Business owners have many considerations when preparing a salary package for their employees. To note, payroll in China involves local tax variations that can often affect the structure of an employee’s salary package. Therefore, it is important to put things into perspective when drafting salary packages for employees.
Read our previous article on Things to Know about Payroll Service in China
How do employers view salary structures for their employees in China? What are the basic requirements required under Chinese law? Read more.
A business perspective for structuring employee’s salary package
As an employer, your main concern would be to be profitable but at the same time be able to have full compliance with all labor regulations and policies. An employment contract between a full-time employee and employer must be written, issued, and signed. This protects the employer from related penalties or punishment if it does not comply with the law or ensure its dues to employees.
In China, there are many different types of contracts depending on the employment, and various terms must be included per the law. Furthermore, an employee handbook is also essential due to its crucial role in resolving conflicts when employer-employee arguments arise.
Employee salary requirement from the government
China’s laws are stringent. Meaning, laws tend to be stricter, more precise, and on point in terms of technicality and wording. In terms of labor laws, China labor statutes seek to ensure the equal and fair treatment of employees. Since employment and payroll regulations vary from city to city in China, it is worthwhile to know the most basic and universal requirements the Chinese government asks of employers.
The government expects companies to take note of the following requirements for employment compensation:
- Wholly Foreign-Owned Enterprises (WFOE) and other limited companies may have employment agreements with Chinese nationals directly;
- Representative Offices, and other companies that are not limited, would need to acquire the services of third-party local entities;
- Any prospective employee in China is required to present proof of residence;
- Social insurance is required of employers for each employee;
- Permits and other documentation such as VISAs.