Country Guide

Local Expertise

Country-Specific Solutions

Onboarding

In China, written employment contracts outlining key terms must be provided to new hires within one month of their start date. These contracts establish a foundation of trust and clarity by specifying:

Job duties and responsibilities
Work schedules to avoid misunderstandings
Salary and payment details for transparency
Probationary period

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Payroll Services

China mandates monthly salary payments on the last working day of every month. Furthermore, Chinese employees receive a customary “13th month” or “14th month” pay in the month of the Lunar New Year or Spring Holiday.

Standard workweeks are 40 hours, with overtime capped at 36 hours per month. Employer social security contributions and employee deductions are subject to mandatory rates that vary by region and can change annually.

Salary paid monthly on the last working day of the month.
Standard workweek: 40 hours.
Overtime capped at 36 hours per month.

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Taxes

China operates a progressive income tax system for both residents and foreign nationals working in China. All income derived from work performed in China is subject to taxation, regardless of payment location. Here's a breakdown of the tax structure:

Individual Income Tax (IIT): Progressive tax rates ranging from 3% to 45% in 2024, based on annual taxable income.
Foreigner's Income Tax (FIT): Foreign workers are entitled to the same personal income tax rate as Chinese citizens in accordance with the law. However, foreign nationals who qualify as tax residents of China can benefit from the progressive tax system like residents.

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Leave

Chinese employees enjoy statutory leave benefits that promote work-life balance and employee satisfaction. These include:

Annual Leave: Minimum of 5 days, increasing with seniority (up to 15 days after 10 years).
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National Holidays: While officially there are 7 legal holidays in China, The General Office of the State Council releases the official holiday schedule for each year in December. In practice, the Holiday Schedule features three major week-long holidays: Chinese New Year, Labor Day and the National Day holiday. Employers should note that Saturdays and Sundays are often connected with the national holidays to make it longer or marked as additional official work days to compensate for adjusted longer breaks around the national holidays.
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Sick Leave: An employee suffering from illness or non-work-related injuries is entitled to a sick-leave period ranging from 3 to 24 months, depending on the number of years the employee has worked for an employer and his/her total years of work experience.
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Maternity Leave: Minimum of 14 weeks (98 days) maternity leave at full pay, with additional leave possible depending on provincial regulations.
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Paternity Leave: Minimum of 15 days paternity leave at full pay.

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Social Security Management

China's social security system provides financial security for employees in retirement, unemployment, work injuries, maternity, and healthcare. Mandatory contributions are made monthly by both employers and employees, with rates varying by region and subject to change annually.

‍Social Insurance (SI): Covers retirement pensions, unemployment benefits, work injury compensation, and maternity benefits.

Employer Contribution: Rates typically range between 22% - 26% of salary (capped) depending on location.
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Employee Contribution: Rates typically range between 10% - 12% of salary (capped) depending on location.

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Housing Fund (HF): Contributes towards the purchase of a home in China with minimum and cap, depending on location.
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Employer Contribution: Between 5 to 12% of salary, depending on location.
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Employee Contribution: Between 5 to 12% of salary, depending on location.

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Termination

China adheres to a termination process requiring adherence to labor law with designated notice periods or compensation in lieu of notice.

Notice Period: Minimum 30 days' notice after probation
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Severance pay : The general rule on severance is that employees are entitled to one month of their average monthly compensation for each year of service. Partial years of service over six months are rounded up to one year, while partial years less than six months are counted as half a year. If the termination is initiated unilaterally by the employer without just cause, then the employee is entitled to severance payment. Often, the employer will need to provide additional compensation to the employee to obtain the employee’s consent on voluntary separation, and such compensation amount is subject to mutual agreement.

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China Market Insights

Economic Giant

China's massive domestic market and continuous growth make it a top destination for foreign business expansion.

Innovation Hub

China's rising R&D investment and thriving tech scene foster a dynamic environment for businesses across sectors.

Government Support

Strategic policies like tax breaks and streamlined registration processes make China attractive for foreign investors.

FAQ

Expand into China with Innovare

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Innovare China

Country-Specific Solutions

China Market Insights

Comprehensive Solutions, Tailored for You

You've got questions, and we have the answers.

Expand into China with Innovare

Expand into Japan with Innovare

Innovare China

Country-Specific Solutions

China Market Insights

Comprehensive Solutions, Tailored for You

You've got questions, and we have the answers.

1) What documents should the client have ready to avail EOR services from Innovare in China?

2) Do you assist clients with company incorporation in China? If so, to what extent do you provide support?

3) What does the process of getting started with Innovare for EOR services in China actually entail?

4) Does Innovare also support businesses with other aspects of setting up a business, such as becoming a member of a chamber of commerce or taking advantage of particular government schemes or grants in China? If yes, to what extent does that support extend?

5) How does Innovare assist clients with visa and work permit requirements in China? What documents do you require from clients to facilitate the visa application process?