Employing in China
China’s employment laws are primarily governed by two central statutes: Labor Law (1995) and Labor Contract Law (2008). The former defines the rights and obligations of employers and employees, protecting workers’ legitimate interests. The latter ensures effective implementation of employment rules and principles outlined in the Labor Law.
Other relevant laws include the Social Security Law, Labor Dispute Mediation and Arbitration Law, Employment Promotion Law, Labor Union Law, Work Safety Law, and laws protecting women’s rights.
Onboarding time
Minimum Wage
Employer costs
Employee costs
Onboarding time
Team APAC can onboard your talents within an average of 120 hours.
Minimum Wage
The minimum wage in China varies per province/ region, reflecting regional economic conditions and living costs.
As of early 2025, Shanghai has the highest monthly minimum wage at CNY 2,690 while Beijing has the highest hourly minimum wage at CNY 26.4.
Other major cities, such as Guangzhou and Shenzhen, set monthly minimum wage rates at CNY 2,300 and CNY 2,360, respectively.
Minimum wages are regularly adjusted by local governments, typically every two years, to keep pace with economic development and cost of living changes.
Employer costs
- Pension – 16%
- Unemployment Insurance – 0.5%
- Medical Insurance -10%
- Injury Insurance – .0256%
- Housing Fund – 7%
Employee costs
- Pension – 8%
- Unemployment Insurance – 0.5%
- Medical Insurance -2%
- Housing Fund – 7%
Payroll
The payroll process in China involves several structured steps to ensure compliance with local labor laws, tax regulations, and social insurance contributions. Only written contracts are legally recognized, detailing salary, social insurance, working hours, and other terms and conditions of employment.
Employers collect employee data such as name, date of birth, job title, and payroll schedule. To calculate gross salary, the following are included: base salary, bonuses, overtime, and taxable fringe benefits (e.g., reimbursements for phone or parking).
Payroll cycle
The payroll cycle in China typically operates on a monthly basis, with salaries paid at the end of the month, or earlier if the last day of the month falls on a holiday. Post-payroll activities involve generating payslips, ensuring compliance by filing necessary reports and remitting deductions to government authorities.
Payroll calculations
The actual payroll processing includes calculating gross salary by adding components like basic pay, allowances, and bonuses, followed by deducting social insurances including pension, medical, unemployment, work injury, and maternity insurance.
Compliance requirements
Employers must register with the Income Tax Department. Employers must withhold individual income tax (IIT) from salaries, with rates ranging from 3% to 45%, and remit taxes monthly to local authorities.
Additional payments
13th Salary
13th month salary is not mandatory but many companies in China have instituted a 13th month salary payment paid during the month of the Chinese New Year or Spring Holiday.
Bonuses
While bonuses are not required by law, it has become a common and important component of employee compensation in many industries in China. In addition to the fixed 13th-month salary, performance-based bonuses are widespread, particularly in profit-oriented sectors such as technology, finance, and manufacturing, where employees might earn bonuses equal to two or three months’ salary or even higher.
Commissions
Commissions are commonly given in the country, particularly those in sales and customer-facing positions. This compensation method is a common component of salary packages, typically combining a base salary with commissions or, in some cases, relying entirely on commissions for roles that are heavily performance-oriented, such as sales representatives, brokers, and dealers.
Other allowances
Some of the optional allowances given to employees in China include transportation, housing, transportation, and education allowance.
Taxes
The income tax system in China is governed by the Income Tax Act, 1961 and is administered by the Central Board of Direct Taxes under the Ministry of Finance. It operates on a progressive tax structure, where tax rates increase with higher income brackets. Individual Income Tax (IIT) IIT is administered on a progressive tax system with rates ranging from 3% to 45%. China taxes individuals who reside in the country for more than 183 days on worldwide earned income
Employee Income Tax
Employee income taxation in the country is regulated by a progressive individual income tax (IIT) system that applies to both residents and foreigners earning income within the country. Employment income, which is comprised of wages, salaries, bonuses, stock options, and allowances, is classified as “comprehensive income” and taxed annually at progressive rates ranging from 3% to 45%. The tax brackets begin at 3% for annual taxable income up to CNY 36,000 and increase progressively to 45% for income exceeding CNY 960,000. Employers must accurately calculate and withhold the IIT from employees’ salaries prior to payment.
Income Tax
- 3% – 0 – 36,000 CNY
- 10% – 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 960,000.00 CNY
Employment eligibility
In China, foreign nationals must meet specific employment eligibility criteria to work legally. This includes obtaining a valid work visa, commonly a Z Visa, and a corresponding work permit. Applicants are required to be at least 18 years old, in good health, free of any criminal record, and possess relevant professional skills and experience related to the job. A confirmed job offer from a licensed Chinese employer is mandatory, with the employer responsible for applying for the Employment License and the Notification Letter of Foreigner’s Work Permit on behalf of the employee.
