Guide to employment, payroll and benefits in

China

Rivermate offers complete payroll, benefits and compliance services for

China

01. Overview

Last updated: 

August 19, 2021

Currency
Chinese Yuan Renminbi
Capital
Beijing
Ease of doing business
77.9
Language
Chinese
Population
1439323776
GDP growth
6.90%

02. Grow your team in

China

with Rivermate

Payroll, benefits, taxes, and compliance can be difficult to manage in

China

, particularly if you don't have established local relationships. You can hire employees in

China

effectively, conveniently, and in full compliance with all relevant labor laws using Rivermate's global employment solution. We handle the responsibilities and legal risks associated with foreign employment so you can concentrate on growing your company.

03. Summary

China is a country in East Asia that is formally known as the People's Republic of China. With a population of about 1.4 billion people, it is the world's most populous nation. China is the world's third or fourth largest nation, with a land area of approximately 9.6 million square kilometers. The country is divided into 23 provinces, five autonomous regions, four direct-control municipalities, and the Hong Kong and Macau special administrative regions. In the fertile Yellow River basin of the North China Plain, China arose as one of the world's first civilizations. From the first to the nineteenth centuries, China was one of the world's most powerful economic forces. Beginning with the Xia dynasty in the 21st century BCE, China's political system was based on absolute hereditary monarchies, or dynasties. China has expanded, divided, and reunified several times since then. The Qin reunified core China and founded the first Chinese empire in the 3rd century BCE. The Han dynasty that followed saw some of the most sophisticated technologies at the time, such as papermaking and the compass, as well as agricultural and medical advancements. The Four Great Inventions were completed by the Tang and Northern Song Dynasties' inventions of gunpowder and movable form. As the modern Silk Route took merchants as far as Mesopotamia and the Horn of Africa, Tang culture spread across Asia. Foreign imperialism wreaked havoc on China's last dynasty, the Qing Empire, which provided the territorial foundation for modern China. With the 1911 Revolution, the Chinese empire came to an end in 1912, when the Republic of China replaced the Qing dynasty. During World War II, the Japanese Empire invaded China, resulting in a territorial split in 1949 when the Chinese Communist Party, headed by Mao Zedong, formed the People's Republic of China on mainland China and the Kuomintang-led Republic of China retreated to the island of Taiwan. Even after the United Nations accepted the PRC as the government to represent China at all UN conferences in 1971, both the PRC and the ROC continue to be the only legitimate government of China, resulting in an ongoing conflict. China is a one-party socialist republic with a unitary government. The country is a permanent member of the United Nations Security Council and a founding member of numerous multilateral and regional cooperation organizations, including the Asian Infrastructure Investment Bank, the Silk Road Fund, the New Development Bank, the Shanghai Cooperation Organization, and the Regional Comprehensive Economic Partnership. It is also a member of the BRICS, the G8+5, the G20, and the Asian Infrastructure Investment Bank. In international comparisons of civil rights, government accountability, freedom of the press, freedom of religion, and ethnic minorities, it ranks among the lowest.

04. Public holidays

05. Types of leave

Paid time off

The period of work is used to measure paid time off:There is no entitlement to resign if you have been working for less than a year.5 days of voluntary leave for employees who have worked for 1 to 10 years.10 days of voluntary leave after 10-20 years of workAfter 20 years of service, you are entitled to 15 days of paid leave.

Public holidays

There are seven national holidays, with extra holidays in certain countries.

Sick days

Pay for sick leave varies depending on duration of service:Sick leave for six months:Employed for less than two years: 60% of the average hourly pay70 percent of daily earnings after 2-4 years of work4-6 years of work experience: 80% of the average hourly rate6–8 years of experience: 90% above the average hourly rateAfter 8 years of service, you can get 100% of your daily pay.Sick leave of more than 6 months:40 percent of daily pay for less than a year of work50% of daily income after 1-3 years of workAfter three years of service, you will be paid 60% of your daily salary.A medical card is required by all employees.

