Hiring Guide
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13
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Everything You Need to Know About Employing in China

This age of digitization and automation has given rise to telecommuting and distributed teams. With advantages such as savings on office costs, more work flexibility, and access to global talent touted as some of the benefits of remote work, it’s easy to see why many employers have shifted from a traditional hiring model to hiring talent from across the globe. One of the countries sought after by overseas employers is China. 

In this article we’ll be covering everything you need to know about employing talent from China, including the hiring process, local labor law requirements, and more. Check out the FAQs below:

1. Why do people hire remote talent from China?

There’s no doubt about it: China has one of the fastest growing economies in the world. In 2019 China’s gross domestic product was valued at $14.2 trillion, placing them right behind the U.S. Considered as one of the world’s financial powerhouses, China is also one of top exporters and importers globally. Due to this, China offers a plethora of opportunities for global companies looking to get into the enormous consumer market of the country.

Besides industry insights and a quickly-growing economy, China is also the country with the largest population. Out of the 1.4 billion people in China, approximately 775 million people make up its workforce. This presents a multitude of opportunities for foreign countries and employers to tap into this seemingly never ending talent pool.

2. Where do I look for remote talent in China?

When looking for the best places in China to hire remote talent, you typically want to hire talent from the following regions:

  • Shanghai
  • Beijing
  • Guangzhou
  • Shenzhen

These regions have a higher economic activity compared to the rest of China, and have larger business and tech hubs with more available English-speaking talent. China also has a national exam, called the gao kao that has approximately 10 million takers annually. The gao kao determines the examinees’ placement in different universities. Getting graduates from the following top universities in the country is also a plus:

  • Tsinghua University
  • Peking University
  • Fudan University
  • University of Science and Technology of China
  • Zhejiang University

Another way to hire talent is to post listings on popular job sites and portals or hire through a trusted recruitment agency. In China, the most popular jobs portals and recruitment agencies are:

3. What is the average salary of a Chinese remote employee?

While the average monthly minimum wage in China ranges from CNY 2,480 (USD 388) to CNY 1,120 (USD 175), depending on the employee’s location, the average salary will depend on the nature of the job.

Here’s an approximation of the average monthly salary for six different positions:

Job Title Average Monthly Salary Range (CNY) Average Monthly Salary Range (USD)
Accounting Manager 25,000 – 33,333 3,750 – 5,000
Software Architect 41,667 – 108,333 6,250 – 16,250
Data Statistician 25,000 – 41,667 3,750 – 6,250
UI Designer 16,667 – 33,333 2,500 – 5,000
Product Manager 41,667 – 58,333 6,250 – 8,750
Business Development Manager 33,333 – 75,000 5,000 – 11,250

4. What are the computations for income tax in China?

Annual Net Taxable Income (THB) Tax Rate
0 – 3,000 3%
3,000 – 12,000 10%
12,001 – 25,000 20%
25,001 – 35,000 25%
35,001 – 55,000 30%
55,001 – 80,000 million 35%
More than 80,000 45%

China follows a progressive income tax model. For more information about income tax, you can visit this website here.

An article in the China Briefing states, “The demand for freelance services in China will be supported by both the private and corporate sectors of the economy. Key areas of demand in the long term will be areas, such as design and multimedia, IT, content and translation, finance, management, and HR… This will give rise to a new class of Chinese citizens appearing – the self-employed.”

While freelancing is quickly becoming a growing career trend in China, one risk of hiring freelancers or independent contractors is their compliance with local tax laws. Without a local registered company withholding income tax for them, freelancers may fail or forget to pay their income tax. (See the other risks of hiring an independent contractor here.)

You can help your Chinese employee comply with local taxation laws by using Professional Employer Organizations (PEOs) like Multiplier who will take care of payroll and taxes for you.

5. What are the working hours in China?

Chinese labor laws outline working hours in China to a standard 40 hours per week. This is usually broken down to 8 hours a day, working 5 days a week. A Chinese employee is also entitled to at least one rest day a week.

Take note that overtime work is only possible after consultation with any applicable trade union unless the situation is an emergency. Overtime is limited to 1 hour per day. However, in special circumstances, this can be extended up to 3 hours, but is limited to a total of 36 hours per month. Employees under flexible working hours are generally not entitled to overtime payment. However, if employers do decide to ask for overtime, this still requires approval from the labor bureau.

