Table of Contents


Table of Contents


Chinese Yuan Renminbi (CNY)

Payroll Frequency


Employer Taxes

34.16% - 35.52%

About China

China is the leading economic and technological superpower in eastern Asia and has the second largest economy in the world. It has a communist party-led government with a focus on market-oriented economic development strategies. China has numerous mineral resources, as well as the world’s largest hydroelectric power potential. 54.7 percent of the land is utilized for agriculture. Major ethnic groups consist of the Han who are 92 percent of the population, and the Zhuang who are the minority. Languages spoken are Mandarin, the official language, as well as Cantonese among many others. Major religions are Buddhism, Christianity, and Islam.

Due to the maturing of the Chinese economy and the effect of the economic war with the United States, the country’s economic growth is expected to continue decelerating, as it has gone from 7.8% in 2013 to 6.9% in 2017. Population growth has stabilized or even slowed, but per capita GDP, on the other hand, has grown from $8103 in 2016 to $8806 in 2017.

Employment Relationship

• Permanent Employment

The Labor Contract Law of China defines a permanent employment relationship as one established by a contract without a fixed term. Employers and employees do not indicate an end date in this type of labor agreement. A permanent employment contract is generally required in the following instances unless the employee proposes otherwise: The employee has worked for the employer for ten consecutive years. The fixed-term labor contract will be renewed for the third time consecutively.

• Fixed-Term or Specific-Purpose Contracts

In China, the law does not indicate the maximum term of a single fixed-term contract. It provides that after the execution of two consecutive fixed-term labor contracts, an employee can request an open-term agreement (unless grounds for termination exists). The length of the fixed-term contract determines the maximum length of probation. Severance is required if the employment contract expires and is not renewed, except when the employer offers renewal on the same terms and is subsequently rejected by the employee.

• Temporary Employment Contratcs

Labor dispatch agencies (or employment service agencies) can be utilized to staff short-term work projects. The workers, in this case, sign employment contracts with the employment service agencies (rather than the company that they will be working for de facto). In this regard, the company hiring the employment service agency workers is protected from serious liabilities. Agencies may only be used for temporary work (less than six months), auxiliary work (related to non-core business), or substitute work (temporary replacement of employees on leave).

Probationary Period

Per the Labor Contract Law, an employer can only impose one probation period on an employee. Probationary periods range from 1 to 6 months, depending on the length of the employment contract. A probation period may not be established for a labor contract that ends at the completion of a specific task or a fixed term of fewer than 3 months.

Working Hours

Under the Labor Law of China, employees cannot work more than 8 hours a day and 44 hours a week, on average. Employers can extend working hours by 1 hour per day after consulting with the relevant trade union and employees due to production needs or business operation requirements. However, extended hours may reach up to 3 hours per day if the extension is needed for particular reasons, and the health of employees is guaranteed. The total extension in a month cannot go over 36 hours.

Holidays / PTO

• Statutory Holidays

New Year (1), Chinese New Year (3), Tomb Sweeping Day (1), Labor Day (1), Dragon Boat Day (1), Mid- Autumn Day (1), and National Day (3).

• Paid Annual Leave

Under Chinese law, employees become entitled to paid annual leave after working continuously for 12 months, regardless of whether they worked in the same company or at different companies. After the first 12 months, the employee can use the leave as it accrues. Annual leave pay is the same as wages paid for employees' regular work. The duration of annual leave depends on the length of service: 1 to 10 years of service – 5 days of leave 10 to 20 years of service – 10 days of leave Over 20 years of service – 15 days of leave

• Sick Leave

Employees who suffer a work-related sickness or injury receive up to 12 months' sick leave with full pay. For non-work-related disease or injury, employees are entitled to leave ranging from 3 to 24 months, depending on tenure. Employers' sick pay obligations vary region-wise. The employee can take sick leave as needed and does not need to use the entitlement all at once. If employees are unable to perform work and must receive medical treatment due to illness or non-work-related injuries, employers cannot revoke the labor contract concluded with the worker during the medical treatment period. 

• Maternity Leave

According to China’s Special Rules on the Labor Protection of Female Employees, pregnant female employees are entitled to a minimum of 98 days of maternity leave, including 15 days of leave before childbirth. Many provincial governments have increased this minimum requirement by 60 to 90 days in accordance with the new Population and Family Planning regulations in China that do away with birth restrictions, allowing couples to have up to three children. Maternity leave in China is paid. For female employees who have participated in maternity insurance, the subsidy is paid by the maternity insurance fund. If employees have not participated in maternity insurance, the subsidy is paid by employers based on the wages prior to maternity leave.

• Paternity Leave

Although China’s Labor Law does not stipulate statutory entitlement to paternity leave on a national level, it is provided by all municipal or provincial governments. Paternity leave ranges from 7 to 30 days, depending on the jurisdiction. Fathers are entitled to be paid their regular earnings while on paternity leave. Employees are entitled to paternity leave for the first and second childbirth. There is no legal requirement as to when the paternity leave must be taken or whether it can be broken up. Since China does not recognize same-sex marriages or civil unions, paternity leave benefits are available only to heterosexual couples.

Termination of Employment

• Notice Period

In China, employees can unilaterally terminate their employment contract by giving a written notice 30 days in advance (3 days in advance during the probationary period). Similarly, an employer can unilaterally terminate an employment contract by giving a written notice 30 days in advance or providing 1 month’s salary in lieu of notice if the employer and employee meet certain prescribed criteria in the labor code.

• Severance Benefits

Severance pay is based on the number of years an employee has worked for the employer: 1 month's wages for every year of service. For employees who have worked for more than 6 months but less than 1 year, the severance pay is calculated based on 1 year. For the duration of employment under 6 months, the severance pay is half of a monthly salary. The maximum period for which severance is paid to it shall not exceed 12 years. If the monthly salary of the laborer is higher than 3 times the local average monthly salary of the place where the employing unit is located, the economic compensation paid to them is paid according to the amount of 3 times the local average monthly salary.