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
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.
|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.|
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.
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.
|Probationary period||No probationary period.|
|Termination||At completion of the project.|
|Severance||Max. one months per year of employment.|
Directly related to contract duration:
1-year contract: 1 month probation
|Termination notice period|
30 days (minimum and maximum allowed by labor law)
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
|Termination notice period|
30 days (minimum and maximum allowed by labor law)
1 month salary per year of service
Hire in 12 hours with the China employment experts — no subsidiary required.
|1 Jan Sunday||New Year’s Day|
|21 Jan Saturday||Spring Festival Eve|
|22 Jan Sunday||Lunar New Year|
|23 Jan to 27 Jan||Spring Festival Golden Week holiday|
|8 Mar Wednesday||International Women’s Day|
|3 Apr to 4 Apr||Qing Ming Jie holiday (Tentative Date)|
|5 Apr Wednesday||Qing Ming Jie|
|1 May Monday||Labour Day|
|4 May Thursday||Youth Day|
|22 Jun Thursday||Dragon Boat Festival|
|23 Jun to 24 Jun||Dragon Boat Festival holiday (Tentative Date)|
|29 Sep Friday||Mid-Autumn Festival|
|1 Oct Sunday||National Day|
|2 Oct to 7 Oct||National Day Golden Week holiday|
The amount of paid time off employees are eligible to receive is based on how long they have been employed at their current company:
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)
Over 6 months of sick leave
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.
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.
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 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.
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.
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.
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.
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.
Standard health and pension insurance is provided through the national system, although supplementary health insurance can be provided to the employees.
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.
Leaders in China employment and HR solutions, Horizons ensures a seamless China hiring experience.
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.
Horizons provide China recruitment services and PEO services, available for both foreign and local professionals from any background.
The overall salary package of employees in China includes base salary, top-ups and any benefits. The key elements include:
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.
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.