What does a $60,000 hire cost in China?
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Total annual employer cost
Full cost breakdown
Statutory contributions and typical benefits for an employee in China at $60,000 base salary.
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Key Takeaways for Hiring in China
- Payroll is highly regulated, with mandatory social insurance and housing fund contributions that vary significantly by city.
- Bonuses aren’t required, but Lunar New Year bonus practices (13th month) are widespread.
- Statutory leave scales with cumulative work experience, not just time with the current employer.
- Expats face additional compliance steps, including work permit cancellation and residency deregistration during offboarding.
Continent
Asia
Capital
Beijing
Currency
Renminbi (CNY)
Language
Mandarin Chinese (Putonghua)
Payroll Cycle
Monthly
Pay Date
Last working day of the month
VAT
13%
China Employment Contract Overview
Hiring in China begins with a precise, legally compliant contract. We outline the key terms we include to meet local requirements and protect both parties.
What Do You Need To Include In A Chinese Employment Contract?
To stay compliant in China, employers must include certain mandatory terms in the employment contract. These are the essentials we always include.
Employee Information
- Full name
- ID number
- Role / Job title
- Start date
- Contract duration
- Working hours
- Probation and notice conditions
- Termination provisions
- Compensation details
- Address details
- Leave entitlement
- End date (if applicable)
Payroll
Average employer cost
39.56 to 40.922% (Beijing)
| Category | Details |
|---|---|
| Salaried Employees | Monthly, with salaries typically paid by the end of each month |
| Avg employer tax | ~30%–40% of gross salary |
Tax Breakdown
Employer Social Insurance Contributions: Varies by city, but commonly includes
| Category | Rate / Details |
|---|---|
| Pension Insurance | ~16% |
| Medical Insurance | ~10% |
| Unemployment Insurance | ~0.5%–1% |
| Work-related Injury Insurance | ~0.2%–1.9% (industry-based) |
| Maternity Insurance | ~0.8% |
| Housing Fund | 5%–12% (varies by city) |
VAT
| Category | Rate / Details |
|---|---|
| VAT | 13% for goods, 6%–9% for services (VAT policies may vary by sector and location). |
Hiring Cost Calculator
Employment of expats is supported in the cities of Shanghai and Shenzhen in China.
| Benefits | Provider | Funded Through | Notes |
|---|---|---|---|
| Health Insurance | Government | Payroll Contributions | All employees, including expats (unless exempted by bilateral agreements), must participate in the public medical insurance scheme. Employer and employee contributions cover basic healthcare, hospitalization, and some outpatient services. Additional private health insurance is optional and often provided by employers for enhanced coverage. |
| Pension/Social Security | Government | Payroll Contributions | Included in the social insurance “Five Insurances” and provides retirement pensions, disability, and survivor benefits. Expatriates may be exempt if covered by social security in their home country under a bilateral agreement, but often are enrolled to ensure benefits portability. |
| Other Statutory Bonuses | Government | Payroll Contributions | Unemployment Insurance: Mandatory; contributions from both employer and employee. Work Injury Insurance: Mandatory; employer contribution only; rate varies by industry risk. Maternity Insurance: Mandatory; generally employer-paid or merged with medical insurance. Housing Fund: Mandatory in most cities; both employer and employee contribute. Some cities allow opt-out for expats. |
Leave And Holiday Entitlement In China
Annual Leave
Employees are entitled to statutory annual leave after one year of cumulative service (with current or previous employers):
-
One to 10 years of service: Five days
-
10 to 20 years of service: 10 days
-
20+ years of service: 15 days
Employers must schedule leave by balancing business needs and employee preferences.
If annual leave is not granted, employers must compensate at 300% of the regular daily wage for each unused day.
Public Holidays
China has 11 national statutory holidays, including:
-
New Year’s Day
-
Spring Festival (Chinese New Year)
-
Qingming Festival
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Labor Day
-
Dragon Boat Festival
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Mid-Autumn Festival
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And National Day (often with extended breaks)
Sick Leave
Sick leave duration is based on cumulative years of work:
-
Less than five years: Three months
-
Five to 10 years: Six to nine months
-
10 – 15 years: 12 – 18 months
-
15 – 20 years: 18 months
-
20+ years: 24 months
Compensation ranges from 60% to 100% of normal wages depending on seniority.
Maternity Leave
Minimum national entitlement is 98 days:
-
15 days pre-birth
-
Remainder post-birth
Regional extensions apply (30 – 90+ days), with total leave in some provinces reaching 158 – 180 days, and up to a year in Tibet.
Maternity pay is covered by the social security fund based on average salary.
If the fund does not cover the full amount, the employer must top it up.
Pregnant employees are protected from termination during pregnancy, maternity leave, and breastfeeding (up to one year).
