Hire in China

60 for male employees, 55 for female white-collar workers, and 50 for female blue-collar workers.

According to Chinese law, the prescribed probation periods are as follows:

• For employment terms exceeding three months but less than one year: a probation period of no more than one month.
• For employment terms of one year or more but less than three years: the probation period must not exceed two months.
• For employment terms of three years or more or for an open-term employment arrangement: the probation period cannot exceed six months.

Each employee is entitled to only one probation period with the same employer.

As it is typically more challenging to terminate an employee after the probation period, it is commonly advised (though not always) to establish an initial term of three years for a new employee. This arrangement enables the employer to implement a six-month probation period, the maximum duration permitted under Chinese law.

Employers are obligated to provide severance payments, with the amount corresponding to one month’s salary for each year of service. If the service period is more than six months but less than one year, the calculation is based on one year. For service durations of less than six months, the mandated severance payment is half a month’s salary, unless the employee fails to meet probation conditions, violates company regulations, or engages in a civil offense. In such cases, the employer must furnish clear evidence as proof.

Alternatively, if the employment termination is due to mutual consent or if the employer provides a 30-day advance written notice to the employee, an additional month’s salary can be paid beyond the severance pay in lieu of observing the 30-day notice period.

Additional overtime pay in China is mandated as follows:

• Overtime on weekdays: 150% of the hourly rate
• Overtime on weekends or days off: 200% of the hourly rate
• Overtime on public holidays: 300% of the hourly rate

China also regulates the allowable number of overtime hours. Overtime is restricted to a maximum of three hours per regular workday and not exceeding 36 hours per month.

If an employer seeks to implement different or extended working hours, they must apply for a specific working time system, which requires approval from the local government labor office.

According to the PRC Labor Law, every employee, irrespective of their position in the company, is technically eligible for overtime pay.

Due to the perceived complexity of labor laws in China, some employers resort to controversial methods to navigate the written terms of the law. These workarounds on overtime pay have some basis, as the law was initially designed with average production line employees in mind. Consequently, there is a degree of flexibility in how the law is modified through common practices accepted by the Chinese government and local labor councils.

Modifications are deemed acceptable as long as the authorities provide their approval. However, these workarounds carry some assumed risk, as employees who feel treated non-compliantly can file complaints against their employer. In case the Chinese government or local labor council disagrees with the treatment of an employee, the employer may face challenges in China’s pro-employee environment. Establishing clear rules and obtaining employees’ consent through signature is generally recommended to mitigate risks.

The notice periods required are outlined in the contract, typically set at a minimum of 30 days.

In various regions of China, it is a customary practice to provide a 13th month of salary, typically disbursed before the Chinese New Year. While this bonus month is not obligatory, the criteria for earning it should be explicitly outlined in written agreements. In the case of multinational corporations (MNCs), a discretionary annual bonus is more prevalent. Some MNCs may incorporate both the 13th month pay and a discretionary annual bonus. If the 13th month pay is explicitly stated in the employment contract, the employer is obligated to fulfill this payment.

Several foreign companies operating in China have chosen to include this 13th month after budgeting based on a 12-month system. If an employer intends to implement a bonus system, it is crucial to clearly delineate its terms within employment contracts. For instance, rather than offering a higher salary without an annual bonus, the employer might opt for a lower salary coupled with an annual bonus, typically paid early in the subsequent year. This approach incurs no additional cost for the employee, yet allows them to defer individual income tax payments.

Employers are responsible for covering statutory benefit contributions, which involves several steps:

• Establish a company.
• Open both a social contribution account and a housing fund account.
• Input employee information into the company account upon hiring.
• Generate monthly billing for social security and housing fund.
• Facilitate payment from the employer’s bank account to the respective social contribution and housing fund accounts.

The contributions for the five social insurances (pension, medical, unemployment, maternity, and injury) are consolidated into one bill, while the housing fund contribution constitutes a separate bill. Both require distinct payments.

