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China is still one of the biggest hiring markets in Asia for foreign companies, especially for manufacturing, sourcing, engineering, and consumer-facing teams close to the domestic market.
It is also one of the most local payroll systems you'll deal with. China has no single national minimum wage or contribution rate. Each city sets its own minimum wage, contribution base, and rates, and resets the base every year. On top of salary, employers usually pay roughly 30% to 40% in social insurance and housing fund contributions. Enforcement has also tightened: the courts and the tax system now make it much harder to underpay contributions.
This guide covers what you'll pay, when you'll pay it, and the rules that commonly trip up companies new to China payroll. It is current as of October 2026.
How Employee Compensation in China Is Structured
| Compensation Component | Typical Practice |
|---|---|
| Base salary | Fixed, paid monthly |
| 13th-month salary | Very common, usually paid before Chinese New Year |
| Annual performance bonus | Common, usually discretionary |
| Pension insurance | Mandatory |
| Medical insurance (incl. maternity) | Mandatory |
| Unemployment insurance | Mandatory |
| Work injury insurance | Mandatory (employer only) |
| Housing provident fund (HPF) | Mandatory |
| Annual leave | Statutory minimum, based on total years of work experience |
| Transport or meal allowance | Optional, set by company policy |
| Supplementary health insurance | Common for mid-level and senior hires |
Candidates in China usually compare offers on annual cash (salary times 13 or more) and on whether social insurance and the housing fund are paid on the full salary. Supplementary health insurance, a higher housing fund rate, and extra leave are common ways to stand out.
Salary Payments in China
China's Labor Law and Labor Contract Law set the national framework, and local rules fill in the detail. Employers need to:
- Pay at least the local minimum wage. Each city or province sets its own. As of October 2026, Shanghai is RMB 2,740, Guangzhou RMB 2,680 and Shenzhen RMB 2,700 (both since 1 September 2026), and Beijing RMB 2,540. In Shanghai and Beijing, the employee's own social insurance and housing fund contributions don't count toward the minimum.
- Sign a written employment contract within one month of the start date. After that, the employee can claim double wages for each month without a contract.
- Pay in money, at least monthly, on the date set in the contract. Paying in kind is not allowed.
- Respect working hours. The standard is 8 hours a day and 40 hours a week. Overtime is capped at 36 hours a month and is paid at 150% of normal pay on working days, 200% on rest days (unless time off is given instead), and 300% on public holidays.
- Give employees a written record of their pay each payday and keep payroll records. Most cities require them to be kept for at least two years.
Since 1 July 2026, the Interim Provisions on the Protection of the Basic Rights and Interests of Over-Age Workers also apply to people who keep working after reaching the statutory retirement age. Employers must sign a written agreement with them, pay at least the minimum wage, give them rest days and public holidays, and enrol them in work injury insurance.
Salaries are almost always paid by bank transfer in RMB. Social insurance, the housing fund, and individual income tax are generally declared and paid monthly, typically by the 15th of the following month. Exact deadlines vary by city.
Mandatory Employer Contributions: Five Insurances and One Fund
Every city sets its own contribution base range and rates. The base is normally the employee's average monthly salary for the previous year, including bonuses, kept within a floor and ceiling the city sets each year. Most major cities update the base in July.
| Contribution | Purpose | Who Pays |
|---|---|---|
| Pension insurance | Retirement income | Employer and employee |
| Medical insurance | Healthcare (maternity insurance is now merged into it) | Employer and employee |
| Unemployment insurance | Income support after job loss | Employer and employee |
| Work injury insurance | Workplace injury and occupational disease | Employer only |
| Housing provident fund | Savings for housing | Employer and employee, usually 5% to 12% each |
Example: Shanghai, July 2026 to June 2027
| Item | Employer | Employee |
|---|---|---|
| Pension | 16% | 8% |
| Medical (incl. maternity) | 9% | 2% |
| Unemployment | 0.5% | 0.5% |
| Work injury | 0.2% to 1.9%, depending on industry | None |
| Monthly contribution base | RMB 7,546 to 37,731 |
In Beijing, the 2026 contribution base runs from RMB 7,270 to RMB 36,348 a month, effective from July 2026.
Two compliance points have recently become much stricter:
- You can't agree to skip contributions. Since 1 September 2025, the Supreme People's Court's Interpretation II on labor disputes has made any agreement or employee waiver to skip social insurance invalid. If an employer doesn't pay, the employee can resign and claim severance.
- The data is cross-checked. Golden Tax Phase IV links tax, social insurance, and bank data, so a contribution base far below the salary reported for tax purposes is easy to spot.
Foreign employees working in China generally also have to pay into social insurance. Citizens of countries with a social security agreement with China can sometimes be exempted from pension and unemployment insurance.
Bonuses in China
Chinese law doesn't require bonuses, but they are close to universal in practice.
- 13th-month salary. Most employers pay an extra month's salary, usually before Chinese New Year. If it's promised in the contract or the company's rules, it must be paid.
- Annual performance bonuses are tied to individual and company results. Spell out the conditions in writing, including what happens if the employee leaves before the payout date. Disputes over pro-rated bonuses for departing employees are common in labor arbitration.
- Commission and sales incentives are common for sales roles. Write down how they're calculated and when they're paid.
On the tax side, a single annual bonus can be taxed separately from monthly salary, which often results in lower tax. This treatment is available until 31 December 2027. Bonuses also count toward the following year's social insurance contribution base.
