COUNTRY GUIDELINES CHINA

AN OVERVIEW OF EMPLOYING IN CHINA- 

1. CURRENCY -
   Chinese Yuan (CNY) denoted by ¥. It is also called as Renminbi (RMB).
2. PAY DATE -
   The salary is paid out to the employees on the 5th of the following month.
3. SALARY-
   The minimum wage in China varies by province or region. As of 1 October 2024, Shanghai has the highest monthly minimum wage among 31 provinces at 2,690 yuans and Beijing has the highest hourly minimum wage at 26.4 yuans.
   In general, the minimum wage standards appear in two forms, namely the monthly minimum wage standard and the hourly minimum wage standard. The monthly minimum wage standard applies to full time employees while the hourly minimum wage standard applies to non-fulltime employees, such as part-time and temporary employees
4. SOCIAL SECURITY SYSTEM-
   China’s social security system requires five mandatory insurance contributions and a housing fund contribution, made to the local provincial government. The reformed laws use the tax administration for the collection of all contributions to the following funds: retirement, health insurance, unemployment, maternity, work-related injury and housing fund. Both employers and employees contribute to these funds, with rates varying by region.
5. HEALTHCARE-
   China's healthcare policy for employees is centered around the Social Insurance System, which includes health insurance as a key component. This system is mandatory for most employees and provides basic healthcare coverage, with both employers and employees contributing to the system .Basic Medical Insurance (BMI) provides the main source of coverage, and medical aid, commercial health insurance, donations, and mutual aid as additional services.
   Employees and their employers are required to contribute to the Basic Medical Insurance Fund. The contribution rates vary by region, but typically the employer pays a higher portion of thee premium. It covers a wide range of medical expenses, including hospitalization, outpatient services, surgeries, and prescription drugs.
6. EMPLOYERS’ COSTS-
   The employer's contribution percentage varies by region, ranging from 39.50% to 41.20%. This variation is due to regional differences in statutory requirements, benefits packages, and other factors influencing compensation structures. 
   
   

AN OVERVIEW OF THE MAIN STATUTORY BENEFITS

1. PENSION-
   

   China’s social security system features a comprehensive pension system that provides financial security to retirees.

   The system is divided into three layers:

   • Basic Pension Insurance for Urban Employees: Covers workers in formal employment within urban areas.
   • Basic Pension Insurance for Urban and Rural Residents: Supports urban and rural residents who are not formally employed.
   • Occupational Pensions for Government Employees and Public Institutions : Benefit government workers and specific public workers, providing additional pension support.

   The contribution rates to China’s pension system vary. Employers generally contribute around 16% of the employee’s wages to the pension fund, while employees contribute around 8%. These contributions are calculated based on the employee’s salary, known as the contribution base.

   Retirement age: For all men and for women in managerial or technical roles, the retirement age will increase by one month for every four months that pass, starting from 1 January 2025 until the statutory retirement age reaches 63 and 58 years, respectively. For women in ordinary worker roles, the retirement age will increase by one month for every two months that pass, starting from 1 January 2025 until the statutory retirement age reaches 55 years.
2. SICKNESS
   In China, the duration of sick leave is governed by the Labor Contract Law and other regulations, but the length of sick leave can vary depending on the nature of the illness, the severity of the condition, and the individual’s employment contract.
   Under the Regulations on Medical Care Period for Enterprises’ Employees for Illness or Non-Work-Related Injury, employees who suffer from a non-work-relatedelated illness or injury are entitled to between 3 and 24 months of medical leave, depending on the employees’ total working years in aggregate and the time spent working for the current employer.
   
   

   For Employees with Less Than 10 Years of Total Work Experience:

   • Less than 5 years with current employer: 3 months of sick leave.
   • More than 5 years with current employer: 6 months of sick leave
   
   

   For Employees with Less Than 10 Years of Total Work Experience:

   • Less than 5 years with current employer: 6 months of sick leave.
   • More than 5 but less than 10 years with current employer: 9 months of sick leave.
   • More than 10 but less than 15 years with current employer: 12 months of sick leave
   • More than 15 but less than 20 years with current employer: 18 months of sick leave.
   • More than 20 years with current employer: 24 months of sick leave.
     
     
   Sickness Pay:
   Employers in China are required to pay sick leave wages to employees, which should be no lower than 80% of the local standard minimum salary. For the first 3 months, the employer typically pays the employee’s full salary. After this, the employee may be entitled to 50% to 80% of their regular salary depending on local regulations (this varies by region in China).

 

MATERNITY & PATERNITY LEAVE

Female employees are entitled to 98 days of maternity leave, including 15 days of antenatal leave. Extra maternity leave of 15 days shall be granted in the case of dystocia. Female employees who give birth to twins or triplets shall be granted extra maternity leave of 15 days for each additional baby born.
In the case of abortion, female employees are entitled to 15 days of maternity leave when the female employee’s pregnancy period was less than four months, and maternity leave of 42 days where the pregnancy period was more than four months.

