Under the PRC Labor Contract Law, an employer may terminate an employment contract by giving a one-month advance notice to the employee or giving one month salary in lieu of such one-month advance notice. According to Article 20 of the Implementation Rules of the PRC Labor Contract Law, the one month salary shall be determined according to the salary of the previous month of termination. However, as per Opinions on Several Issues regarding Application of the Labor Contract Law issued by Shanghai High People’s Court on March 31, 2009, “the salary of the previous month” may be too high or too low, which may be unfavorable  to either the employer or the employee, thus not helpful to promote and build harmonious labor relationship. Therefore, it is the Shanghai High People’s Court’s opinion that the “salary of the previous month of termination” shall mean the normal salary of employee. If the salary of the previous month of termination cannot represent the normal salary, the one month salary in lieu of one month notice shall be determined as the average of the salaries of the twelve months prior to termination of employment.