Following consultation, overtime pay can be calculated as follows:

Period of Overtime Normal Hourly Salary Paid (%)
Normal weekdays 150%
Weekends 200%
Public holidays 300%

6. What benefits am I required by law to provide an Chinese employee?

13th month pay: Unlike countries such as the Philippines or Indonesia, a 13th month pay cycle is not mandatory in China. However, it is highly encouraged, with most employees expecting to receive this bonus before the Chinese New Year holiday (around the end of January or early February).

Annual Leaves: The number of paid annual leaves (exclusive of public holidays), a Chinese employee has, is dependent on the duration of employment.

Years of Employment Number of Leaves
Less than 1 year 0
1-10 years 5
10-20 10
More than 20 15

Sick Leaves: Like annual leaves, sick leaves are also dependent on the duration of employment. Should an employee take a sick leave, the employee must usually provide a medical certificate to support their leave.

Years of Employment Sick Leave Pay (%)
For 6 months sick leave
Less than 2 years 60%
2-4 years 70%
4-6 years 80%
6-8 years 90%
More than 8 years 100%
Over 6 months of sick leave
Less than 1 year 40%
1-3 years 50%
More than 3 years 60%

Family Leaves: 

Maternity Leave: Every female employee is entitled to 98 days of maternity leave, with an additional 15 days leave in the case of difficult labor or multiple births. Some cities also offer additional maternity leave for women who give birth over the age of 23.

Maternity leave is paid by the Social Security Bureau and is based on the average monthly salary over the 12 month period before the birth. The Social Security Bureau will either pay this rate or 3 times the minimum wage, whichever is higher. Take note that in some areas such as Beijing and Shanghai, the employer usually supplements maternity pay with additional pay.

Paternity Leave: A male employee whose wife has given birth is entitled to take 10 days of paid leave. In some cities, additional paternity leave is given.

Other Leaves: Chinese employees are also entitled to other leaves at the discretion of the employee and employer, which include the following:

Type of Leave Number of Paid Leaves
Marriage leave Varies between cities, ranges from 3-10 days
Bereavement leave Varies between cities, ranges from 1-3 days

Insurance and social security: Chinese law requires both the employee and employer to make contributions to social welfare, which include pension, unemployment, and health insurance funds. Social insurance obligations vary considerably depending on the city in which the contributions are made, and generally have a limit. Here is the breakdown in both Beijing and Shanghai:

Beijing

Type of Tax Employer Contribution (%) Employee Contribution (%)
Pension 16% (capped at CNY 26,541) 8%
Housing fund 12% (capped at CNY 26,541) 12%
Work-related injury 0.16-1.52% (capped at CNY 26,541) 0%
Maternity 0.80% (capped at CNY 29,732) 0%
Unemployment 0.80% (capped at CNY 26,541) 0.20%
Medical 9.80% (capped at CNY 29,732) 2%

Shanghai

Type of Tax Employer Contribution (%) Employee Contribution (%)
Pension 16% (capped at CNY 28,017) 8%
Housing fund 7% (capped at CNY 28,017) 7%
Work-related injury 0.16-1.52% (capped at CNY 28,017) 0%
Maternity 1% (capped at CNY 28,017) 0%
Unemployment 0.50% (capped at CNY 28,017) 0.50%
Medical 9.50% (capped at CNY 28,017) 2%

7. What other benefits or allowances can Chinese remote employees be given?

While not mandated by law, it is quite common to provide non-taxable allowances for your remote employees, and it's expected by the employees. These can include stipends for business and equipment expenses, internet and telecom allowances, and even transportation allowance – if your remote employee works from a co-working space. If you work with a PEO platform like Multiplier, they can arrange for other benefits and allowances for your Chinese employees for you.

To gain a competitive advantage, some Chinese companies will also provide their own supplemental health coverage for their employees. Alternatively, employers can also provide an insurance allowance or stipend for their employees.

8. What are the regulations on working during the holidays in China?

Currently, China has a total of 7-11 public paid holidays (depending on the region). It is also common practice for the local government to combine national holidays with closed weekends. Take note that if a holiday falls on a weekend, most companies will provide one day off from the regular work week.

