China is the world’s most populous country located in Southeast Asia. It spans 5 time zones and borders 14 countries, and has the world's largest economy by GDP. China is currently the world’s #1 manufacturer and exporter and has the fastest-growing major economy.
It’s not possible to hire employees under C-level job titles (CEO, CFO etc.), or the General Manager title under the Employer of Record (EOR) model.
The statutory maximum working hours are 8 hours per day, 40 hours per week.
Overtime should be paid at the following rates for working outside of normal working hours:
The minimum wage in China is different for each region, but hovers around CNY 2,590 per month.
Probation periods are not mandatory in China, with maximum lengths ranging from 1 to 6 months, depending on the contract length:
During probation, employees should be paid 80% of their salary at a minimum; in practice, most companies pay 100%.
Taxation in China is very complex and varies according to province, city, type of income, and employee personal circumstances.
Employees pay Income Tax according to different income types; see here for more information including tax bands and percentages.
Additionally, employees contribute to the following social securities, whose values vary by province and city:
Employers are required to pay towards the following social security areas, the values of which vary by province and city:
In addition, employers may be required to pay towards the following for compliance purposes:
Employees are entitled to a minimum number of annual leave days, based on their accumulated working years with all employers:
Employees who need to take sick leave should obtain a Certificate of Sickness from the medical organization of the employers or appointed hospitals. The medical practitioner issuing the certificate will recommend a duration of leave for treatment, with the following maximums based on length of service for severe illnesses:
The amount of pay the employee receives during sick leave is subject to the following:
The pay ranges from 60-100% of the employee’s salary, capped by the sum of the city’s minimum wage and the employee’s social security & housing contributions.
The statutory entitlement to maternity varies on a per-city basis. The national minimum maternity leave in China is 98 days, but additional entitlements are granted by the majority of cities and provinces, ranging from a total of 98 days to 1 year.
For example, Shanghai employees are entitled to 158 days of maternity leave.
Employee compensation while on maternity leave varies by city, mainly following one of the 2 examples below:
Employees who are late in their pregnancy are eligible for an additional 30 days of late pregnancy leave in addition to the state-mandated maternity leave. Spouses are entitled to three days of late pregnancy paternity leave.
There are no national regulations governing paternity leave in China. However, some cities and provinces entitle employees to paternity leave, ranging from 10 to 30 days in length.
Employees who have recently married in China are eligible for compensated marriage leave.
The number of days varies based on the city, ranging from a minimum up 3 days, up to 30 days in some cities for late marriages.
To be entitled to the leave, employees must meet the following criteria:
Employees are entitled to 1 to 3 days of bereavement leave when their parent, spouse or child dies; in practice, employers are generally expected to provide the full 3 days.
Additionally, some local city policies (e.g. Shanghai) entitle employees to bereavement leave when their parent-in-law dies.
There are 8 public holidays in 2023; see here for a complete list of Chinese public holidays.
Employees are fully paid during public holidays; if the employer requires them to work, employees should be paid 300% of their standard daily wage.
Employers in China can typically offer the following benefits:
During probation, the notice period is 3 days. After probation, the notice period is 30 days. Payment in lieu of notice is possible.
Employees in China whose employment is terminated are entitled to a severance payment of one month’s salary per year of service. For any incomplete years, the first 6 months count for half a month’s salary, and between 6 and 12 months count as a full year (1 month’s salary). Severance pay is capped at 3 times the local average monthly salary for the employer’s location and at 12 years of service (12 months of pay)
If an employer is found to have wrongfully terminated an employee, the maximum possible severance payment increases to 2 month’s salary per year of service. If an employee is terminated, the employer must pay out any unused leave in the employee’s final salary. If an employee resigns, any unused leave will not be paid out.
It’s customary to pay a 13th-month and sometimes also 14th-month salary in China, paid out during the time of the Lunar New Year or Spring Holiday. While it is not legally required, it will commonly be stipulated in the employment contract.
★ 16% - Pension
★ 12% - Housing Fund
★ 9.8% - Medical Insurance
★ 0.5% - Unemployment Insurance
★ 0.6% - Work Injury Insurance
★ 1% - Maternity Insurance
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Unlike full-time employees, contractors work on projects with multiple companies at a given time and are technically self-employed. Full-time employees are solely focused on their employer and usually receive benefits (such as health insurance, equity or stock options, and time off) as an additional form of compensation. While it can be cheaper to work with international contractors instead of paying benefits to a full-time employee, you run the risk of misclassification. It's recommended to work with an EOR for contractor onboarding and payments, so you can know that your international contractors are paid compliantly and on time.