How to hire and pay EMPLOYEES IN

China

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Before hiring

EMPLOYEES IN
China

Before hiring employees in China, there are a few important things you’ll need to know. Firstly, in China, employees are only entitled to paid vacation days after they’ve been working for at least a full year. After that, their paid time off entitlement depends on their length of employment. 

As an employer in China, it’s important to know that employees in China are entitled to 98 days of maternity leave, and an additional 15 days in the case of difficult labour or multiple births. 

We know this might sound overwhelming—but it doesn’t have to be. A solution like Oyster eliminates the barriers for you. With Oyster, you can automate compliance across 180+ countries, easily managing HR and payroll—all in one, easy-to-use platform. 

Get an overview of what you need to know when hiring in China below.

At a Glance

CURRENCY

CNY

OFFICIAL LANGUAGE

MANDARIN

PAYROLL FREQUENCY

MONTHLY

PUBLIC HOLIDAYS

7

(based on region;
see here
)

EMPLOYER TAXES

32.30% - 44.50%

of gross salary

13th / 14th SALARY

It is common practice to give employees an annual bonus equal to one months’ salary before the Chinese New Year.

Good to know

  • In China, it's customary to give employees an annual bonus equal to one month's salary before the Chinese New Year.
  • Employees are only entitled to paid vacation days after they have been working for at least a full year.
  • Employees who are left unemployed upon dismissal are entitled to unemployment insurance benefits provided they have participated in the unemployment insurance scheme, have made contributions to it, are registered as unemployed, and are actively seeking work.

Employment in

China

Working hours and overtime

Employees in China work eight hours a day, 40 hours per week. 

Overtime is limited to one hour per day. It can sometimes be extended to three hours, and is limited to 36 hours per month.

For overtime worked on a working day, employees are entitled to 150% of their normal salary. For overtime worked on a rest day, they are entitled to alternative rest time or 200% of their normal salary. For overtime worked on a public holiday, they are entitled to 300% of their normal salary.

Employment contracts
Probationary period

The probation structure in China is as follows:

  • For employment contract that are three months to a year in length: A maximum of one months’ probation
  • For employment contracts that are one to three years in length: A maximum of two months’ probation
  • For employment contracts that are three years or more: Up to six months’ probation

Probation is not permitted for employment contracts of less than three months, or contracts that expire upon completion of assignment.

Pensions
Notice period

The notice period in China is 30 days. Employers can choose to offer one month's pay in lieu of notice to the employee.

Employers only need to give notice to terminated employees if the termination is due to illness or a non-work related injury, incompetence, or a major change in circumstances that renders the contract infeasible.

Some local regulations require employers to give prior notice (or payment in lieu of notice) when not renewing an employment contract.

IP protection and non-compete agreements

Non-compete agreements must be clearly defined in the employment contract, and must be reasonable. They cannot exceed two years after termination, and must include a monthly compensation for the employee. In practice, 30-60% of the employee's average monthly salary is acceptable as compensation.

Employment cost calculator

Holidays

01 Jan - 03 Jan

New Year Holiday

12 Jun - 14 Jun

Dragon Boat Festival

11 Feb - 17 Feb

Spring Festival

19 Sep - 21 Sep

Mid-Autumn Festival

03 Apr - 05 Apr

Ching Ming Festival

1 Oct - 7 Oct

National Day Holiday

01 May - 05 May

Labour Day Holiday

01 Jan - 03 Jan

New Year Holiday

11 Feb - 17 Feb

Spring Festival

03 Apr - 05 Apr

Ching Ming Festival

01 May - 05 May

Labour Day Holiday

12 Jun - 14 Jun

Dragon Boat Festival

19 Sep - 21 Sep

Mid-Autumn Festival

1 Oct - 7 Oct

National Day Holiday

Employer tax

Employer taxes in China vary across cities. Here’s an example of what employer contributions look like in Beijing: 

  • Pension (maximum base is 25,401 CNY): 16%
  • Unemployment (maximum base is 25,401 CNY): 0.8%
  • Medical Insurance (maximum base is 25,401 CNY): 10%
  • Work Injury (maximum base is 25,401 CNY): 0.2- 1.90%
  • Maternity Insurance (maximum base is 25,401 CNY): 0.8%
  • Housing Fund (maximum base is 25,401 CNY): 5-12%

Individual tax

Employees in Chile are taxed between 3% and 45% depending on their income bracket. Employees in Beijing pay up to 22.2% in social security contributions, and employees in Shanghai pay up to 17.5%.

Termination of employment

Severance pay in China depends on the reason for termination, but in general, it’s equal to one month’s salary for each year of employment, which is capped at 12 months, and cannot exceed three times the minimum wage.

Start hiring employees in

China

Setting up a business entity everywhere you want to hire a new employee isn’t scalable—it takes too long and the legal fees are high. At the same time, understanding and adhering to the local labor laws and employee expectations can be complex and time consuming. And it’s hard to find reliable information on up-to-date employment information for all the countries where you’re considering hiring. Not to mention tracking down invoices and managing employee contracts over email and spreadsheets—that gets messy fast. 

We can’t afford to take risks when it comes to compliance—we need to make sure we follow the local guidelines, especially when it comes to taxes and legalities. 

With Oyster, you can manage HR and payroll, and automate compliance across 180+ countries—all in one, easy-to-use platform.

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