China is known for its exceptional benefits and compensation laws that benefit employees. Before you hire any workers or set up a subsidiary, you need to understand each aspect of the law so you can pay employees a fair wage and offer additional benefits to stay above the competition.
Chinese Compensation Laws
China’s minimum wage varies by province or city. For example, Shanghai has the highest monthly minimum wage at 2,480 yuan, while Shenzhen outlines a minimum wage of 2,200 yuan per month, and Guizhou’s wage is 1,570 yuan (amounts as of 2021). Employers typically pay employees monthly either in cash or through a bank.
An additional bonus or 13th-month salary is not required by law, but it is a market norm in China. Instead of a guaranteed bonus, you can state the monthly salary, how often employees will be paid, and the total annual salary in the employment contract. You can then specify that a bonus is not mandatory but will be dispersed under the right conditions. Sales employees often have a commission plan that replaces this bonus.
China Benefit Management
In addition to compensation laws in China, you’ll find numerous guaranteed benefits and supplemental options for employees. For example, China celebrates seven national holidays, and the statutory minimum includes paid leave for each. While this is the statutory minimum, many employers go above and beyond by giving employees flexibility around the Chinese New Year to avoid heavy travel days.
Annual vacation is another example of benefits management in China. Mandated vacation days vary based on how long an employee has remained at the company:
- No vacation days for employees who have worked less than one year
- Five days of vacation for those who have worked between one year and 10 years
- Ten days for those who have worked between 10 years and 20 years
- 15 days for those who have worked at least 20 years
Although this is the statutory minimum, foreign employers hiring mid-level or senior executives usually offer more vacation. It is not uncommon for offer letters to include two to four weeks of annual vacation time.
China Benefit Outsourcing
You have two options for benefits management in China.
- Some companies may choose to disperse benefits themselves. This process involves a complete understanding of compensation and benefits laws and a commitment to your subsidiary in China. You will need to make sure employees get every benefit they are entitled to and any supplemental benefits that may attract more candidates.
- You can also choose to work with a global PEO such as Globalization Partners. As a China benefit outsourcing solution, we help you source benefits and take the stress out of ensuring your compliance.
Benefits and Compensation Restrictions
Standard benefits and compensation restrictions include working hours, minimum wage, and annual vacation time. It is essential to study each law so that you stay compliant and your employees get everything they deserve.
Instead of worrying about employee compensation and benefits on your own, you can work with Globalization Partners. We act as the employer of record to take the liability off your shoulders. Contact us today to learn more about our services.