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China - HR & HR Software Guide

Country Overview:

China has the second largest economy in the world and is a prominent economic and technological dominion in eastern Asia. Additionally, the country has the world’s largest hydroelectric power potential and numerous mineral resources. China can be a complicated country to do business for newcomers since it has several provinces, each with its own set of criteria.

Capital City: 

Beijing

Currency:

Yuan Renminbi (CNY)

Language:

Mandarin, Cantonese

Government:

Communist party-led state

Per the Labor Contract Law, a written contract is the most common type of contract in China. However, written agreements are not mandatory for part-time employees. 

The employer and employee must copy the agreement in Chinese and any relevant foreign language depending on the local dialect. 

Some of the details typically mentioned in the written contract include: 

  • Contract term 
  • Social security 
  • Protection against occupational hazards, labor protection, and working conditions 
  • Liability for contract breach
  • and more

The different types of employment relationships are: 

  • Permanent EmploymentPermanent employment relationship is also known as a contract without a fixed term as there is no indication of an end date in the agreement. Under these contracts, terminations can be complex. 
  • Fixed-Term ContractsDefined as a labor contract in which both parties have agreed on the period of termination, fixed-term agreements are authorized under the Labor Law of China.
  • Short-term Employment – Often, employers can use employment service agencies or labor dispatch agencies for temporary work that is less than six months. 

Probationary Period 

According to China’s Labor Contract Law, probationary periods vary from one to six months, subject to the length of the employment contract. 

Work/Time Regulations 

Chinese labor law states that employees are not allowed to work more than 8 hours a day and an average of 44 hours a week. Typically, the employer can extend working hours up to 1-3 hours per day for production or operational requirements considering the trade union and the employee’s consent. Overtime cannot exceed 36 hours per month. 

Leaves 

Employees in China are entitled to the following leaves: 

  • Annual leave – Per China’s labor law, employees are entitled to paid annual leave after working for a continuous period of one year. Annual leaves vary from 5 to 15 days, depending on the years of employment. 
  • Sick leave – Employees in China are entitled to sick leave ranging from three months to two years, depending on their years of employment. 
  • Maternity leavePer China’s Special Rules on the Labor Protection of Female Employees, a minimum of 98 days of maternity leave are allowed. Many provincial governments, however, have raised this minimum threshold.
  • Paternity leave – Although China’s Labor Law does not provide statutory paternity leave on a national level, all municipal or provincial governments grant it. Paternity leave varies from 7 to 30 days, depending on the region. 

There are various other types of leave categories available to employees with specific situations. 

Public Holidays 

The following are the statutory national holidays observed in China: 

  • January 1 – New Year’s Day 
  • January 2 – New Year’s Holiday 
  • January 3 – New Year’s Holiday 
  • February 11 – Spring Festival Eve 
  • February 12 – Chinese New Year 
  • February 13 – Spring Festival Golden Week Holiday 
  • February 14 – Spring Festival Golden Week Holiday 
  • February 15 – Spring Festival Golden Week Holiday 
  • February 16 – Spring Festival Golden Week Holiday 
  • February 17 – Spring Festival Golden Week Holiday 
  • March 8 – International Women’s Day 
  • April 3 – Qing Ming Jie Holiday 
  • April 4 – Qing Ming Jie Holiday 
  • April 5 – Qing Ming Jie Holiday 
  • May 1 – Labor Day 
  • May 2 – Labor Day Holiday 
  • May 3 – Labor Day Holiday 
  • May 4 – Labor Day Holiday 
  • May 4 – Youth Day 
  • May 5 – Labor Day Holiday 
  • June 12 – Dragon Boat Festival Holiday 
  • June 13 – Dragon Boat Festival Holiday 
  • June 14 – Dragon Boat Festival Holiday 
  • September 19 – Mid-Autumn Festival Holiday 
  • September 20 – Mid-Autumn Festival Holiday 
  • September 21 – Mid-Autumn Festival Holiday 
  • October 1 – National Day 
  • October 2 – National Day Golden Week Holiday 
  • October 3 – National Day Golden Week Holiday 
  • October 4 – National Day Golden Week Holiday 
  • October 5 – National Day Golden Week Holiday 
  • October 6 – National Day Golden Week Holiday 
  • October 7 – National Day Golden Week Holiday 

Benefits 

Employers must provide their employees with social insurance benefits. They must contribute 20% to social security, covering pensions, health insurance, maternity insurance, work-related injury insurance, and unemployment insurance. Generally, the employer contributions differ by province.  

Per China’s Social Insurance Law, all employees hold the right to basic old-age insurance, contributed to by both the employee and the employer.  

Some examples of social insurance programs are: 

  • Dependents’/Survivors Benefit – The survivors of the deceased are entitled to receive bereavement allowances. The basic old-age insurance fund covers the expenses and determines the amount following local regulations. 
  • Life and Disability Insurance/Benefit – Employers must enroll their employees in the work injury insurance system, a part of the country’s social insurance system. Only the employer contributes to work-related injuries. 

Termination 

Employees and employers may unilaterally terminate their employment contract by providing a written notice 30 days in advance. Employers may also offer one month’s salary in place of notice if both parties meet specific labor code standards. 

Visa/ Work Permits 

Visitors from most countries are obligated to have a visa to enter and stay in China. However, tourists from Japan, Brunei, and Singapore can enter the country without a visa for up to 15 days for traveling or personal visits. 

Per the State Council of China, visa categories typically include: 

  • C – Crew 
  • D – Resident  
  • F – Non-business activities 
  • G – Transit  
  • J1 – Journalists whose intended duration of stay exceeds 180 days 
  • J2 – Journalists whose intended duration of stay is less than 180 days 
  • L – Tourist  
  • M – Business 
  • Q1 – Family Reunion where the intended duration of stay must exceed 180 days 
  • Q2 – Family Reunion where the intended duration of stay is less than 180 days 
  • R – Talent/ Skill 
  • S1 – Private Visit where the intended duration of stay must exceed 180 days 
  • S2 – Private Visit where the intended duration of stay is less than 180 days 
  • X1 – Students where the intended duration of stay must exceed 180 days 
  • X2 – Students where the intended duration of stay is less than 180 days 
  • Z – Work 

Before obtaining a work permit, foreign employees need an employment license (provided by their employer). Work permit applications are available at embassies and consulates and must meet specific criteria. 

Foreign employees in Beijing are required to obtain a non-criminal background check approved by Chinese authorities. 

Accounting

Accounting standards must adhere to the International Financial Reporting Standards (IFRS).

Taxes 

Corporate Tax 

The standard corporate tax rate is 25%. 

Value Added Tax (VAT) 

The VAT rate in China is 13%. It applies to most taxable goods and services. 

Filing Dates 

Typically, companies must file a provisional income tax return with the local tax authorities within 15 days of the end of each quarter and pay quarterly tax installments generally based on the profits for the quarter. An annual tax return and final tax settlement are due within five months of the end of the taxation year. 

Penalties 

Companies will be charged a daily late payment premium at 0.05% of the unpaid tax amount. In addition to the additional fees for late payment, fines may apply. 

The Cybersecurity Law regulates data utilization and governance in the digital era. 

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  • Ensured compliance with in-country employment and labor laws
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