When foreign companies begin hiring in China, salary in China is indeed a hot topic. To ensure that employees’ payroll in China are compliant, foreign employers must have a basic understanding of the China salary, average salary in China, minimum wage in China and how employees’ salaries are calculated in China. Meanwhile, it is critical to understand the market rate for various positions in order to make an appropriate offer to their candidates in China. Top Tips For Hiring Employees in China [2022 Complete Hiring Practices]
Contents:
Minimum Salary in China
Average Salary in China
Understand China Payroll Structure and Calculate your Employment Cost in China
2022 Salary Index by Industries & Section in China
Minimum Salary in China
It is very important for foreign investors to know that in China there is a minimum salary in China policy which are changed and announced by local government each year. The minimum salary in China is differ from city to city. Usually Tier 1 city like Shanghai, Beijing and Shenzhen is higher than the small cities in China. Employer in China cannot offer the salary lower to the minimum salary to employee in China.
The minimum salary in China refers to the lowest labor remuneration that employer should pay lawfully to employees during legal working hours. The standard of minimum pay in China is divided into two types: monthly minimum wage and hourly minimum wage. Typically, the standard of monthly minimum wage applies to full-time employees, whereas the standard of hour minimum wage applies part-time employees. Overtime pay, allowances for unusual working conditions, and statutory perks are often not included in the minimum China salary.
JSC has concluded the latest 2022 China minimum salary in China data for your reference.
Average Salary in China
Average salary in China is one of the very important data that employers shall know and aware when hiring in Chinese. Average salary in China data is declared by each company for all their employees hired and collected, announced by local government of each city’s average salary yearly.
The average salary in China refers to the average wage of income obtained by dividing the total wage of all workers in a given area for a given year by the number of workers employed during that time period. Average salary = (12 months’ salary + bonus + allowance + overtime pay)/12
The average salary in China is also used to adjust each employees’ social security contribution base yearly and determining the severance payment standard. Check more on the average salary in China.
Below is the latest 2021 Average Salary in China
Understand China Payroll Structure and Calculate your Employment Cost in China
Understanding the payroll system in China and how to calculate China salary is also critical for international companies doing business in China to maintain employment compliance in China. If you have no legal entity in China to handle your employee’s payroll, engage a China PEO vendor or employment outsourcing agency in China to ensure the compliance.
The following are the most significant aspects of Chinese payroll and China salary that you should be aware of. Such information are recommended to mention into the China labor contract. Check with JSC for China labor contract template.
1. What is the payroll cycle in China?
China salary are paid once a month for full-time employees. It is mandatory for part-time employees to receive their pay every 15 days.
2. What is employee monthly gross salary and net salary?
Employee monthly gross salary in China is the salary amount before taxes; this figure is typically the same as stated in the labor contract. Employee net salary in China is the amount received after taxes, which can also be considered pocket money, and is deposited into the employee’s bank account. Employee monthly gross salary minus monthly individual income tax and employee’s social security contribution equals employee monthly net salary.
3. Mandatory benefits: 5 Social Insurance and 1 Housing Fund
All full-time employees in China are required to register with China social security system, which is known in China as five social insurance and one housing fund. Both employees and employers are required to contribute to mandatory social security on a monthly basis. The contribution base percentage varies by city in China and adjust yearly.
5 Social insurance and 1 housing fund:
Pension
Unemployment insurance
Medical insurance
Work-related injury insurance
Maternity
Housing fund
Below is one example for social security contribution rate in Shanghai.
4. China Individual Income tax (China IIT)
IIT in China is calculated and declared on the monthly basis. It is employer’s liability to calculate their employee’s income tax properly in China and contribute on behalf of employees monthly. Such amount shall be deducted from employees’ monthly gross salary. Employees are responsible for completing their annual tax returns on a yearly basis.
Below is the latest China individual income tax rate table:
If you want to understand the detailed information regarding salary calculation in China, read the article. How to Calculate Employee Salary in China? [China Payroll Guide]
Salary Index by Industries & Section in China
Salaries in China are differed from industry, position, cities and usually adjusted on the yearly basis. JSC prepare a comprehensive China salary guide in 2022 by different industry and section in China.
Salary Index for Digital Section in China
Salary Index for Education Section in China
Salary Index for Engineering and Manufacturing Section in China
Salary Index for Finance and Accounting Section in China
Salary Index for Human Resource Section in China
Salary Index for Marketing Section in China
Salary Index for Purchasing Section in China
Salary Index for Real Estate Section in China
Salary Index for Retailing Section in China
Salary Index for Sales Section in China
Salary Index for Office & Admin Section in China
Salary Index for Technology Section in China
JSC is a professional service company that assists foreign-invested companies in doing businesses in China.
Our core services China PEO and employment solution enables foreign investors to hire employees in China without setting up any company which allow them to expand into China market in days, not months. Our in-country local experts are also experienced in assisting businesses to compliantly establish their own legal entity in China.
Please contact us if you require any other information on China PEO.
Info@jscgroups.com
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 do not need.
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.
