According to Article 46 of the Labor Contract Law, when a fixed-term labor contract is terminated, the employer must pay economic compensation to the employee if it decides not to renew the contract, unless it is the worker who refuses to renew the contract offered by the employer with conditions equal to or better than the existing terms.

How to calculate the economic compensation？

As outlined in Article 47 of the law, economic compensation is based on the employee's length of service at the company. Employers must pay the equivalent of one month's wages for each full year of service.

For employees with service periods between six months and one year, this is rounded up to one year. Those with less than six months of service are entitled to half a month's wages.

It should be noted that, in calculating the number of years for economic compensation, the period earlier than Jan 1, 2008 — when the Labor Contract Law went into effect — is not counted.

In addition, the monthly wage used in the calculation is the employee's average monthly income over the 12 months preceding the contract's termination or expiration.

Source: Official WeChat account of the Shanghai Municipal Bureau of Human Resources and Social Security at "shrsjwx"