China Employee Benefits

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China Employee Benefits

Foreign companies’ responsibilities when hiring in China stretch beyond complying with contract laws. Workers’ rights are also strictly applied in China. For example, social insurance alone comprises legally-required benefits covering retirement pensions, medical care, unemployment insurance and disability insurance plus maternity benefits.

Other categories under China’s Labor Law include minimum wages (set at provincial level), holiday entitlement, working hours, termination, dismissals and severance compensation.

Social Security in China

Under the Social Security Law, Chinese nationals and foreign employees must make social security contributions, which vary between provinces, autonomous regions and municipalities. For example:

Category Shanghai Beijing

Pension 8.0% 16.0%

Medical (including Maternity) 2.0% 10.8%

Unemployment 0.5% 0.8%

Work-related injury 0% 1.52% (maximum)

In addition employers contribute at varying rates which, including the Housing Fund, can reach 48% of the employee’s salary.

Statutory Costs in China

Statutory employers’ costs in China cover minimum wages and social security contributions, which are set at provincial level. Although both parties make social security contributions, it is the employer’s responsibility to ensure they are correctly calculated and remitted to the authorities, at the risk of fines and sanctions for late or incorrect filings.

What Benefits are guaranteed in China?

• Minimum wage: These are set at provincial, not state, level and can even vary between districts within the same province depending on the urban/rural mix. In 2020 rates ranged from an upper level of 24 yuan ($3.7) per hour in Beijing to 18.4 ($2.8) in Zhejiang

• Sickness benefit: The Social Security Administrative Department allow for benefits of between 60-100% of salary for between three and 24 months

• Holiday allowance: Employers generally agree to significantly more than the statutory minimums, which are five days for one to 10 years’ service, 10 days for 10-20 years’ and 15 days for over 20 years’ cumulative employment

• Maternity benefits and allowances: A total of 98 days (15 pre-natal) is the mandatory minimum, although some provinces allow between 128 and 158 days. The Maternity Insurance Fund pays 100% of salary during maternity leave

• Discrimination: Employees must not face workplace discrimination over race, ethnicity, religious beliefs or gender under the Labor Law (1994)

• Termination/Severance: Employees must have 30 days’ written notice or payment in lieu in the case of unilateral termination by the employer. Severance pay is one month’s salary for each year’s employment

What Restrictions exist on Benefits and Compensation in China?

• Unemployment benefit: Claimants must have paid unemployment premiums for at least 12 months as part of their social security contributions, their unemployment must not be voluntary and they must have registered as unemployed and filed for job applications

• Maternity leave: Employees must have contributed to the maternity insurance scheme through their social security contributions, or their leave must be funded by their company

Health Insurance and other Benefits in China

Basic health care for Chinese nationals and foreign workers is covered by their social security contributions, although the scope will vary regionally. But with the World Health Organization rating China close to 150th in the world for public healthcare, many look for private schemes covering urban employees, urban residents or those located in rural areas.

Benefit from our advice!

Health, retirement, maternity benefits, holidays, working hours and termination agreements are among the benefits guaranteed for Chinese and foreign employees. Guaranteeing legally-protected compensation and benefits is an essential factor of complying with China’s Labor Law. Bradford Jacobs will ensure compliance with these crucial requirements to avoid fines and sanctions.