Employers are required to provide financial compensation to employees under certain conditions when terminating an employment contract, as outlined in China's Labor Contract Law.

The compensation amount is calculated based on the number of full years an employee has worked for the employer, with one month's salary paid for each year of service.

In this context, the "N" in "N+1" refers to the total number of full years the employee has worked at the company. The "1" represents an additional month's salary that must be paid if the employer does not provide the required 30-day written notice before terminating the contract. This extra payment is calculated based on the employee's final full-month salary.

For example:

An employee has worked for 5 years and 8 months with an average monthly salary of 10,000 yuan ($1,380) and is laid off without prior notice. The compensation would be:

N = 6 (as 5 years and 8 months rounds up to 6 years)

N + 1 = 7 months of salary

Total compensation = 70,000 yuan

Importantly, the "N+1" compensation does not include regular wages the employee earned during the final working days before departure.

Employers must issue a certificate of contract termination and, within 15 days, complete the employee's file transfer and social insurance settlement. Economic compensation must be paid upon the employee's departure, as per legal requirements and any mutual agreements.

Source: Official WeChat account of the Ministry of Human Resources and Social Security at "rsbzwwx"