Payroll Administration

China's Salary System

Statutory working hours and working hour system

China currently has three legally mandated working hour systems. The vast majority of enterprises apply for the “standard working hour system,” while certain industries can apply for two additional special working hour systems:

Standard Working Hour System: Employees work no more than 8 hours per day and no more than 40 hours per week on average. Employers must guarantee employees at least one day off per week.
Special Working Hour Systems: These include the “comprehensive calculation working hour system” (applicable to industries requiring continuous operation, such as transportation and railways, with average working hours calculated on a weekly/monthly/quarterly/yearly basis) and the “irregular working hour system” (applicable to senior management, field staff, or sales personnel). Both of these systems require prior application and approval from the local labor administration department.

Overtime restrictions and statutory overtime pay

When enterprises need to arrange overtime work due to production and operation needs, they must consult with the labor union and employees. The law has mandatory requirements regarding the upper limit of overtime hours and the calculation of overtime pay:

Time Limits: Generally, overtime should not exceed 1 hour per day; under special circumstances, provided that the health of employees is guaranteed, it should not exceed 3 hours per day, but the total overtime hours per month should not exceed 36 hours.
Overtime Pay (Penalty Premium): The calculation base is usually the employee’s normal daily wage or hourly wage.
- Overtime on weekdays: Pay no less than 150% of the regular wage.
- Overtime on rest days (weekends): Enterprises should first arrange compensatory time off; if compensatory time off cannot be arranged, then pay no less than 200% of the regular wage.
- Overtime on statutory holidays (such as Spring Festival and National Day): Compensatory time off cannot be used to offset overtime; no less than 300% of the regular wage must be paid directly.

Salary system and minimum benefits

Minimum Wage Standard: China does not have a unified national minimum wage. Instead, it is set and adjusted by the people’s governments of each province, autonomous region, and municipality directly under the central government based on the local economic development level. The wages paid by enterprises to their employees during normal working hours must absolutely not be lower than the local minimum wage standard for the current period.
Statutory Social Welfare (Five Insurances and One Fund): Employers have a legal obligation to withhold and pay contributions on behalf of employees at a set rate, including: pension insurance, medical insurance, unemployment insurance, work injury insurance, and maternity insurance (collectively referred to as “five insurances”), as well as housing provident fund (“one fund”).

Our advantages

Experienced payroll team, familiar with local regulations and industry standards
High-standard data security and confidentiality mechanisms
Reduced corporate administrative costs and error risks
Ensuring employees receive their salaries on time and accurately

Kindly contact us to learn more about our payroll administration services.

MSMC ASIA

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