What is "Severance Pay"?
Severance pay is a legal payment for employees who worked 1+ years. Under Labor Standards Act Article 34, employers must pay at least 30 days of average wage per year of service. Applies equally to permanent and contract workers.
Example: Monthly wage $3,000 × 5 years → Severance ~$15,000 (pre-tax)
💼 Severance Pay Calculator
About Severance Pay
- • Paid to employees who worked 1+ years.
- • Must be paid within 14 days of resignation.
- • Retirement income tax applies separately.
- • Actual amount may vary by company policy.
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🎯 Who is this for?
Useful for various situations
Changing Jobs
Calculate your severance before moving to a new company.
Starting a Business
Accurate severance calculation is crucial for startup funding.
Retirement Planning
Plan your severance and pension together for retirement.
Rights Verification
Check if your employer's severance offer meets legal standards.
Expert Tip
Receiving severance as a lump sum triggers immediate retirement income tax. But transferring to an IRP defers taxes until pension withdrawal. If you receive it as pension after age 55, the tax rate drops 30-40%, providing significant tax savings.
— Tax Expert Advice
❓ Frequently Asked Questions
With $3,000 monthly wage and 5 years of service, severance is about $15,000 (pre-tax). Formula: Average wage × 30 × (work days ÷ 365). Actual amount may vary based on bonuses and allowances.
💡 Bonuses and allowances are included in average wage calculation!
Yes! Regardless of employment type, anyone who worked 1+ year and 15+ hours per week is entitled to severance. This applies equally to permanent, contract, and part-time workers.
💡 Multiple contract renewals count as continuous employment!
Under Labor Standards Act, severance must be paid within 14 days of resignation. After 14 days, 20% annual interest applies, for up to 3 years.
💡 You can report unpaid severance to the labor office!
Retirement income tax varies by years of service and amount. Generally, longer service means lower tax rate. For 10 years service and $50,000 severance, expect about 5-8% tax.
💡 Transferring to IRP lets you defer the tax!
Yes, the probation period counts toward severance calculation. All time from hire date (start of probation) to resignation is included.
📌 Key Takeaways
- ✅Eligible after 1+ year and 15+ hours/week of work
- 📋Severance = Average wage × 30 × (days worked ÷ 365)
- ⏰Must be paid within 14 days of resignation (legal deadline)
- 💰IRP transfer defers taxes and provides tax savings
What is Severance Pay?
Severance pay is a legal payment provided to employees who have worked for more than one year. According to the Labor Standards Act, employers must pay at least 30 days of average wage for each year of continuous service.
Severance Pay Eligibility
- Employment Period: 1+ year of continuous employment
- Weekly Hours: 15+ hours per week
- Employment Type: Both permanent and contract employees
Calculation Method
Severance = Daily Avg Wage × 30 × (Work Days ÷ 365)
Average Wage Calculation
Average wage is calculated by dividing the total wages received in the 3 months before resignation by the total number of days. This includes base salary, regular bonuses, and various allowances.
Severance Tax
Retirement income tax applies to severance pay. The tax rate varies based on years of service and amount. Generally, longer service means lower taxes. You can defer taxes by transferring to an IRP or pension account.
Frequently Asked Questions
Yes, the probation period is included in the calculation. All periods from hire date to resignation are counted.
Yes, contract workers are also eligible for severance pay if they work more than 1 year. Employment type does not matter.
According to the Labor Standards Act, severance must be paid within 14 days of resignation. Late payment incurs interest.
📚 各地区计算规则说明
计算逻辑
采用公开的金融、贷款、比率与单位换算标准公式。
参考范围
参考公开标准与各地区常见实务规则。
前提条件
税费、费率、上限会因地区和机构而不同。
结果解读
结果可作为基准情景。正式决策前请与当地机构报价和税务规则对比。
地区默认值
货币: CNY
单位: metric
税务模型: US payroll estimate
法规提示
本工具基于地区预设进行估算。实际合同条款与法定上限可能因机构和当地法规而不同。
建议操作
- 正式申请前请至少比较 2~3 家本地机构方案。
- 再次核对费用、税务处理和提前还款条款。
- 用利率 +1~2% 与收入下降场景再测一次。
做真实决策前，请先确认当地机构的最新条款。