Typically, applicants need a bachelor’s degree or higher and a minimum of two years of relevant work experience.
Visa
The visa regulations for employment in China primarily revolve around the Z Visa, which is the standard work visa for foreign nationals intending to work long-term in the country. After arriving in China on a Z Visa, foreign workers must convert it into a residence permit within 30 days to legally reside and work in the country.
Visa types
- Z Visa – main visa for foreigner workers
- R Visa (Professional Talent Visa) – for highly-skilled professionals
- M Visa (Business Visa) – for foreigners invited to China for short-term business trips
- S1 and S2 Visas (Family Visas) – for family members of foreign workers
Compliance requirements
- Job offer
- Work Permit Notification
- Passport (valid for at least six months)
- Visa Application Form
- Educational and Professional Qualifications
- Health Certificate
- Criminal Record Certificate
- Application submission
- Entry Registration (registering one’s address in China with the local Public Security Bureau [PSB] within 24 hours of arrival in the country)
- Work Permit Application in China (within 15 days of arrival)
- Residence Permit (within 30 days of entry; issued by PSB)
- Point-based Eligibility (minimum assessment score [usually 60] of applicants based on education, work experience, age, and Mandarin proficiency)
Background check
Visa-related background checks in China mainly aim to confirm that foreign applicants, particularly those applying for work visas, have no criminal record. A criminal background check, also called a police clearance certificate or certificate of no criminal record, is a mandatory document for China work visa applications. This certificate must be obtained from the applicant’s current country of residence and any other country where they have lived for more than six months within the last five years. It must be recently issued (usually within six months before the visa application) and authenticated by the issuing authority. China has recently tightened its regulations, requiring applicants to have a completely clean criminal record for visa approval. Thus, any criminal history, regardless of its nature, now leads to visa denial.
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Benefits
Employees in China receive mandatory and voluntary benefits aimed at securing their financial stability, health protection, and work-life balance. The compulsory “5+1 system” comprises pension insurance, medical insurance, work injury insurance, unemployment insurance, maternity insurance, and housing fund contributions, all funded by both employers and employees, establishing a social safety net and retirement support. Additionally, many employers provide extra benefits such as subsidies for housing, meals, transportation, and children’s education, private supplemental health insurance, annual bonuses commonly given during the Chinese New Year, and additional paid vacation days beyond the legal minimum.
Private health insurance
Private health insurance in China helps cover high out-of-pocket costs, offers access to higher quality care, and reduces waiting times compared to public hospitals.
Team APAC providers
- SafetyWing
- Allianz
Mandatory benefits
The statutory benefits system in China is mainly regulated by the State Social Insurance System, which mandates five types of social insurance: basic pension insurance, basic medical insurance, unemployment insurance, work-related injury insurance, and maternity insurance. Both employers and employees contribute to these insurances based on the employee’s salary, with contribution rates and benefit levels differing across municipalities. The pension scheme offers retirement benefits through a combination of a base pension, individual account pension, and transitional pension, with the standard retirement age currently at 60 for men and 55 for women, though this is gradually increasing. Medical insurance covers treatment, rehabilitation, and allowances during illness or injury. Work-related injury insurance provides compensation for medical costs, disability, and death benefits including funeral and dependent support. Unemployment insurance offers financial aid during periods of joblessness, while maternity insurance grants paid leave and related support. Additionally, both parties contribute to a housing provident fund to assist with housing needs. These benefits are managed by local governments under the supervision of the Ministry of Human Resources and Social Security, aiming to protect workers from social risks such as aging, sickness, unemployment, and workplace injuries.
Mandatory benefits in China
- Basic pension insurance
- Basic medical insurance
- Unemployment insurance
- Work-related injury insurance
- Maternity insurance
Working hours
The standard workweek in China is 40 hours, based on an eight-hour day. The law requires that employees receive at least one full day of rest during the week, although most employers provide two days, usually Saturday and Sunday. The Labor Law allows employers to extend working hours for production or operational needs as long as the labor union, if one exists, and the employees are consulted.
Working hours per day
The standard workday is 8 hours.
Working hours per week
The standard workweek is 40 hours.
Overtime pay
Employees required to work additional hours beyond the standard eight-hour workday are entitled to overtime pay based on the following criteria: on a regular working day, 150 percent of regular hourly wages; on a rest day, either compensatory time off or 200 percent of regular hourly wages; and for all work on a statutory holiday, 300 percent of regular hourly wages.
Leave
In China, mandatory leave types include statutory annual leave, public holidays, sick leave, maternity leave, paternity leave, marriage leave, and bereavement leave. Additionally, employees are entitled to one rest day per week, commonly observed on weekends.
