China Employer of Record

When negotiating terms of an employment contract with a candidate in China, here are some of the statutory benefits and paid leave requirements to keep in mind, as well as how an employer of record can support your company’s benefits strategy. 

Maternity leave 
Employers are required to offer maternity leave. The national requirement is a minimum of 98 days. 

After China abandoned its one-child policy, localities lengthened the amount of maternity leave they require. The length of leave varies from place to place, the shortest being 128 days and the longest 190 days.

Leave can be extended between one and three additional months, depending on locality, if the employer agrees to it. 

Employees receive a maternity allowance while they are on leave. The amount is based on the insurance policy their employer must hold for them, which is based on their salary. 

The Social Security Bureau pays the employee. In some places, the employer must also pay the employee. 

Employers cannot require overtime or night shifts for employees who are more than seven months pregnant or nursing, and pregnant or nursing employees cannot be terminated.  

Vacation
Employees who have worked continuously for more than one year are entitled to paid vacation.

The amount of paid leave depends on the total number of years they have worked—not just their years with their current employer. 

• At least one but less than 10 total work years: Five days of annual leave
• 10 years to less than 20 years: 10 days
• 20 years or more: 15 days

Unused annual leave may be carried over to the next year.

Employers who want to cancel annual leave because of production or work requirements must get the consent of their employees and must also pay 300% of each employee’s daily wages for each day of annual leave that is accrued but unused.

Holidays
Employees are entitled to 11 national holidays:

• New Year’s Day
• Spring Festival (three days)
• Tomb Sweeping Day 
• International Labor Day
• Drago Boat Festival 
• Mid-Autumn Festival
• National Day (three days)

Female employees are also entitled to a half day of paid leave on International Women’s Day. 

The government provides additional public holidays in order to create long holiday weeks called Golden Weeks during the Spring Festival and on National Day.

Employees who are required to work on a holiday are entitled to 300% of their usual pay.

Sick leave
Employees who have suffered illness or injury not related to work are entitled to paid sick leave. The amount ranges from three months to two years and depends on a number of factors, including the total number of years worked, tenure with the current employer and local regulations. 

Compensation also varies by location. It can be calculated in a variety of ways:

• Based on the employee’s salary and work experience
• Based exclusively on salary 
• According to the employment contract

Generally, the amount of compensation must be at least 80% of the minimum monthly salary as determined by the local government.

Health coverage
In China, medical coverage is almost universal and largely publicly funded. In cities, employees are required to enroll in Urban Employee Basic Medical insurance, which is primarily funded by employee and employer payroll taxes. In rural areas, people can enroll in the Urban-Rural Resident Basic Medical Insurance, which is financed primarily by central and local governments. 

Employers contribute between 8% and 10% of payroll, depending on where they are located, and employees contribute 2% of their income. Employee contributions are deposited into personal accounts along with approximately 30% of employer contributions. The rest of the employer contributions goes into the pooled fund. 

Private insurance fills in coverage gaps. Employers may offer this to employees to cover deductibles, copayments and other costs as well as to cover services not included in the public insurance plans.

As your employer of record in China, we may be able to provide optional supplementary medical insurance coverage for professionals and their dependents at a more cost-effective rate.

Pension
All employees, including expatriate employees with work permits, are entitled to a pension. The official retirement age is 60 for men and 50 for women. 

As with all employment regulations in China, the amount of an employer’s contribution varies by locality. The maximum contribution is generally about 20% of total payroll and, irrespective of locality, the maximum salary used to determine employer contributions is three times the average local annual salary as determined by the local government. 

Employees are required to contribute 8% of their salary to a personal account. Employees who have contributed for at least 15 years receive a monthly pension from the common pension fund in addition to the funds in their personal accounts. A retired employee who has contributed for fewer than 15 years can continue to make contributions until the 15-year requirement is met and will then receive a pension from the state system.

Workers’ compensation
The process for reviewing workers’ compensation claims in China entail four steps: 

• Health professionals diagnose the injury or illness
• Local labor and social security officials verify that the injury or illness is work-related 
• The degree of disability is assessed
• Social security authorities calculate the amount of benefits to be paid

The amount of compensation and the responsibility for paying it are largely determined by labor laws and regulations, but the actual payout varies from region to region.

Employer social costs will cover a large portion of employee benefits in China, but we can consult with you about supplemental coverage options, such as additional pension contributions or life insurance, if needed.