Starting Work in China: 10 Facts You Need to Know

Source: China Hush

China is a country with a diverse economy. For a long time, it has been a leader in businesses and global markets, creating employment opportunities for workers and employers alike. The boosting economy has led to higher income, and in a country with low cost of living, that translates to a great way of life. It also means time and money to travel China’s diverse regions, eat its delicious foods, and mingle with the locals. 

With all the benefits China has to offer, it’s still important to consider what goes into employing or working there before making the move. That’s because, just like any country, local regulations and laws, contract obligations, and payroll procedures must be followed. 

Before hiring a foreign workforce or taking the leap oversees, its best to get an understanding of China’s payroll laws; this is to ensure they are cohesive with the structure of your company or the employment standards you want. 

So, if you’ve ever thought about hiring or working overseas in China, here are 10 facts you need to know.

1. Minimum wage

   China’s minimum wages vary across the country’s regions, with the highest in Shanghai at 2,480 CNY. The lowest paid minimum wages can be almost half the rate.

2. Payroll cycle/pay date

   Payments are provided monthly though pay slips typically sent though a secure channel on WeChat (Chinese WhatsApp). This graphic explains a Chinese pay slip in more detail. Paydays happen between the 10^th and 20^th or are paid during statutory holiday, marriage leave or funeral leave.

3. Working hours/overtime pay

   A standard workweek in china is five days, and eight hours each of those days, amounting to 40-hour work weeks. Flexible hours are allowed, and some companies still have 6-day work weeks. Overtime should not exceed 3 extra hours a day or 36 extra hours a month. For overtime on normal workdays, workers are paid 150%, overtime on rest days is 200%, and overtime of holidays is 300% a worker’s regular wage.

4. Payroll taxes/SS

   Social insurance in China is comprised of pension, medical insurance, unemployment, maternity leave, workplace injury, and a housing fund. Employers and employees contribute to these funds, with contribution rate percentages dependent on city.

5. Pension

   Both employers and employees contribute to the pension system, with employees contributing up to 8% of their wages and employers up to 20%.  Pension for professional men and women begins at age 60 after at least 15 years of contributions.

6. Unemployment

   This contribution is also made by both the employer and employee with percentages ranging between Chinas regions; .2% up to 2%. To claim unemployment, contributions must be made for a period of at least one year. Benefits from unemployment are dependent on the length of time contributions have been made.

7. Housing funds

   The housing fund bureau collects contributions made by employers and employees with contribution percentages varying across the country. This fund is established to provide employees with savings to help with the purchasing of a house.

8. Termination/notice

   Terminating an employee can be quite difficult once the probation period has passed. That’s because even if an employee has shown incompetence, they are to be retrained or possibly even shifted roles before than can be fired. The easiest way for termination is by mutual agreement. It is highly advised that first time employees be on fixed term contracts and extend the contract once the employee has proven competent. The notice period should be at least 30 days from both the employer and employee. Employers may give a one moth wage in lieu of notice if they wish.

9. Severance pay

   Dismissed employers receive severance pay unless they have been terminated due to inaptitude, breach of company law, or were still on a probation period. Severance payments depend on the length of employment with the typical payout being one month’s pay for each year of employment. This is capped at 12 months.

10. Leave

    Annual leave in China can be quite limited, with a minimum of 5 annual leave days for 1–10 working years, 10 days annual leave for 10-20 working years, and 15 annual leave days for more than 20 years of employment. Employees with less than a year of service are not required leave.  Other paid leaves are, sick leave, work related injury leave, bereavement leave, and maternity leave.