Payroll & Employment Guide China

All employment contracts in China must be in written form and follow the national Labour Law. Contracts can be fixed-term, open-ended, or project-based, and must include job role, salary, working hours, benefits, and termination terms.

Notice periods: Minimum 30 days' notice after probation and 3 days during probation

Termination of employment: Immediate termination is allowed for specific misconduct or legal violations. Legal grounds include misconduct, redundancy, or mutual agreement. Severance pay is usually required.

Chinese labour law requires employers to provide a range of mandatory benefits, such as social insurance and contributions to the housing fund. These statutory benefits are legally required for all eligible employees. In addition to these, many companies in China choose to offer extra perks and allowances to stay competitive and attract top talent.

Mandatory benefits: Health insurance, pension, unemployment insurance, work injury insurance, maternity insurance, and housing fund
Common perks: Performance bonuses, transportation stipends, free meals
Leave policies: Paid annual leave, public holidays, sick leave, maternity/paternity leave

Employers in China are responsible for withholding and contributing to several mandatory taxes and social security schemes:

• Individual Income Tax (IIT): Progressive rates ranging from 3% to 45% applied monthly or annually.
  
  
• Social security contributions: Calculated based on the employee’s monthly salary, within local minimum and maximum contribution limits (typically 60%–300% of the local average wage). These include pension insurance, medical insurance, unemployment insurance, work Injury Insurance (employer only), maternity insurance (employer only), housing fund (both employer and employee contribute)
  
  
• VAT (Value-Added Tax): Effective from 1 January 2026, applicable rates are 13%, 9%, and 6%, depending on the type of goods or services.
  
  
• Tax allowances: A basic monthly deduction of CNY 5,000 (CNY 60,000 annually) applies to IIT calculations.
  
  
• Additional tax reliefs are available for: Child education, continuing education, mortgage interest, rental expenses, elderly care, and major medical expenses, care for children under age 3

Other taxes, such as those on dividends, capital gains, and royalties, may also apply depending on the income type.

Payroll in China must follow both national laws and local regulations, which can vary from one city or province to another. Employers are responsible for withholding taxes and making mandatory contributions on behalf of their employees. These payments must be made on time and reported to the relevant local authorities.

Salary payment deadline: Fixed date each month, but no later than the 10th of the following month

Taxes and contributions payment deadline: Withholding IIT returns and payments are generally due by the 15th of the month following the month of income.

Payroll declarations deadline: Employers must file monthly provisional or final withholding IIT returns with the tax authority.

Payroll currency: Chinese Yuan or Renminbi

China’s Labour Law governs employment relationships, defining minimum wages, social insurance, working hours, and dismissal procedures. Employers must stay updated on regional differences and changes in regulations.

Total employment cost:

• Employer’s social security contributions:
• Employers' pension insurance: 16%
• Employer's medical insurance: 5-10%
• Employer's unemployment insurance: 0.5-1%
• Work injury insurance: 0.2-1.9%
• Maternity insurance: 0.5-1%
• Employer's housing fund: 5-12%
• Employer’s health insurance costs: 5-10%
• Employees’ social security contributions:
• Employee's pension insurance: 8%;
• Employee's medical insurance: 2%;
• Employee's unemployment insurance: 0.5%;
• Employee's housing fund: 5-12%.
• Employees’ health insurance costs: 2%

Minimum wage: ¥2,650/month (varies by region)

Probation period: 1–6 months, based on contract length

Using EOR services in China allows you to legally employ individuals in the country without opening legal entities there. The EOR takes over all the legal responsibilities as an official employer, including:

• Legal employment and contracts
• Payroll processing
• Tax withholding
• Benefits administration
• Onboarding/offboarding employees

Using PEO services in China provides HR and administrative support, while you remain the legal employer. PEO services are ideal for employers who already have legal entities in China but need support to manage their workforce operations, including:

• HR support and workforce administration
• Payroll and benefits management
• Compliance and local labour law guidance
• Employment contracts assistance

Native Teams provides a payroll calculator adjusted per China’s labour laws. Estimate gross-to-net salaries, tax withholdings, and employer costs in China with our localised calculator. Designed to meet all payroll and compliance requirements.