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hire in china

China PEO &
Employer of Record

SALARY PAYMENT IN Chinese Yuan (CNY, ¥)

CONTRACT LANGUAGES Mandarin & English

PAYROLL TAX 39.50% – 41.20%

PAYROLL CYCLE Monthly 

TIME TO HIRE 12 hours

Hire and pay talents
with Horizons in
180+ countries

Simple, compliant hiring with Horizons PEO

Hire in China

Horizons is a leading Employer of Record and Professional Employer Organization in China.

It provides compliance solutions to ensure your business in China operates in line with Chinese labor laws and tax regulations. Businesses benefit from hiring in, investing in, or job outsourcing to, China in a range of industries, from customer service, to accounting services, to software development.

We also process monthly payroll, and, as a China Employer of Record, absorb all local employer liabilities. Partnering with our China PEO is the quickest and most cost-effective way to enter the Chinese market. 

Facts & Stats

PEO Platform Hire in China, and pay employees through our platform or app.PEO Cost Our China PEO solution is the most affordable on the market.Time-to-hire Fast China onboarding, hire in as little as 12 hours.
Contracts We draft compliant China labor contracts.Local benefits We manage all China “Five Insurances” mandatory benefits.180+ Countries It doesn’t stop with China — we hire employees globally.
stay compliant with China labor laws

Labor Laws

One of the principal reasons for engaging a PEO in China (also known as a ‘China Employer of Record’ or ‘China EOR’), is to ensure full compliance with China’s employment laws. Here we explain how a China PEO ensures:

01. Compliance with China employment contract requirements

02. Compliance with working hours, national holiday provisions, and China social security requirements. 

Employment contract types

China requires all employers to provide a compliant employment contract that states the employee’s compensation, benefits, and termination requirements. Employment contracts in China should state the salary and any additional compensation in the local Chinese Yuan Renminbi. 

When you partner with a China PEO & Employer of Record, a team of local experts can provide assistance for drafting strong employment contracts compliant with local regulations. A PEO in China can provide your business with labor contracts in the three different forms set out below. 

Project-based
Probationary periodNo probationary period.
TerminationAt completion of the project.
SeveranceMax. one months per year of employment.
Fixed-term
Probationary period

Directly related to contract duration:

1-year contract: 1 month probation
2-year contract: 2 month probation
3+ year contract: 6 month probation

Termination notice period

30 days (minimum and maximum allowed by labor law)

Severance

2 months salary per year of service

In cases of justified termination: 1 month’s salary per year of service

In cases of dismissal on serious grounds: none

Indefinite
Probationary period

Not available

Termination notice period

30 days (minimum and maximum allowed by labor law)

Severance

1 month salary per year of service

Working hours in China

China operates with a standard five-day working week that should not surpass 8 hours of work per day or 44 hours per week. Companies typically run on an 8am to 6pm schedule with a one-hour lunch break. There is a strict limit on overtime in China. Overtime is not allowed to exceed 36 hours per month, except where there is an emergency event requiring it. A China EOR ensures that all employment contracts reflect these statutory limits.
Overtime must be compensated in the following way: 
  • For a regular workday: 150% of the standard hourly rate (also known as ‘time and a half’);
  • For a rest day: 200% of the standard hourly rate, or a day off (also known as ‘double time, or a day in lieu’);
  • For a statutory holiday: 300% of the standard hourly rate (also known as ‘triple time’).

Hire compliantly in China without a local entity.

Hire in 12 hours with the China employment experts — no subsidiary required.

Chinese national holidays 2023

China has a range of national public holidays that are celebrated annually. In 2023 these holidays are:
DateHoliday name
1 Jan SundayNew Year’s Day
21 Jan SaturdaySpring Festival Eve
22 Jan SundayLunar New Year
23 Jan to 27 JanSpring Festival Golden Week holiday
8 Mar WednesdayInternational Women’s Day
3 Apr to 4 AprQing Ming Jie holiday (Tentative Date)
5 Apr WednesdayQing Ming Jie
1 May MondayLabour Day
4 May ThursdayYouth Day
22 Jun ThursdayDragon Boat Festival
23 Jun to 24 JunDragon Boat Festival holiday (Tentative Date)
29 Sep FridayMid-Autumn Festival
1 Oct SundayNational Day
2 Oct to 7 OctNational Day Golden Week holiday

Paid time off

The amount of paid time off employees are eligible to receive is based on how long they have been employed at their current company:

  • Under 1 year of employment  | no leave entitlement
  • 1-10 years of employment | 5 days of paid leave annually
  • 10-20 years of employment | 10 days of paid leave annually
  • 20+ years of employment | 15 days of paid leave annually

Sick leave in China

Employees are entitled to between 3 and 24 months paid leave to address medical ailments and treatment. The exact amount of time off will be based on how long the employee has been with the company. Sick pay should never drop below 80% of the local minimum wage.

