Hiring Talent And Managing Payroll In China

Agreements

• 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

• 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.

Minimum Wage

Payroll Cycle

Annual Bonus

Health Benefits

• 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

• 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.

Social Security

• Social Security in China covers maternity, paternity, sick, and disability leaves.
• Both the employer and employees have to contribute towards social security.
• Employee contribution varies regionally. For example:

  • Housing fund

    • Shanghai - 7%
    • Guangzhou - 5 to 12%
    • Beijing - 12%
  • Pension

    • Shanghai - 8%
    • Guangzhou - 2%
    • Beijing - 8%
  • Medical

    • Shanghai - 2
    • Guangzhou - 2%
    • Beijing - 2%
  • Unemployment

    • Shanghai - 0.5%
    • Guangzhou - 0.2%
    • Beijing - 0.2%
  • Maternity

    • Shanghai - 7%
    • Guangzhou - N/A
    • Beijing - N/A

Taxes for Employees

Termination

• 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

• 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

• 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