The two main holiday periods in China are during Chinese New Year (typically late January or early February) and Chinese National Day (typically early October). Usually companies will provide their employees with an additional one to two days of leave to allow their employees to visit family.

If you require your Chinese employee to work on a public holiday, refer to the table under FAQ #5 to calculate payment and overtime payment. For an updated list of Chinese holidays, click here.

9. How do I hire a remote employee in China?

If your business is registered in another country, the easiest way to hire a Chinese remote talent would be through a Professional Employer Organization. PEO platforms like Multiplier make it easy for you to hire remote talent, comply with local labor laws, and pay your employees in time. Instead of having to jump through the legal and financial hoops of setting up a business entity in another country, Multiplier will act as your representative and abide by all the necessary laws for you.

If you want more details on how to hire and set up your remote team, you can check out our article here.

10. Are probation periods necessary?

While a probationary period is not mandatory in China, employers can choose to set a probationary period in the employment contract. The duration of the probation period will depend on the length of the contract.

Contract Period Probationary Period (Maximum)
Less than 3 months Probation is not permitted
3 months to 1 year 1 month
1-3 years 2 months
3 or more years 6 months

11. How do I pay an Chinese remote employee?

China does not have a strict payment cycle, and employers can choose to pay their employees either bi-monthly or monthly on an agreed upon payday. Take note that the payment cycle should be agreed upon by both the employer and the employee beforehand.

The easiest way to pay your Chinese remote talent would be through PEO platforms like Multiplier. With a PEO platform, you won’t have to worry about payroll or compliance with local taxes and labor laws as they will be taking care of everything for you.

12. Can Chinese remote employees be paid in foreign currencies?

As a general rule, salaries paid to Chinese employees must be paid in Chinese Yuan

(CNY). Even transactions, labor contracts, and agreements should be referenced with Chinese Yuan and written in Chinese. This can be quite troublesome for foreign nationals looking to hire Chinese remote employees, which is why using PEO platforms like Multiplier can be extremely advantageous. Multiplier can help set up a contract, enable regular payment cycles in the local currency, and ensure labor law and taxation compliance for you.

By paying your Chinese remote employees in their local currency, you’ll be able to avoid fluctuations in conversion rates, which will help make tax calculations and contributions to benefits such as healthcare and social security easier.

13. How do I terminate an Chinese remote employee?

While not particularly common due to its complexities and arduous processes, it is possible to unilaterally terminate a Chinese remote employee for the following reasons:

  • Fails to satisfy the specified recruitment requirements
  • Has substantially violated the labor discipline or internal rules of the employer
  • Has committed an action of serious dereliction of duty
  • Has additionally established an employment relationship with another employer
  • Has invalidated the employment contract
  • Is subject to criminal liability

In most other cases, bilateral termination (termination by mutual agreement) or the expiration of the employment contract is applied. The notice period for termination is 30 days for both the employee and employer. If the employee is on probation, a 3 days’ notice is usually given.

Severance pay depends on whether it is termination with cause or without cause. If with cause, no severance pay is required, otherwise severance pay is required. As per the Employment Contract Law, an employee is entitled to severance pay for any of the following reasons:

  • The employee resigns as a result of the employer's infringement of the employee's labor rights.
  • The employment contract expires (unless the employer proposes to renew the fixed-term employment contract by maintaining or raising the conditions provided in it, and the employee refuses the renewal).
  • The dismissal is agreed to between the employer and employee, and the employer initiates the dismissal.
  • The employer unilaterally terminates the employment (unless the termination is for one of the grounds stated above).
  • The employment is terminated on the employer's bankruptcy.
  • The employment is terminated because the employer's business licence has been revoked, or the employer has been ordered to close down/deregister or has opted for voluntary liquidation.

If severance pay is required, it is equivalent to one month’s salary for every year of service. If the employer does not comply with the 30-day advance notice period, the employer may have to pay an extra month’s salary beyond the severance pay requirement. This is capped at three times the average local wage and cannot exceed 12 months.

Learn more about how you can easily hire remote talent from China with the help of Multiplier. You can visit our website or contact us today.

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