Employer of Record in China: Hire, Manage, and Pay Talent Seamlessly
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Employment Norms in China
China has the highest population in the world. The hi-tech infrastructure and robust economy have enhanced its development. The Chinese employment norms are guided by the constitution of China. The labor laws in China give protection to an employee against any form of discrimination. It also protects employees from harassment in the workplace. The labor laws in China are liberal and allow foreign investors to invest easily.
General Information:
- The Chinese currency is the Chinese Yuan (CNY).
- Beijing is the capital of China.
- Mandarin, Cantonese, and Hunanese are the official languages of China. Documentation can be in Chinese and English.
- As of 2022, the GDP of China was reported to be around 12,556.33 billion USD
The Chinese labor laws are flexible and provide many facilities to employees. The law enforces minimum wages, leaves, health, social benefits, etc.
Table of Contents
- Agreements
- Onboarding Process
- Visa
- Minimum Wage
- Payroll Cycle
- Annual Bonus
- Health Benefits
- Working Hours and Overtime
- Leaves
- Social Security
- Taxes for Employers
- Taxes for Employees
- Probation
- Termination
- Severance Pay
- Employees or Contractors
- Final Words
AgreementsOnboarding ProcessVisaMinimum WagePayroll CycleAnnual BonusHealth BenefitsWorking Hours and OvertimeLeavesSocial SecurityTaxes for EmployersTaxes for EmployeesProbationTerminationSeverance PayEmployees or ContractorsFinal Words
Agreements in China
The agreement must be written in the official Chinese language. It can be translated into English if required. If an employer can not present a written agreement within 30 days of hire. A penalty of double wage is imposed on the employer if unable to present the written contract.
There are mainly three types of labor contracts that are valid in China.
- Indefinite or open-ended employment contract- When the employee and employer do not have an end date, it is called an indefinite contract. This type of contract can be terminated by mutual agreement. An employee can terminate the contract for any reason. The employer has to state a valid reason for the termination of the contract.
- Fixed-term employment contract- A contract with an end date is a fixed-term contract. This type of contract lapses on its fixed date. Usually, this type of contract is for temporary employees. The employer must provide all benefits given under the indefinite contract.
- Project-based contract - It is mainly for a specific type of work or project. An employer may hire employees based on the skills needed for a project. The contract is termed expired after the completion of the project.
Onboarding Process in China
The hiring process in China is like any other country. It may take a couple of days or so to complete the process. It follows these steps:
- The HR team prepares a job description with the details of the job. They collaborate with the unit that has a job vacancy.
- The description is then uploaded on the official site of the company. It can be uploaded on other platforms like LinkedIn.
- Candidates apply for the job by proving their eligibility. They are further shortlisted based on rounds of screenings and interviews.
- Final shortlisted candidates then negotiate their terms and conditions with the employer. After the mutual agreement, the candidate is hired as an employee.
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Visa in China
There are several types of visas in China. These:
- L visa - It is a Chinese tourist visa.
- F visa - It is a business-type visa given for a duration of up to 6 months.
- Z visa - It is the work permit given to an employee for more than 6 months duration.
- X visa - It is issued to students for their academic duration.
- C visa - It is issued to aviation crew or navigation purposes.
- G visa - It is granted for transit purposes through China.
- D visa - This type of visa is given for residential purposes.
- J visa - This visa is granted to the journalist who comes to China.
Minimum Wage in China
The Chinese labor law enforces different wages in different regions. The minimum wage in one province varies from the other. For example, the minimum wage in Shanghai is 2,590 RMB while 2,320 RMB in Beijing.
Payroll Cycle in China
The payroll cycle in China is monthly. There is no legal provision for daily or weekly payment. However, it can be given based on the mutual agreement between employer and employees.
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Annual Bonus in China
There is no legal provision for paying an annual bonus or a 13th-month salary in China. However, there is a custom of paying the 13th-month salary. The annual bonus is paid during the lunar holidays.
Health Benefits in China
- The health and safety of the employee are the responsibility of the employer. Employers have to maintain healthy working conditions.
- Employees are also required to represent their health issues if any.
Working Hours and Overtime in China
- Work hours- The Chinese labor law oversees working conditions. An employee must not work more than 8 hours a day and 40 hours per week. The standard working week is from Monday to Friday.
- Break- An employee is entitled to take an unpaid break of about 30-45 minutes.
- Overtime- The Chinese labor law is strict about overtime hours. An employee can not work more than 3 hours daily and 36 hours a month. The overtime is paid at the rate of 150% of the regular salary. 200% for working on a rest day and 300% for working on statutory holidays.
