contract law stipulates that serious economic difficulties arise in the course of production and operation of enterprises, and other major changes in the objective economic situation based on the conclusion of the labor contract, resulting in the failure of the labor contract to be fulfilled. The employer shall pay the laborers according to the forty-first paragraph and first paragraph.

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The existing law adopts the principle of piecewise calculation (except where the local regulations provide otherwise).

The third clause of the ninety-seventh clause of the labor contract law stipulates: "the labor contract which is subsisted on the date of implementation of this Law shall be discharged or terminated after the implementation of this law. The economic compensation period shall be calculated from the date of implementation of this Law in accordance with the forty-sixth provision of this law. Before the implementation of this law, the employing unit shall pay the economic compensation to the laborers in accordance with the relevant provisions of the time, and shall be implemented in accordance with the relevant provisions of that time."

According to the above provisions, whether the payment of economic compensation is paid or not, the age of payment and the standard of payment are related to the duration of labor relations.

If the laborer is employed by a certain employer before January 1, 2008, the working life before January 1, 2008 will be determined according to the provisions of the time, whether the payment is paid or not, the years of payment and the standard of payment. The working life after January 1, 2008 will be determined according to the provisions of the labor contract law.

The forty-seventh provision of the labor contract law stipulates: "economic compensation shall be paid to the laborers according to the number of years worked by the laborers in their units and the wages paid for one month per year."

For more than six months with less than one year, the financial compensation for half a month's wages will be paid to the laborers for a period of one year or less than six months.

The monthly salary of laborers is higher than that of the Municipal People's Government of the municipality directly under the central government or the municipal government at the time when the monthly average wage of the workers in the region is three times higher than that of the employing units. The standard of paying the economic compensation shall be three times the average monthly wage of the workers, and the maximum period of payment for the economic compensation shall not exceed twelve years.

That is to say, the compensation period after 2008 is only 12 months' capping limit for workers whose monthly wages are higher than the monthly average wages of the local workers in the local region released by the municipal governments of the municipalities directly under the central government and the municipal governments at the district level. Otherwise, they will be calculated according to the actual working years.

The current effective legal document is labor department's [1994] 481 violation and release.

"Economic compensation measures".

According to the provisions of the "measures", there are two cases, the payment period of the economic compensation does not exceed 12 months.

One is to terminate the labor contract by consensus.

The fifth provision of the measures stipulates: "after the parties concerned have reached a consensus through the labor contract, and the employer has rescinded the labor contract, the employing unit shall, according to the working life of the laborer in the unit, give an economic compensation equivalent to one month's salary for a full year, at most not more than twelve months.

If the working time is less than one year, the economic compensation will be issued according to one year's standard. "

The two is to terminate the labor contract because the workers are incompetent.

The seventh provision of the measures stipulates: "the laborers are not competent, and after training or adjustment, they are still not competent for the work. If the employer terminates the labor contract, the employer shall pay the economic compensation for the equivalent of one month's wages for a full year at the maximum of no more than twelve months."

If the employer has to terminate the labor contract with the worker due to the medical treatment expiry of the worker or the major change of the objective situation or the reason for economic layoffs, the compensation period shall not be restricted by 12 months' salary.

However, it is worth noting that, according to the eleventh provision of the measures, the employer has to terminate the labor contract with the workers because of the significant change in the medical treatment of the workers, the major changes in the objective situation or the reasons for economic layoffs.

The standard of compensation for the lifting of negotiation and dismissal of work is based on my salary, but the medical term is full, the objective situation has changed significantly or the economic layoffs have been lifted.

When laborers' monthly average wages are lower than the monthly average wages of enterprises, they should be paid according to the monthly average wage of enterprises.

In this case, xiaomou was relieved of labor contract because of economic layoffs. Therefore, the economic compensation before 2008 is not limited by 12 months' capping.

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