In addition, if a female employee meets certain requirements, she is entitled to extra maternity leave subject to local regulations (which vary from city to city). For example, in Beijing and Shanghai these are 60 days and in Guangdong Province (including Guangzhou and Shenzhen), these are 80 days and an extra 30 days for a caesarean section.

Paternity Leave

While there is no national entitlement to paternity leave, local legislation generally
provides male employees with some paid paternity leave. Eligibility and entitlements for
paternity leave vary widely. New fathers are generally granted paid leave, ranging from a few
days to several weeks, depending on the province.
For instance, Beijing offers new fathers 15 days of paternity leave, while Zhejiang provides up to15 days. Shanghai and Henan offer 30 days, and other regions may offer different durations.

ADDITIONAL STATUTORY INSURANCE/ ALLOWANCES

Life Assurance
Many employers in China choose to offer voluntary life insurance or group life insurance as part of their employee benefits package. This may be provided as a supplementary benefit to enhance employee welfare. These life insurance policies are typically offered by the employer to cover employees in the event of death or permanent disability, and they may be a form of additional compensation or employee retention strategy. While life assurance or life insurance is not mandatory under Chinese law, some employers do offer it as a voluntary benefit.

CONTRACTUAL PROVISIONS

Probationary Period-

The probation period of an employee is governed by the Labour Contract Law. The duration of the probationary period for employees in China depends on the term of the employment contract, mentioned as follows:

• When the term of the labour contract is between three months and one year, the probation period must not exceed one month
• When the term of the labour contract is between one year and three years, the probation period must not exceed two months
• When the term of the labour contract is for more than three years, the probation period must not exceed six months

No probation period needs to be specified in a labour contract with a term that expires upon completion of a certain project, or a labour contract with a term of less than three months.

Overtime-

The Labour Law provides regulations for remuneration for overtime work. If the overtime
occurs on weekdays, the remuneration must be no less than 150 per cent of the employee’s existing salary. If the overtime occurs on holidays and no replacement holidays are arranged, the remuneration must be no less than 200 per cent of the employee’s existing salary. If the overtime occurs on statutory holidays, the remuneration must be no less than 300 per cent of the employee’s existing salary. The extended working hours should not exceed one hour per day. If, for special reasons, a further extension is required for overtime, the additional hours of overtime should not exceed three hours per day and should not harm the employee’s health. The total number of hours in overtime may not exceed 36 hours each month.

 

TERMINATION

The termination process for employees in China is governed by the Labor Contract Law of the People’s Republic of China (2008) and its amendments. Under the Labor Contract Law, both employers and employees can terminate a contract under certain conditions:

Employer’s Grounds for Termination

• Contract expiration: When a fixed-term contract ends, and neither party wants to renew it (Article 44).
• Employee misconduct: The employer can terminate without notice or severance if the employee violates rules, engages in illegal activities, or has excessive absenteeism (Article 39).
• Business closure: Termination can occur if the employer closes or restructures the business (Article 41).

Employee’s Grounds for Termination

• Employer misconduct: Employees can resign if the employer breaches the contract (Article 38).
• Health concerns: Employees can quit if their work environment is unsafe or harms their health (Article 38).

Severance Pay

The severance pay policy for employees in China is generally required unless the termination is due to employee misconduct or the employee's fault. The amount of severance is based on the number of years of service, with the calculation typically being one month's salary for each year of service. For a working period of less than six months, the amount of severance pay shall be half of one month’s salary.

This one month's salary should equal the average monthly salary of the employee in the last twelve months prior to the dismissal, which shall include monthly salaries, bonuses, allowances and subsidies that were paid to the employee in cash during such period.

For the working period after 1 January 2008, if the average monthly salary of the employee exceeds three times the average monthly salary of employees for the previous year as stipulated by the local government, the severance payment is calculated with a cap of three times the average monthly salary of employees as stipulated by the local government and with a maximum of 12 months. 

HOLIDAY ENTITLEMENT

Employees in China are entitled to paid annual leave, which increases with their years of service. This leave entitlement starts from 5 days for employees who have worked for 1 to 10 years, increasing to 10 days for 10 to 20 years of service, and up to 15 days for more than 20 years of service, or more. However, the actual number of leave days may vary based on company policies or collective agreements.

Employees whose work tenure is less than one year will have no statutory annual leave. However, it is important to note that work tenure is not limited to the length of time an employee has worked for their current employer. Rather, it refers to their cumulative work years with all previous and current employers.

Employers are required to compensate employees for any unused leave if they are unable to take it due to work demands. Where an entity can’t give annual leave to an employee due to work needs, it is allowed to do so as long as it gets the consent of the employee. As for the annual leave time due and not taken by the employee, the entity shall pay the employee 300% of his daily wage income for each day of the annual leave due and not taken.

PUBLIC HOLIDAYS

There are 7 Public Holidays observed in China. They are listed as follows:

PUBLIC HOLIDAY DATES 2025

The State Council also provides public holidays for specific social groups :

• International Women’s Day is observed for half day by women only.
• Youth Day is observed for half day by youths between age 14 to 28.
• Children’s Day is observed for a full day by children below age 14.
• Army Day is observed for half day by military personnel in active service.