Paternity Leave
No national standard; policies vary by province.
Typical durations include:
-
10 – 15 days in major cities (Beijing, Shenzhen)
-
20 – 30 days in provinces like Sichuan, Yunnan, Henan, Gansu
Paternity leave is generally paid at regular wage, depending on local rules.
Other Types of Leave
-
Childcare / Parental Leave: Regional rules vary.
-
Beijing & Shanghai: Five days/year for children under three
-
Many provinces: 10 days/year
-
Some regions offer extra leave for multiple children or until children reach age six
-
-
Bereavement Leave: Typically three days for immediate family; regional variations apply
-
Marriage Leave: Three to 10 days depending on region and contract
-
Compensatory (Make-Up) Days: Common practice during holiday periods. Weekends may be adjusted to create extended breaks
Termination and Offboarding in China
Wrapping up employment in China involves structured procedures and precise documentation. Below is everything you need to ensure a smooth and compliant offboarding process.
| Type | Possible? |
|---|---|
| Termination for Cause (poor performance, misconduct, etc.) | Yes |
| Termination without Cause | Yes |
| Mutual Termination Agreement (MTA) | Yes |
| Redundancy | Not possible under the EOR setup |
China Employee Resignation
Notice
Form
Written notice.
Notice period
-
After probation: 30 days advance written notice
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During probation: Three days advance written notice
-
Termination without notice: An employee may end the employment contract immediately without prior notice if the employer:
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Does not provide the working conditions outlined in the contract;
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Fails to pay the employee fully and on time;
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Neglects to pay mandatory social insurance contributions;
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Implements rules that breach labor laws and adversely impact the employee;
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Uses coercion or deception when forming or altering the contract;
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Forces work through violence, threats, or unlawful restrictions on personal freedom; or
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Requires the employee to carry out dangerous tasks that jeopardize their safety.
-
Payment in lieu of notice or notice waiver
If both parties agree, the notice period can be waived or shortened; otherwise the statutory minimum applies.
End-of-Service Benefits
Severance/Gratuity
In general, voluntary resignations do not trigger severance unless the resignation is due to employer breach of contract or law.
Other Benefits
-
Payment for all wages due up to the resignation date
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Payment for any accrued unused annual leave
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Any bonuses or allowances that have become due under contract or law
Termination Documentation
-
Written acknowledgement by employer of the resignation and its effective date
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Certificate of service / separation document specifying start date, end date, position, and relevant entitlements
Employer Termination With Cause in China
Acceptable grounds
-
Serious violations of company rules or discipline
-
Criminal conduct or conviction
-
Gross negligence causing significant loss to the employer
-
Refusal or inability to perform work duties
-
Other legally defined serious misconduct
Notice
Form
Written notice specifying grounds for termination.
Notice period
Generally, immediate termination is allowed for cause without advance notice; however, employers must notify labor authorities in certain cases.
Payment in lieu of notice or notice waiver
No payment in lieu is required for termination with cause as employment ends immediately.
End-of-Service Benefits
Severance
No severance or gratuity is payable if termination is for a valid cause.
Other Benefits
-
Payment of all wages and benefits earned up to termination date
-
Payment for any accrued unused annual leave
Termination Documentation
-
Written termination letter stating cause and effective termination date.
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The Employer must provide a termination certificate or proof of separation upon employee request.
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Documentation must be retained in compliance with labor regulations.
Employer Termination Without Cause in China
Acceptable Grounds
-
Significant changes in objective circumstances rendering the contract unperformable, and no agreement on modification
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Employee becomes incompetent and remains so after training or reassignment
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Economic redundancies due to restructuring, bankruptcy, or business downturn (not possible under the EOR setup)
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Other statutory grounds where termination is allowed without employee fault
Notice
Form
Written notice delivered to the employee.
Notice period
At least 30 days in advance or one month’s salary in lieu of notice.
Payment in lieu of notice or notice waiver
If no 30-day notice is given, the employer must pay one month of salary instead; waiver of notice requires employee consent.
End-of-Service Benefits
Severance
-
Severance is mandatory and calculated based on one month’s salary per full year of service.
-
Periods of service less than six months are compensated at half a month’s salary; six months or more count as a full year.
-
Severance is based on the average monthly wage of the 12 months prior to termination.
Other Benefits
-
All unpaid wages up to the termination date
-
Compensation for any unused annual leave
-
Statutory social insurance contributions and other entitlements accrued during employment
Termination Documentation
-
Written termination notice stating the reason and date of termination.
-
Certificate of termination or separation indicating the employee’s position, duration of employment, and reason for termination.
-
All documentation must be provided promptly to enable the employee to transfer social insurance and apply for unemployment benefits.