Leaves in China
Sick Leaves
- An employee is entitled to paid sick leaves in China depending on the work tenure. It can vary from 3 months to 24 months.
- The sick leave is paid by the employer.
Maternity leaves
- A pregnant female employee is entitled to 98 days of maternity leaves in China.
- 15 days are given before childbirth and the remaining after it.
- The mother is paid an average salary (paid by the employer) or thrice the minimum wage (paid under social security), whichever sum is greater.
- If the mother earns more than the average salary, the employer has to pay the amount that is not covered under social security.
Paternity leaves
- A male employee is entitled to 15 days of paid paternity leaves in China.
- The salary is covered under social security if the employer has paid the social insurance on behalf of the employee.
- If the male employee has a higher salary than the average wage, then the employer has to pay the amount not covered under social security.
Annual leaves
- Usually, 5 - 15 days of annual paid leave is granted to an employee. The leave depends on the tenure.
Public Holidays (for the Calendar year 2024)
A few of the following dates may vary according to the traditional calendar.
- New Year's Day - January 1
- Spring Festival Eve - February 9
- Chinese New Year - February 10
- Spring Festival Holiday - February 11 to February 17
- International Women's Day - March 8
- Arbor Day - March 12
- Qingming Festival - April 4
- Labor Day - May 1
- International Children's Day - June 1
- Dragon Boat Festival - June 10
- CPC Foundation Day - July 1
- Liberation Army Day - August 1
- Mid-Autumn Festival - September 17
- National Day - October 1 to October 7
- Christmas Day - December 25
Public Holidays (for the Calendar year 2025)
A few of the following dates may vary according to the traditional calendar.
- New Year's Day - January 1
- Spring Festival Eve - January 30
- Chinese New Year - January 31
- Spring Festival Holiday - February 1 to February 7
- International Women's Day - March 8
- Arbor Day - March 12
- Qingming Festival - April 4
- Labor Day - May 1
- International Children's Day - June 1
- Dragon Boat Festival - June 22
- CPC Foundation Day - July 1
- Liberation Army Day - August 1
- Mid-Autumn Festival - September 17
- National Day - October 1 to October 7
- Christmas Day - December 25
Taxes for Employers in China
An employer has to pay around 41% tax in China. These include:
- Housing fund
- Shanghai - 7%
- Guangzhou - 5 to 12%
- Beijing - 12%
- Pension
- Shanghai - 16%
- Guangzhou - 14%
- Beijing - 16%
- Medical
- Shanghai - 9.5%
- Guangzhou - 7%
- Beijing - 10%
- Unemployment
- Shanghai - 0.5%
- Guangzhou - 0.32% to 0.8%
- Beijing - 0.8%
- Work Injury
- Shanghai - 0.16% to 1.52%
- Guangzhou - 0.1% to 0.7%
- Beijing - 0.16% to 1.52%
- Maternity
- Shanghai - 1%
- Guangzhou - 0.9%
- Beijing - 0.8%
Taxes for Employees in China
Income tax is calculated according to progressive rates. An employee has to pay an income tax ranging from 3% to 45%. The income tax ranges as follows:
- 3% - on annual income less than 36,000 CNY
- 10% - on annual income between 36,000.01 - 144,000 CNY
- 20% - 144,000.01 - 300,000 CNY
- 25% - 300,000.01 - 420,000 CNY
- 30% - 420,000.01 - 660,000 CNY
- 35% - 660,000.01 - 960,000 CNY
- 45% - over 960,000 CNY
There are no regional income taxes in China.
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Probation in China
The probationary period in China is not defined. It may vary from one month to 6 months.
Termination in China
- An employer is bound to provide a written notice stating the reason for termination.
- An employee who resigns on their own is not required to provide the reason for their decision.
- Termination can be done by mutual agreements as well.
- A notice period of 1 month is given before the termination.
Severance Pay in China
- Severance pay in China depends on the tenure of an employee.
- It is paid at the rate of 1 month's wage for every year worked.
Employees or Contractors in China
- A person who works for a company and gets paid is called an employee.
- An organization or company that hires employees is the employer.
- There are two types of recognized employment in China - employees and self-employed.
- A penalty is imposed if an employer is found guilty of an employee's and contractor's misclassification.
- The employer has to pay all legal benefits to such a misclassified employee.
- The employer has to pay all taxes and other contributions on behalf of the employee.
Final Words
China is one of the fastest-growing economies in the world. It has excelled in the fields of manufacturing, IT, agriculture, and technology. Its hi-tech development and flexible labor norms are inviting. It offers a vast scope of business development to many growing businesses. China may be a suitable option if you are looking to extend your business outreach.
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Social Security in China