Workers compensation for injuries or illnesses incurred while working cover employees with legal entitlements of up to one year’s leave at full pay to receive medical treatment.

Take a look at the chart below to learn more about the specifics of sick leave standards in China:

Less than 6 months of sick leave

(percentage of regular wages owed to the employee)

  • Under 1 year of employment  —  no leave entitlement
  • 1-10 years of employment — 5 days of paid leave annually
  • 10-20 years of employment — 10 days of paid leave annually
  • 20+ years of employment — 15 days of paid leave annually

Over 6 months of sick leave

  • Under 1 year of employment — 40%
  • 1-3 years of employment — 50%
  • 3+ years of employment — 60%

In order for employees to receive the full wages due to them, workers must present a valid medical certificate from a certified doctor to their employer.

Maternity leave in China

China provides all female employees with 98 days paid maternity leave. They have the option to begin this leave within 15 days prior to child birth. Depending on the city, women over the age of 24 are generally provided with an additional 30 days for their “late maternity leave.”

Women are traditionally granted full pay during their leave, which is either paid through social security or by their employers. China has laws in place that legally protect women from being terminated while pregnant or breastfeeding a newborn child.

The laws for paternity leave differ greatly by location, but typically do not exceed 14 days. Men in Shanghai usually receive 3 days of paternity leave while men in Shenzhen are typically granted 10 days.

An EOR in China will ensure that all maternity leave obligations are fully complied with.

Annual leave in China

As well as standard Chinese compensation laws, there are a host of guaranteed benefits and supplemental options available to employees. As China celebrates seven national holidays, the statutory minimum notes that employees be paid leave for each holiday. And while this is the statutory minimum, there are a number of employers that elect to provide employees with greater flexibility around holidays like the Chinese New Year.

In addition to national holidays, annual vacation leave is another important employee benefit in China. Depending on how long an employee has been with an organization, there will be a set number of vacation days each year. In China, vacation days follow the following criteria:

  • For employees that have been with a company less than a year, there are no mandatory vacation days.
  • For employees that have been with a company between one and 10 years, there are five vacation days each year.
  • Employees that have worked for a company between 10 and 20 years receive 10 days annual vacation.
  • If an employee has been with an organization for at least 20 years, they are entitled to 15 days vacation each year.

For foreign employers that are looking to hire either mid-level or senior executives, more vacation days are generally offered. In fact, it is common for such offers to come with up to four weeks of vacation time per year.

Termination & severance in China

In order to terminate an employee in China, there must be strong cause for dismissal and clearly documented grievances leading up to the termination. The initial employment contract must contain an agreed upon probationary period that can last up to six months in length.

Specific time requirements for submitting a notice of termination vary widely by industry. Any employer terminating an employee of between one month and two year’s tenure must provide at least one week’s notice. Employees working for a company for over two years require notice of one week for each year of completed service up to 12 weeks of notice.

Employers have the option of including “payment in lieu of notice” in employee contracts which permit employers to pay employees instead of providing them with a notice of termination. This is common in Chinese business practice.

Navigating employee terminations and handling severance packages can be complicated for companies expanding overseas for the first time.

Setting up a PEO in China can mitigate risk for foreign companies and provide guidance through this process.

 

China's compulsory social security contributions

Chinese employees are provided with statutory benefits through the “five insurances” practice in China. These include health insurance, pension, worker’s compensation, maternity benefits, and unemployment insurance. However, additional benefits, such as housing, are predicated by the income tax bracket of the individual employee.

These benefits are paid out of social contributions paid by both the employee and employer. More on this below.

China social security for foreigners

Different rules are applied to social security contributions from foreigners and Chinese nationals.

