Payroll & Employment Guide: China

Employee Benefits

Mandatory Benefits (“Five Insurances and One Housing Fund”)

• Pension insurance
• Medical insurance
• Work-related injury insurance
• Unemployment insurance
• Maternity insurance
• Housing provident fund

Rates and bases vary by city and are adjusted periodically.

Many employers also provide:

• Commercial health insurance
• Meal subsidies
• Transport and communication allowances
• Festival bonuses

Leave Policies

Annual Leave:

7 days minimum, increasing up to 14 days based on years of service.

Sick Leave:

Paid sick leave accrues monthly; employees receive eligible sick pay based on statutory rules.

Parental Leave:

• Maternity leave: 14 weeks
• Paternity leave: 5 days

Healthcare

• No mandatory employer-paid health insurance
• Public healthcare system available to residents
• Many employers provide private medical insurance as a competitive benefit

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Taxes in China

China uses a progressive individual income tax (IIT) with monthly withholding.

• Income is taxed after standard deduction and “three insurances and one housing fund” from the employee’s share.
• There are additional itemized deductions (e.g., for children’s education, housing, parental support).

Expatriates have had changing tax treatment in recent years; allowances and preferential rules for fringe benefits are subject to policy updates.

Payroll in China

• Payroll Frequency: Typically monthly
• Payroll Currency: CNY

Employer responsibilities:

• Calculate gross-to-net salary
• Withhold IIT and employee social insurance & housing fund
• Pay employer contributions to social insurance and housing fund
• File monthly IIT and social insurance declarations
• Maintain payroll and HR records in compliance with local regulations

Because contributions and policies are local, each city must be configured separately.

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Legal Regulations

Key rules:

• Labour Law and Labour Contract Law
• Social Insurance Law
• Local implementing rules and regulations
• Company policies (must be lawfully implemented and communicated)

Total Employment Cost:

• Employer contributions for social insurance and housing fund can add 20–40%+ on top of gross salary, depending on the city and policy.

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Work Permits & Visas for China

Foreign employees generally need:

• A work permit (classified by category, e.g., A/B/C)
• A Z visa to enter
• A residence permit for work

The process includes:

• Employer qualification
• Documentation of education and experience
• Health checks and background verification

Timelines depend on city and case complexity.

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Employer of Record (EOR) in China

Employer of Record (EOR) services in China allow companies to hire employees quickly and compliantly without registering a local Chinese entity, which can otherwise be complex, expensive, and highly regulated. The EOR becomes the legal employer and manages all statutory employment obligations across China’s city-specific labour and payroll systems.

EOR services in China:

• Allow you to hire staff without establishing a local entity, enabling fast and cost-efficient market entry
• Act as the legal employer in China, ensuring fully compliant employment relationships
• Run city-specific, fully compliant payroll, aligned with local tax rules and municipal regulations
• Manage social insurance and housing fund contributions, which vary by city and must meet local thresholds
• Help navigate local HR policies, labour laws, mandatory benefits, and regional employment practices
• Handle onboarding, documentation, and ongoing HR administration

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PEO Services in China

PEO services in China are ideal for companies that already have a local Chinese entity but need support managing HR operations, payroll, benefits, and compliance across China’s complex, city-specific regulatory environment. A PEO acts as an extension of your in-country HR team, reducing administrative workload and ensuring adherence to national and local labour rules.

A PEO in China assists with:

• HR administration, including onboarding, employee records, employment documentation, and day-to-day HR support
• City-specific payroll processing, aligned with local tax rules, contribution rates, and reporting requirements
• Benefits management, including mandatory social insurance and housing fund (five insurances + housing fund) administration
• Compliance with national and municipal labour laws, ensuring employment contracts, working hours, leave entitlements, and termination procedures follow local regulations

• Regulatory filings and documentation, including tax submissions, social security reporting, and contract updates
• Employee lifecycle support, from onboarding to offboarding

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Payroll Calculator

A China payroll calculator (city-specific) helps you:

• Estimate net salary and IIT
• Model employer contributions
• Understand total cost per hire in each city

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