For local staff, after the employment contract is signed, the employer must promptly file the employee’s information into the designated company accounts for social contributions and the housing fund. This process typically takes one to two working days. If the employee lacks individual social contribution and housing fund accounts, the employer will need about a week to apply, open the employee’s account, and subsequently file their information.

Mandatory government health insurance is a requisite, but employers also have the option to acquire a supplementary commercial health insurance program for their employees.

• China enforces a mandatory system for the proportional employment of disabled individuals.
• Governed by the PRC Disabled Persons Security Law and the Rules of Employment of Disabled Persons, companies are required to employ disabled individuals, constituting no less than 1.5% of their overall workforce.
• These funds are allocated for vocational training and facilitating job placement for disabled individuals.
• In instances where a company falls short of meeting the stipulated quota for hiring disabled persons, it is obligated to contribute to the Disabled Persons’ Employment Security Fund.

Rates by City:

• A business with a workforce not exceeding 30 employees may be exempt from contributing to the Disabled Persons’ Employment Security Fund during the initial three years after its establishment.
• The mandatory fund for employing disabled individuals must be remitted on a monthly basis and can be processed concurrently with the monthly or annual payments of social insurance contributions for the employees.

Employees access their electronic payslips through a designated web or app platform by logging in with their registered cell phone numbers.

The use of timesheets is optional and is at the discretion of the company.

• Public holidays in China are intricate, featuring stringent regulations compared to other developed nations. When a holiday falls on a weekend, it is observed on the following working days after the weekend. The Chinese New Year and National Day holidays span three days.
• The week-long breaks for May Day (Labor Day) and National Day were introduced in 2000 to stimulate holiday spending. These extended holidays, known as the “Golden Weeks” (黄金周), lasting seven or eight days (if Mid-Autumn Festival is close to National Day), have become peak seasons for travel and tourism. In 2008, the Labor Day holiday was shortened to three days to reduce travel rushes to twice a year. Three traditional Chinese holidays were added in its place.
• Typically, if there is a three-day or four-day holiday (if Mid-Autumn Festival is near National Day), the government declares it a seven-day or eight-day holiday, requiring citizens to work on a weekend. Businesses and schools then treat the affected Saturdays and Sundays as the weekdays that replaced the weekend. Schedules are usually released late in the preceding year and may change during the year.
• During public holidays, employers are obligated to pay employees their full wages. The wage calculation can be based on the average daily wage derived from the employee’s history. An alternative holiday arrangement is permissible, but it must occur no later than 60 days before the statutory holiday.

Statutory minimum standards for annual leave are as follows:

• One year or more and less than 10 years’ cumulative service: five days of vacation
• 10 years or more and less than 20 years’ cumulative service: 10 days of vacation
• 20 years’ cumulative service or more: 15 days of vacation.

It is customary to grant additional annual leave to key staff as an incentive. Allowances for paid leave and sick leave are calculated based on the total working life, not just the period with the company.

While carry-over is at the employer’s discretion, allowing employees to carry over vacation days to the next year is permitted but may complicate future requirements. As a result, it is not a common practice.

Employers are obligated to take measures ensuring employees utilize their entitled vacation days. Failure to do so requires compensation to the employee for untaken paid leave. In addition to the regular salary, the employer must pay the employee 200% of their daily wage for each day of untaken paid leave. This requirement does not apply to days of paid leave beyond the statutory amount. For example, if the company offers more paid leave than the statutory requirement, compensation for untaken leave days may not be necessary. If the employer cannot provide the entitled leave, compensation to the employee is required at 300% of the normal compensation.

• Sick leave is applicable for illness or non-work-related injuries. The employee must furnish a supporting document from a certified practitioner or recognized medical organization, subject to approval by the employer. The number of annual paid sick leave days should be predetermined and explicitly stated in the employee’s contract, and carry-over is not recommended.
• In instances of severe illness, employees in their initial year of employment are entitled to a sick leave of up to three months. An additional month of sick leave is granted for each full year thereafter, not exceeding a total of 24 months.
• It is essential to utilize sick leave independently from annual leave.

Maternity leave encompasses prenatal examination, childbirth, breastfeeding, late pregnancy, and delivery.