Annual leave
Employees do not qualify for paid leave until they have completed their first year of employment. After finishing their first year but before reaching ten years of service, employees are entitled to five days of paid leave each year. Those who have served for at least ten years receive ten days of paid leave annually, which increases to a maximum of fifteen days for employees with twenty or more years of service.
Sick leave
Employees are entitled to sick leave of between three months and 24 months depending on total years of work experience and tenure with the current employer. An employee on sick leave is entitled to compensation, the amount of which varies by location but is generally no lower than 80 percent of the minimum monthly salary announced by the local government.
Parental leave
Parental leave in China is not mandated by a unified national policy; instead, it is regulated at the provincial level, with each province setting its own rules regarding duration and conditions. Duration varies by province and ranges from 5 to 15 days, with some provinces offering as few as 5 days (e.g., Beijing and Shanghai) and others up to 30 days (e.g., Shaanxi). Parental leave is generally paid at 100% of the employee’s salary in most provinces.
Paternity leave
Working fathers are eligible for seven to 30 days of paternity leave depending on locality. In Beijing, up to 15 days of paternity leave at full pay can be taken by the male spouse of a female employee who is over 24 years of age at the date of the child’s birth. Shanghai provides 10 days of paternity leave.
In Beijing, fathers may take more leave days if their spouses reduce their leave by the same amount and both employers agree. Shanghai and Beijing provinces offer parental leave, which entitles eligible parents to five days of paid leave each year until the child reaches 3 years of age.
Maternity leave
Under national law, female employees who are pregnant are entitled to 98 days of maternity leave, but local laws provide additional conditions and leaves depending on situations surrounding childbirth and pregnancy.
Other types of leave
Bereavement leave
Bereavement leave typically allows up to 3 days of paid leave for immediate family members.
Family & domestic violence leave
There is no legal entitlement to family and domestic leave.
Long service leave
Long service leave, as a specific type of leave granted for extended service, is not explicitly mandated in China under that term. Instead, China’s labor law provides for statutory annual leave based on the employee’s total length of service across all employers, which functions similarly by rewarding longer tenure with increased paid leave days.
Marriage leave
Marriage leave usually lasts at least 3 days, with some provinces granting extended leave up to 30 days.
Termination
In China, the primary legislation regulating termination of employment is the Labor Contract Law, which offers robust protections for employees and limits employers’ rights to terminate contracts without just cause. Employment can end through mutual consent, employee resignation, employer-initiated dismissal, or automatic termination under certain conditions.
Termination process
Employers are required to document and provide evidence for the reason behind a termination, issue formal written notice to the employee, and notify the labor union if one exists prior to the termination. In cases of mass layoffs involving more than 20 employees or 10% of the workforce, additional steps must be taken, such as informing labor authorities and unions. Furthermore, all final payments, including wages, unused leave, and severance, must be promptly settled.
Termination reasons
Grounds for employer-initiated termination include serious misconduct or fault warranting immediate dismissal without notice or compensation, such as failure to meet probationary employment conditions, repeated violations of company rules (like unexcused lateness), gross negligence or corrupt practices causing significant harm to the employer, holding another job that severely impacts performance without termination, obtaining the employment contract through deception or coercion, conviction of a crime, or fraudulent or coerced contract signing.
Notice period
Employees are entitled to 30 days’ advance notice of termination or one month’s wages in lieu of notice plus severance pay unless termination is for a serious violation of company work rules or similar circumstances. Labor unions must be notified by employers of any proposed unilateral termination and may demand that an employer correct an action that violates government law or the terms of a labor contract.
Severance Pay
Severance pay is calculated as one month’s salary for each full year of service, plus an additional half month’s salary for any partial year worked that is less than six months, or a full month’s salary for a partial year of six months or more. For employees whose salary exceeds three times the local monthly average wage, severance calculations are capped at three times that average salary and a maximum of 12 months of seniority. Additionally, employees who are terminated by mutual agreement or whose fixed-term contracts expire without renewal are also eligible to receive severance pay.
Note that severance pay is determined by the duration of employment with a single employer and may vary according to the specific province or region.
In Shanghai, the amount of severance pay depends on both the reason for termination and the employee’s length of service.
Probation period
Based on Chinese labor law, the length of the probationary period depends on the duration of the employment contract: for contracts less than three months, probation is not allowed; for contracts between three months and one year, the probation period can be up to one month; for contracts between one and three years, it can last up to two months; and for contracts longer than three years or indefinite contracts, the probation period can be up to six months.
Probation Period days
- No probation period (for contracts lasting for less than 3 months)
- Up to 1 month probation period (for contracts lasting for 3 up to 12 months)
- Up to 2 months probation period (for contracts lasting for 1 to 3 years)
- Up to 6 months probation period (for contracts lasting for more than 3 years or indefinite contracts)
