Employee Benefits in China

Bonuses and additional payments

In China, the Labor Contract Law does not mandate an annual bonus; however, it is customary for employers to provide a year-end bonus, often equivalent to one month's salary or more, based on company performance and individual contributions. This bonus is typically paid before the Lunar New Year and is subject to individual income tax, calculated separately from regular salary to potentially reduce the tax burden. The percentage and eligibility criteria for the bonus are determined by the employer and should be applied consistently among eligible employees.

Annual leave

Employees in China are entitled to paid vacation leave after completing one year of continuous service. The statutory entitlement is based on cumulative years of employment: five days for one to 10 years, 10 days for 10-20 years, and 15 days for more than 20 years. This leave is fully paid and can be taken throughout the leave year, as agreed between employer and employee.  

Additional leave may be offered as part of an employment contract, though it is not required by law. Many employers offer enhanced leave policies to stay competitive and improve retention.  

Unused statutory leave must be taken within the stipulated period; otherwise, it may be forfeited, depending on company policy. Payment in lieu of unused leave is only permitted upon termination of employment.

Sick leave

Personal and sick leave are governed by the Labor Law and local regulations. Employees are entitled to sick leave ranging from three to 24 months, depending on their length of service and local policies. During sick leave, employees receive 60% to 100% of their salary, with the exact amount determined by local standards and the employee's tenure. 

Parental leave

Employers must provide 18 weeks of paid leave to biological and adoptive mothers, including surrogate mothers, regardless of the number of children. Pregnant employees who have worked for an employer for at least one month prior to the expected delivery date are eligible for benefits, with written notice and a medical certificate submitted before the due date.

Additional benefits

Social Security contributions in China are known as “five insurances and one housing fund” 五险一金. Employers and employees must contribute to five mandatory insurance types:​

• Pension insurance: Supports retirement income for employees.​
• Medical insurance: Covers a portion of medical expenses.​
• Unemployment insurance: Provides income support during periods of unemployment.​
• Work Injury insurance: Covers medical costs and compensation for work-related injuries.​
• Maternity insurance: Offers financial support during maternity leave.​

Many employers also offer supplemental benefits, such as meal allowances, private health insurance, flexible schedules, or transportation subsidies. These additional benefits help improve retention and employer branding.​

As your employer of record in China, we help design compliant and competitive benefit packages that align with statutory obligations and local market expectations.