During the first 12 weeks, prenatal examination, including doctor visits, is considered working time.

For natural delivery, most provinces in China have extended maternity leave from 128 days to 158 days, though this period may vary by city. However, certain provinces deviate from the 158-day norm:

• Chongqing, Guangdong: 178 days
• Tianjin: 128 days
• Henan, Hainan (maximum): 190 days
• Jiangxi, Hebei (third child), Zhejiang (third child): 188 days
• Gansu, Heilongjiang, Fujian (maximum): 180 days
• Guangxi: 148 days
• Jiangsu (minimum): 128 days

Other leave periods related to child care include:

• Difficult delivery: 15 days
• Multiple deliveries: 15 days (natural delivery) + 15 days extra per child
• Abortion or miscarriage within the first 4 months: 15 days
• Abortion or miscarriage after the first 4 months: 42 days

Additional provisions:

• Prenatal leave: After the seventh month of pregnancy, an employee is entitled to a one-hour break each day, with the possibility of 2.5 months’ prenatal leave upon employer approval.
• Breastfeeding leave: For a child under 1 year old, female employees can take up to two feeding periods per day, totaling 30 minutes per child. Travel time during this period is considered working time.
• Maternity leave: Following childbirth, female employees can apply for a 6.5-month leave upon employer approval. Maternity insurance provides an allowance, replacing the regular salary during this period.

Male employees seeking paternity leave are typically entitled to 15 days in most regions of China, although this duration may vary by location. Exceptions include:

• 7 days (paternity leave): Tianjin, Shandong (pending extension to no less than 15 days)
• 10 days: Shanghai
• 20 days: Liaoning, Chongqing, Sichuan, Hunan
• 25 days: Ningxia, Guangxi, Inner Mongolia
• 30 days: Henan, Jiangxi, Anhui, Yunnan, Gansu

Paternity leave requirements can have nuances that differ by location. For example, Shenzhen mandates a minimum 15 days of paternity leave if the mother is at least 23 years old. In various parts of China, the specifics of an employee’s right to paternity leave may be somewhat ambiguous.

Employees with maternity insurance: 

• If the employee has maternity insurance through the Social Security Bureau (SSB), the employer might not be obligated to fully compensate the employee during maternity leave. The SSB could cover all or a significant portion of the employee’s allowance.
• The SSB follows its own calculation rules, considering the average monthly salary of all employees in the company over the preceding 12 months and the local average wage.
• Depending on the regulations of the local social welfare administration, the employer may still be required to contribute to the employee’s salary. In Beijing and Shanghai, the employer is responsible for compensating any maternity leave allowance exceeding the local average monthly salary. In these cities, the maximum allowance standard is set at three times the average local salary.

Employees without maternity insurance:

• If the employee taking maternity leave is not covered by maternity insurance, the employer is required to provide compensation during maternity leave. The compensation should be calculated based on the employee’s average monthly salary over the preceding 12 months.

Starting from 2020, numerous cities have integrated maternity insurance with medical insurance.

• Wedding Leave: Generally, employees are entitled to three days of wedding leave, but the duration may vary based on local government regulations, ranging up to 30 days. Additionally, legally married couples in Shanghai receive an extra seven-day marriage leave, in addition to the three-day national marriage holiday.
• Funeral Leave: In the unfortunate event of the death of an immediate relative (parents, spouse, parent-in-law, or child), employees are eligible for funeral leave, typically ranging from one to three days.
• Family Visit Leave: Employees can avail family visit leave when an immediate family member (spouse or parent) visits and does not reside with the employee. For spouse visits, leave duration can be up to 30 days per year. For parent visits, single employees may enjoy up to 20 days per year, and married employees up to 20 days per four years. This benefit is applicable to employees in specific legal entities such as government offices, state-owned companies, or public institutions.

• Establishing a Defined Benefit Plan by the employer is not commonly practiced in China.
• While employers can offer supplementary insurances like medical, life, pension, and accident coverage to attract and retain talent, these additional benefits are taxable to the individual.
• Provident funds and similar benefits are generally not applicable in this context.