Mutual Termination Agreements in China
Notice
Form
A written agreement signed by both the employer and the employee confirming mutual consent to terminate the employment contract.
Notice period
No statutory notice period applies; the termination date is determined by mutual agreement.
Waiver of notice
Not applicable, as notice is not legally required when both parties agree to terminate.
End-of-Service Benefits
Severance
-
Severance is not automatically required in mutual termination.
-
If the employer offers severance as part of the agreement and the employee accepts, it becomes binding.
-
If the mutual termination is initiated by the employer and the employee agrees under economic pressure or without fault, severance is commonly paid in practice.
Other Benefits
-
All wages earned up to the agreed termination date must be paid.
-
Compensation for unused statutory annual leave
-
Any contractually agreed benefits that have accrued prior to termination
Termination Documentation
-
A written termination agreement signed by both parties specifying the termination date and any compensation or conditions
-
Certificate of termination (also called proof of separation) indicating employment period, position, and reason for separation
-
Documentation to facilitate social insurance transfer and legal compliance
Offboarding Process for the End of Fixed-term Contracts in China
If the Fixed-Term Contract Ends Normally
Notice
- No advance notice is required from the employer or employee if the contract ends upon expiration and is not renewed.
- The employer must inform the employee in advance if the contract is not going to be renewed, especially if it was previously renewed once and the employee has worked continuously for 10 years or more.
End-of-Service Benefits
Severance/Gratuity
- Severance is required if the employer chooses not to renew the contract upon expiration, unless the employee declines a renewal on equal or better terms.
- Severance is calculated as one month’s salary per full year of service.
Other Benefits
- Wages up to the contract expiration date
- Payment for unused statutory annual leave
- Any bonuses, allowances, or benefits accrued under the contract
If the Employer Terminates Early
Notice
- The employer must give at least 30 days’ written notice or pay one month’s salary in lieu of notice.
- Termination must be for a lawful reason (such as incompetence, or legal grounds), or it will be deemed unlawful.
End-of-Service Benefits
Severance/Gratuity
- Severance is mandatory if early termination is lawful.
- The standard formula is one month’s average salary per full year of service.
- Partial years of service over six months are counted as a full year; less than six months result in half-month severance.
Other Benefits
- Payment of all earned wages up to the termination date
- Compensation for any unused annual leave
- Any other contractually agreed payments or entitlements
Final Payment Timing & Immigration and Visa Compliance in China
Final Payment Deadline
The employer must pay all final wages and economic compensation on or before the termination date or within a reasonable timeframe, usually the normal payroll cycle unless local authorities or collective agreements state otherwise.
Penalty
If the employer delays final wages or severance without a valid reason, the employee can file a complaint with the labor bureau. Authorities may then order the employer to pay double compensation for the delayed amounts. Late wage payments can also lead to administrative fines and, in serious cases, criminal liability.
Visa and Immigration Compliance
- If the employee is a foreign national, the employer must cancel the work permit and residence permit after termination. This cancellation is handled through the relevant Exit-Entry Administration and the Ministry of Human Resources and Social Security.
- The employer should complete final wage payments and issue all termination documents before starting the cancellation process. They must also provide a termination certificate, which the employee may need for visa conversion or departure procedures.
- If the employer doesn’t follow these steps correctly, they may face compliance issues or future restrictions on hiring foreign employees.
Supporting Guides
Frequently Asked Questions
Do I have to pay a 13th-month bonus?
No, it’s not legally required. But it’s such a widespread custom (especially around Lunar New Year) that employees expect it. Skipping it will hurt retention and make you uncompetitive.
Annual leave is based on total work experience, not time with my company?
Correct. An employee with 12 years of total career experience gets 10 days of annual leave from day one with you, even if they just started. It’s cumulative across all employers, not just tenure at your company.
Why do social insurance costs vary so much by city?
Each city sets its own contribution rates and caps. Shanghai has different rates than Beijing or Shenzhen. Total employer costs can range from 27% to 45% of salary depending on location.
Can I fire someone for poor performance?
Not easily. You need to document incompetence, provide training or reassignment opportunities, and give 30 days’ notice (or pay in lieu). Termination with cause (serious misconduct) is possible, but the bar is high.
What happens if I don’t grant annual leave?
You must compensate at 300% of regular daily wage for each unused day. You can’t just let it expire.
Do expats need to participate in social insurance?
Yes, unless they’re exempt under a bilateral social security agreement with their home country. Most expats must be enrolled to ensure benefits portability.
What’s required when a foreign employee leaves?
You must cancel their work permit and residence permit through the Exit-Entry Administration and Ministry of Human Resources. Provide all termination documents first. Missing this step can restrict your ability to hire foreign employees in future.
