Legal basis: People's Republic of China (PRC) Labor Contract Law.
Article 46 Where an employer terminates a labor contract in accordance with the provisions of the first paragraph of Article 41 of this Law, it shall pay economic compensation to the employee.
Article 41 Under any of the following circumstances, if it is necessary to lay off more than 20 employees or less than 20 employees, but it accounts for more than 10% of the total number of employees in the enterprise, the employing unit may explain the situation to the trade union or all employees 30 days in advance, report the reduction plan to the labor administrative department after listening to the opinions of the trade union or employees, and may lay off employees:
(1) Conforming to the provisions of the Enterprise Bankruptcy Law;
(two) serious difficulties in production and operation;
(three) the enterprise has changed production, major technological innovation or adjustment of business mode, and it still needs to reduce staff after changing the labor contract;
(4) Other major changes have taken place in the objective economic situation on which the labor contract was concluded, which makes it impossible to perform the labor contract.
When reducing personnel, priority should be given to retaining the following personnel:
(1) Concluding a long-term fixed-term labor contract with the unit;
(2) Concluding an open-ended labor contract with the unit;
(3) there are no other employees in the family, and there are elderly people or minors who need to support them.
If the employing unit reduces its staff in accordance with the provisions of the first paragraph of this article and recruits staff again within six months, it shall notify the retrenched staff and give priority to the retrenched staff under the same conditions.
As can be seen from the above regulations, the company's layoffs are compensated.