Mandatory Employee Benefits in China
Annual Leave
Employees who have worked continuously for more than 12 months are entitled to paid annual leave. The amount depends on their total working years with any employer, not just their time with you:
| Total Working Experience | Minimum Annual Leave |
|---|---|
| 1 to 10 years | 5 days |
| 10 to 20 years | 10 days |
| 20 years or more | 15 days |
If an employee doesn't take statutory leave and the employer hasn't arranged it, the employer must pay 300% of the daily wage for each untaken day. In practice, that means two extra days' pay on top of normal salary.
Sick Leave
Employees who are ill get a protected medical treatment period of 3 to 24 months, depending on their total working years and time with the current employer. Sick pay rates are set locally, but they can't fall below 80% of the local minimum wage.
Maternity and Paternity Leave
National law gives 98 days of maternity leave. Every province adds to this, so total maternity leave is usually 128 to 188 days. In Beijing and Shanghai it's 158 days. Maternity pay generally comes from the medical insurance fund, based on the employer's average contribution wage.
There's no national paternity leave. Provinces set it themselves, usually between 7 and 30 days. Shanghai gives 10 days and Beijing 15, for example. Most provinces also give parents several days of childcare leave each year until the child turns 3.
Public Holidays
Since 2025, China has 13 days of paid public holidays:
- New Year's Day (1 day)
- Spring Festival (4 days, including Chinese New Year's Eve)
- Qingming Festival (1 day)
- Labor Day (2 days)
- Dragon Boat Festival (1 day)
- Mid-Autumn Festival (1 day)
- National Day (3 days)
The government also publishes an official holiday calendar each year. It often swaps weekends for weekdays to create longer breaks, so a Saturday or Sunday can become a normal working day. Build these swaps into your payroll and attendance calendar.
Retirement Age Reform
Since 1 January 2025, China has been gradually raising its statutory retirement ages over 15 years:
- Men: from 60 to 63
- Women in managerial or professional roles: from 55 to 58
- Women in other roles: from 50 to 55
From 2030, the minimum number of years of pension contributions needed to receive a pension will also rise from 15 to 20, by six months each year. For employers, this means more employees will work for longer before their contracts end at retirement.
Payroll Taxes and Employee Deductions
| Payroll Item | What It Is |
|---|---|
| Individual Income Tax (IIT) | Withheld monthly on a cumulative basis, at progressive rates from 3% to 45% |
| Social insurance | Employee share of pension, medical, and unemployment insurance |
| Housing provident fund | Employee share, matching the employer's rate |
IIT is calculated on annual taxable income, after a basic deduction of RMB 60,000 a year (RMB 5,000 a month) and special deductions for things like children's education, childcare, housing, and elderly care. The 3% rate applies to the first RMB 36,000 of taxable income, and the 45% rate to taxable income above RMB 960,000. Employees then settle any balance in an annual reconciliation between March and June.
Late payment of social insurance carries a surcharge of 0.05% a day, and tax authorities can also add surcharges and penalties for late or incorrect IIT withholding.
Common Payroll Mistakes Foreign Employers Make
- Using the minimum base instead of actual salary. Many companies have paid contributions on the city's minimum base to save costs. Under the 2025 court interpretation and Golden Tax IV checks, this has become a real risk of back payments, surcharges, and severance claims.
- Missing the annual base reset. Most cities reset contribution bases in July. If you don't update them, you underpay contributions and build up daily surcharges.
- Applying one city's rules to another. Minimum wages, contribution rates, maternity leave, and paternity leave all differ between cities and provinces.
- Ignoring official holiday swaps. Swapped working weekends affect attendance, overtime calculations, and payroll.
- Not having a valid employer. A foreign company with no entity in China can't legally employ staff there directly. Paying people as offshore "contractors" when they work like employees carries labor, tax, and social insurance risks.
How Slasify Simplifies Payroll in China
Running payroll in several countries means following several sets of employment law, tax rules, contribution schemes, and currencies. Slasify brings international hiring onto one platform.
With Slasify, you can:
- Hire employees in China without a local entity through our Employer of Record (EOR) service.
- Run compliant global payroll in China and more than 150 other countries.
- Pay in 130+ currencies from one place.
- Let us handle city-specific social insurance, housing fund, and IIT filings, including the yearly base resets.
- Manage onboarding, contracts, and the full employee lifecycle in one system.
Ready to Build Your Team in China?
Whether it's a sourcing manager in Shenzhen or a sales team in Shanghai, Slasify takes care of the employment and payroll compliance so you can start hiring quickly. Book a free consultation to see how our Employer of Record and global payroll solutions work in China.
FAQs
1. Can a foreign company hire employees in China without a local entity? Not directly. Without an entity, a foreign company needs a local employer to hire staff on its behalf, such as an Employer of Record. The EOR employs the staff, runs payroll and social insurance, and you manage their day-to-day work.
2. What is the minimum wage in China? It depends on the city. As of October 2026, it's RMB 2,740 a month in Shanghai, RMB 2,700 in Shenzhen, RMB 2,680 in Guangzhou, and RMB 2,540 in Beijing.
3. How much does it cost to employ someone in China on top of salary? Usually around 30% to 40% of salary for social insurance and the housing fund, depending on the city, the employer's industry, and the housing fund rate.
4. Is the 13th-month salary mandatory in China? Not by law, but it's standard practice. It becomes mandatory if it's in the employment contract or company policy.
5. Can an employee agree to give up social insurance? No. Since September 2025, such agreements are invalid, and an employee can resign and claim severance if contributions aren't paid.
6. How many public holidays are there in China? 13 days a year since 2025, plus official weekend swaps published each year.