(Effective on January 1, 1995)
To regulate standard of economic compensation to laborers brought about by labor contract violation and termination, these regulations are formulated in accordance with the Labor Law of the People's Republic of China.
Economic compensation to laborers shall be paid wholly in one lump sum by their work units.
If a work unit deducts or delays in paying its laborers wage for unjustifiable reasons, or it refuses to pay the laborers for their overtime work, it shall be required to pay the laborers not only the overdue remuneration within a designated period, but also an additional economic compensation equivalent to 25 per cent of their due wages.
If a work unit pays its laborers wages less than the local minimum wage standard, it shall not only replenish the laborers the part short of the minimum standard, but also pay them an additional economic compensation equivalent to 25 per cent of the part short of the minimum wage.
Where a work unit, after reaching agreement with its laborer on terminating his own her labor contract, it shall calculate the total years the laborer has worked in the unit, and issue the laborer economic compensation in the amount of one-month wage for every year the laborer has worked, to a maximum amount of his or her 12-months' wage. If the laborer has worked for less than a year, he or she shall be paid as having worked for one year.
If a laborer¡¯s contract was terminated because of illness or off-job injury, and he or she has been found by the Labor Verification Commission as not capable to perform the former duty or other jobs as arranged by the work unit, the unit shall calculate the total years the laborer has worked in the unit, and issue the laborer economic compensation in the amount of the worker's one-month wage for every year he or she has worked, and in the same time, issue to the worker a medical subsidy no less than his or her six months' wage.
To those laborers suffering from serious and fatal illness, the worker unit shall increase their medical subsidy as follows:
To the laborer suffering from serious illness, the medical subsidy shall be increased by no less than 50 per cent of the normal amount; and
To the laborer suffering from fatal illness, the medical subsidy shall be increased by no less than 100 per cent of the normal amount.
If the laborer¡¯s contract is terminated because of his or her incapability to perform in the present job even after training, or in new positions provided by the work unit, the unit shall calculate the total years the laborer has worked in the unit, and issue the laborer economic compensation equivalent to his or her one-month wage for every year the laborer worked, but the total compensation shall not surpass his or her 12 months' wage.
If the laborer¡¯s contract is terminated because the objective environment on which the labor contract was based has changed so much as to make the contract un-practicable, and the work unit and the laborer can not reach agreement after consultation on altering the contract, the work unit shall calculate the total years the laborer has worked in the unit, and issue the laborer economic compensation equivalent to his or her one-month wage for every year the laborer has worked.
If the work unit has to discharge employees, because it is on the brink of bankruptcy or in the period of production rectification, or its business counters serious difficulty, the unit shall pay the employees economic compensation according to the total years they have worked in the unit. For every year the employees worked, they shall be paid economic compensation equivalent to their one-month wage.
If a work unit terminates its labor contract and yet does not pay its laborers economic compensations according to these regulations, it shall be required to pay the laborers not only all the economic compensation, but also an additional economic compensation equivalent to 50 per cent of the over due compensations.
The wage calculating standard adopted by these regulations on economic compensation is the enterprise's workers' average monthly wage (or one twelfth of their annual wage) under normal conditions, before the laborer¡¯s contract is terminated.
At the time when a work unit terminates a labor contract according to Article 6, Article 8 and Article 9 of these regulations, the relevant laborer¡¯s average monthly wage is lower than the enterprise's average monthly wage, the enterprise's average monthly wage shall be taken into account.
Economic compensation shall be listed in enterprise's production cost, and shall not be listed in its welfare expenditure which enterprise draws from its budget according to regulated rates.
Article 13 These regulations come into effect as of January 1, 1995.