When you get a severance payment, check the personal income tax first: the part within 3 times the local average wage for the previous year is tax-free, the rest is taxed separately and not added to the year's pay

In plain words

For the lump-sum payment you get for ending a labor contract, the part within 3 times the local average employee wage for the previous year pays no personal income tax. The part above that is taxed separately and is not added to the year's wages. If the employer added the whole sum to the month's pay and withheld tax, first ask the employer to explain, and then call 12366 (China's tax service hotline) to ask the tax bureau.