Foreign employees in Shanghai are not yet required to pay the Chinese social security for foreign nationals. In other cities in China, foreigners must pay the full amount of Chinese social insurance.

A PEO in China will ensure that all employees are paying the correct contributions.

Individual income tax

Effective as of January 1st 2019, China has adjusted tax brackets and changed residency rules in order to reduce the tax burden on low income earners, with new special additional deductions available for resident tax payers.

The Individual Income Tax is calculated on an annual basis. The China EOR will automatically withhold taxes in advance on a monthly basis on the accumulated income and deductions. Individuals may have additional taxes or tax returns to claim through the annual settlement process.

Health insurance

Standard health and pension insurance is provided through the national system, although supplementary health insurance can be provided to the employees.

hassle-free chinese compensation & benefits

Compensation & Benefits

China compensation laws
The minimum wage in China varies greatly between provinces and cities. In Shenzhen, the minimum wage is 1,808 yuan per month. This is only slightly less than Shanghai, which has a monthly minimum wage of 1,820 yuan. However, in Guizhou, the monthly minimum drops significantly to 1,030 yuan.
13 month salary in China
The 13th month salary is the standard type of bonus provided to employees working in China at the end of the year. Rewarding employees with the 13th month salary is extremely common in China. As such, we recommend being clear with the employee during the employment contract phase so the employee is aware of the bonus stipulations regarding their annual salary and bonus structure.
Social security for Chinese nationals

As mentioned above, Chinese employees are provided with statutory benefits through the “five insurances” practice in China. These include health insurance, pension, worker’s compensation, maternity benefits, and unemployment insurance.

They are all funded through ‘social pooling’, formed from payments made by the state, employer and employee, to varying degrees. Entitlements are then acquired through contribution.

However, additional benefits, such as housing, are predicated by the income tax bracket of the individual employee. China’s housing fund system allows Chinese employees to save money towards purchasing their own house, thus providing a way for local employees to have the means to ensure social security and stability in the country. The Housing Fund has no social pool, since the entire amount goes directly to employees’ personal Housing Fund accounts. An EOR in China will always ensure that social security obligations are fully complied with.

Hire in China in 12h
without a subsidiary.

Leaders in China employment and HR solutions, Horizons ensures a seamless China hiring experience.

FAQs

A China PEO can hire employees of all nationality as long as their profiles match with the requirements established by the Chinese immigration authorities.
Horizons can hire your staff everywhere in China through its PEO network of local entities specialized in HR management services.
The China EOR prepares all payroll calculation (including social charges, taxes, benefits, expenses claim, etc.) on your behalf – as the employer of record of your employee(s) in China.

All mandatory social charges contributions, housing fund contributions and income tax payments are paid directly to the Chinese authorities and relevant third-parties by Horizons. Both the foreign company and its employee(s) can access the records of all payments at any time.

The number of employees dispatched in China is not limited and can vary according to the ongoing projects and business development.

All mandatory payments stated on the labor contract shall be paid by the China PEO. Additional payments (e.g. expenses) can be reimbursed by the PEO on your behalf.
No severance pay has to be paid during the probationary period, then the amount of the termination pay is usually 1 or 2 months salary per year of seniority, depending on the labor contract nature and the reason for termination.
In China, work from home is authorized as long as the employer gives its approval.

Horizons provide China recruitment services and PEO services, available for both foreign and local professionals from any background.

Horizons can implement any changes directly with the employee on your behalf.

The overall salary package of employees in China includes base salary, top-ups and any benefits. The key elements include:

Base Salary
Optional ‘top ups’, such as a performance bonus, commission or remote work stipend

’13th month’ salary

Compulsory benefits including leave entitlements, the five social insurances and contributions to the housing fund

Additional (optional) health insurance.

When expanding internationally, it is crucial to calculate what the total cost per employee (the ‘payroll cost’) will be. In China, this means adding together the cost of net salary, employer and employee social insurance contributions, any additional allowances and income tax.

Paid public holidays in China are:

New Year’s day (1 day paid leave)
Chinese New Year (3 days paid leave)
Qing Ming Festival (1 day paid leave)
Labor Day (1 day paid leave)
Dragon Boat Festival (1 day paid leave)
Mid-Autumn Festival (1 day paid leave)
China National Holiday (3 days paid leave).

Special rates apply if organizations require staff to work on public holidays.