On the afternoon of July 5, 2022, Shanghai Municipal Human Resources and Social Security Bureau announced that the average salary in China – Shanghai in 2021 (hereinafter referred to as “social average salary”) was CNY 11,396 per month, which was CNY1,058 higher than the 2020 Shanghai social average salary in China of CNY 10,338.

Shanghai China average salary of CNY 11,396 is adjusted from July 1, 2022, and this figure is often used in handling of employees’ China payroll, China social security system, which is related to the following content.

1. Determine the upper and lower limits of Shanghai China society security contribution base

According to the relevant provisions of Shanghai Municipal Social Insurance Contribution, the upper and lower limits of Shanghai China social insurance payment base of employees are determined according to 300% and 60% of the average monthly salaries of employees in the city in the previous year.

The upper limit of the social security contribution base from July 1, 2022: CNY 11396 * 300% = CNY 34188.

The lower limit of social security contributions from July 1, 2022: CNY 11396 * 60% = CNY 6838.

Remarks: Considering the impact of the current round of the COVID-19 on economic and social development in China, in order to reduce the burden on companies in China, the lower limit of China social security payment base is determined by 60% of the arithmetic average of the China average salary in 2020 and 2021, and adjusted to CNY 6520 / month from July 1, 2022.

Calculation formula: [(10338 *60%)+ (11396*60%)] / 2 = CNY 6520

2. Determine the upper and lower limits of Shanghai China housing fund contribution base

According to the relevant regulations of Shanghai China Municipal Housing Provident Fund Payment, both employees and employers are required to pay housing provident fund fees in China, that is, the amount deposited in the employee’s monthly provident fund account is twice the payment base. The upper limit of the housing provident fund contribution base of employees and employers in this city is based on 300% of the average monthly salary of employees in the city in the previous year; The lower limit is based on the minimum salary standard of the previous year in the city. At the same time, from July 1, 2022, the housing provident fund will be calculated according to the contribution ratio of 7% of the employee himself or herself and the unit.

From July 1, 2022, the upper limit of provident fund contribution: CNY 11396 * 300% * 7% * 2 times = CNY 4786.

From July 1, 2022, the lower limit of provident fund contribution: CNY 2590 * 7% * 2 times = CNY 362.

Remarks: On June 29, 2022, the Shanghai China Municipal Human Resources and Social Security Bureau announced on its official micro-blog that the minimum salary standard in Shanghai in 2022 will not be adjusted and will remain CNY 2590.

3. Determine the standard of 3 times cap of severance payment in China

According to the provisions of China Labor Contract Law, if an employer pays an employee economic compensation for the termination or termination of a labor contract in accordance with the law in China, and the employee’s monthly salary is three times higher than the average monthly salary of the employee in the previous year, the economic compensation shall be three times the average monthly salary of the employee, and the maximum period of economic compensation paid to employee shall not exceed 12 years in China

From July 1, 2022, the maximum base of economic compensation is = CNY 11396 * 3 times = CNY 34188.

From July 1, 2022, the upper limit of the severance payment limit = CNY 11396 * 3 times * 12 months = CNY 410,256.

For understand more about Complete Guide on Salary in China 2022 [Average Salary in China]

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