Qualified employees are entitled to take statutory annual leaves in China. An employee who has worked continuously for twelve months or more is entitled to paid annual leave. The amount of statutory annual leaves an employee is entitled to is usually determined by their working experience and tenure. For foreign employees working in China, they are also entitled to take the annual leave.

How many days of annual leave employee can take in China?

Employees who have hired in China for a period of at least twelve months are eligible for paid yearly leave. The company is unable to provide days that are less than those listed below:

Annual Leaves in China

The number of days of annual leave required will be calculated based on each employee’s cumulative working years, which will include hours worked for the same or different employers as well as working hours defined as working time by law, administrative rule, or State Council provision.

Furthermore, paid annual leave does not include statutory rest days, public holidays in China, or other additional holidays in the country (e.g., maternity leave and annual visits to family).

China Annual Leaves Arrangement

In view of the current company production and business situation, employer can organize and arrange the annual leave of all of their employees, however, employer shall check each employee to see if they are agree with it or not. When employer is unable to provide annual leave to an employee or decides to postpone annual leave to the next year due to business needs, employer must obtain the consent with each employee.

Within a calendar year, annual leave days can be handled in a single or segmented manner; however, annual leave days cannot normally be carried over to the next year. Employers may schedule annual leave periods for the following calendar year if business needs need it.

Employee Treatment during Annual Leaves Periods

During annual leave, employees salary are entitled to be equivalent to that of normal working days.

If, despite the employee’s wishes, the employer is unable to provide complete annual leave for an employee owing to business needs, employer must compensate the employee at a rate of 300% of the normal daily salary for the days of untaken annual leaves. The standard salary is already included in this payment.

An employer is required to provide annual leave to its employees; however, if an employee gives written notice that he or she does not intend or willing to take annual leave, the company is permitted to pay the employee as if it were a regular working day.

Employees’ monthly salary divided by the monthly paid days equals the daily wage for calculating untaken yearly leave (21.75).

The previous monthly salary was the average monthly compensation for the previous twelve months, excluding overtime pay. If an employee worked for the employer for less than 12 months, the average monthly compensation is calculated based on the actual working months.

When an employer terminates or lets an employment contract expire without making full payment for the annual leave days, the employer must calculate the annual leave days and pay for the untaken annual leave days based on the number of working days the employee has already worked for the employer in the current year. In the event that this value is incorrect, it will be rounded down.

The formula for such calculation is: (number of days that the employee has worked for the employer in the current year ÷ 365 days) x the number of days of annual leave the employee is entitled to in the current year – the days of annual leave which employee has already taken in this year.

If the number of days of annual leave that the employer has set aside for the employee exceeds the number of days of annual leave that the employee is entitled to base on the foregoing calculation, the employer may not take back the additional days of annual leave.

Conditions Employees with No Annual Leaves in China

In China, there are some certain situations mentioned below that employees are not entitled to annual leave of that year:

  • According to the local regulation in China, the employee is entitled to summer and winter vacations, and the number of vacation days is greater than the number of annual leave days as indicated above.
  • The employee has taken at least 20 days of personal leave, and the employer does not reduce his or her salary in accordance with corporate policies;
  • The employee has worked for more than 1 year but less than 10 years and has taken more than 2 months of sick leave in total.;
  • The employee has worked for at least 10 years but no more than 20 years, and has taken more than 3 months of sick leave in total.;
  • The individual has worked for at least 20 years and has taken sick leave for a total of more than 4 months.

In the year following the annual leave of that year, if an employee falls under any of the situations listed in Item 2, Item 3, Item 4, and Item 5 of Article 4 of this Regulation, he or she will not be entitled to the next year’s annual leave.

When an employee is hired under labor dispatch/PEO solution, the dispatch agency pays an employee for non-working time within the employment contract for more days than the annual leave he or she is entitled to in that year, the employee is not entitled to that year’s yearly leave. If the number of days is less than the number of annual leave days he is entitled to, the labor dispatch agency or the employer must provide him the remaining annual leave days according to the China labor dispatch employment regulation.

To minimize future labor disputes, employers are recommended to include these regulations in the employment contract or employee handbook.

For foreign companies start doing business in China, in addition to employee’s annual leave, there are a lot other important issues to understand and learn to ensure the compliance operation in China. Here are the recommended top 9 websites in China to start a business in China.

Frequently asked questions for payroll and hiring employees in China.

No, you do not need.

If you don’t have a company in China, you can hire employees through PEO service through the employment agency in China.

a) Hire employee through the PEO/employment service.

If you don’t have a legal entity in China, this is the only compliance way to have employee working for you in China.

b) Hire employee under WFOE.

If you already set up a WFOE in China, you can sign the labor contract with employees directly. You can either choose to handle their payroll land benefits yourself, or you can choose to outsource.

c) Hire employee under representative office (Ro)

Representative office in China is not allowed to hire employees directly. The only compliance way is hire employees through labor dispatch agency under PEO service

PEO refers to a professional employment organization, in China it’s also called employee outsourcing, labor dispatch. Foreign companies can hire staff in China through a PEO agency without setting up a legal entity in China.

Severance payment in China is based on the number of years employee has worked for the company.

Each full year employee worked for your company, one month salary shall be paid as severance payment.

For the working periods that are less than 6 months, half month salary shall be paid.

If employee’s monthly salary is higher than 3 times local average monthly salary, each year of the severance payment compensated shall be 3 times local average monthly salary.

If employees are in the probationary period, both employee and employer shall give 3 days as notice period for termination.

After probationary period, both employee and employer shall give 3o days as notice period for termination.

If employer need immediate termination, employer shall compensate one month salary.

No, You shall have a company registered in China to sign a written labor contract with each of your employee.

In practice, employer will sign a fixed term contract with their employee. However, when it goes to the third time renewal of the contract, then the contract becomes to a permanent contact.

Sign a two years or three years contract is more common in China.

Labor contract in China shall be at least in Chinese, and including but not limited to:

 Company details including full name, address and legal representative or person in charge.

 Employee details including full name, ID number, address.

 Term of the employment contract; (E.g., 2 years, 3 years…).

 Position (job title), location(city), working hours, holidays, leaves.

 Package: gross salary, bonus, commission, social insurance, other benefits.

 Occupational safety, and occupational hazard prevention.

 Other terms which laws and regulations required.

You need to set up a company in China and then set up a separate Social Insurance and Housing Fund Account. After the company has been set up, you can contribute the benefits to the employees who have signed a contract with you.

The most popular job portals in China is: Zhaopin.com, Liepin.com, zhipin.com. However, these three job portals only accept a registered company in China.

If you don’t have a company in China, you can search candidates through Linkedin.com or engage a headhunting or recruitment firm to help you search the candidates.

In China, employees’ individual income tax (personal tax) shall be declared monthly by the employer, and yearly by employee themselves.

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