Maternity leave

A female employee is entitled to 98 days of maternity leave, with an extra 15 days if the delivery is painful or multiple births are occurring. Women who give birth after the age of 23 could be eligible for extra maternity leave in some cities.Maternity leave is compensated by the Social Security Bureau where the individual is enrolled and is calculated based on an average monthly wage for the preceding 12 months. This rate or three times the minimum wage would be paid by Social Welfare, whichever is higher. Employers in some countries, such as Beijing and China, complement maternity pay with extra pay.

Paternity leave

When paid paternity leave is taken, fathers are entitled to ten days of paid paternity leave. Additional paternity leave is available in some cities.

Parental leave

For infants under the age of 12 months, nursing mothers are entitled to one hour off every day.

Other leave

Marriage Leave: Each city has its own set of rules, which range from 3 to 10 days. Employees in Beijing and Shanghai are entitled to ten days of marriage leave.Bereavement Leave: It varies by city and can take anywhere from one to three days.

06. Employment termination

Termination process

In China, a contract may not be permitted to end unless all parties concur or the contract expires.

Notice period

Both the employee and the employer have a right to 30 days' notice in advance. Three days' notice may be given, however, if the employee is on probation.

Severance pay

Severance pay varies according to the reason for termination, but in general, it is one month's income for each year of service, limited at three times the minimum wage, and not to exceed twelve months.

Probation period

The probation period is determined by the length of the employment contract. For employment contract of 3 months to a year, a maximum of 1 months’ probation is administered. For employment contracts of 1 to 3 years, a maximum of 2 months’ probation is administered. For employment contracts of 3 years or more, up to 6 months’ probation is administered. For employment contract for less than 3 months or that expire upon completion of assignment, probation is not permitted.

07. Working hours

General

In China, the standard workday is eight hours and no more than 44 hours per week. Employers may adopt different work hours in exceptional circumstances and with the Labor Department's approval.


Offices are typically open from 8 a.m. to 6 p.m. each day, with a two-hour lunch break between noon and 2 p.m., although hours vary by city. Government offices are open Monday through Friday from 9 a.m. to 5 p.m. and are closed on weekends.

Overtime

Overtime is limited to one hour per day, but may be extended to three hours in exceptional circumstances, up to a total of 36 hours per month. Overtime pay for workdays is 150 percent of the regular rate, 200 percent on rest days, and 300 percent on official public holidays.


Employees with flexible work hours are generally not entitled to overtime pay, but this is subject to labor bureau approval.

08. Minimum wage

General

The minimum wage in China varies by province and city. For example, as of 2021, Shanghai has the highest monthly minimum wage of 2,480 yuan, followed by Shenzhen at 2,200 yuan and Guizhou at 1,570 yuan. Employers typically pay employees on a monthly basis, either in cash or via a bank transfer.


Although a 13th-month bonus or salary is not required by law, it is a market norm in China. Instead of a guaranteed bonus, you can state in the employment contract the monthly salary, the frequency with which employees will be paid, and the total annual salary. You can then specify that a bonus is optional but will be distributed if certain conditions are met. Salespeople frequently receive a commission plan in lieu of this bonus.

09. Employee benefits

General

The national system provides basic health and pension insurance; however, extra health insurance may be supplied to the employee.

Employers in China contribute to a housing fund, which is similar to a 401k plan. Employees' real estate rent and purchase costs are subsidized by the fund. Some contributions are required; nevertheless, employees typically bargain for a higher housing fund rate. Employers are typically required to contribute between 5% and 25% of an employee's annual wage. Distinct cities have different policies concerning the housing fund.

It is difficult to provide stock options to employees in China. We strongly advise you to consider if it is "worth" delivering this bonus to your Chinese staff before doing so.

10. Why Rivermate as your Employer of Record / PEO?

Establishing an entity in

China

to hire a team takes time, money, and effort. The labor law in

China

has strong worker employment protection, requiring great attention to details and a thorough awareness of local best practices. Rivermate makes expanding into

China

simple and effortless. We can assist you with hiring your preferred talent, managing HR and payroll, and ensuring compliance with local legislation without the hassle of establishing a foreign branch office or subsidiary. Our PEO and Global Employer of Record solutions in

China

give you peace of mind so you can focus on running your business.

Please contact us if you'd like to learn more about how Rivermate can help you hire employees in

China

via our Employer of Record / PEO solution.

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