The Complete Guide to Offering Employee Benefits in China: Part 1

an HR manager explaining employee benefits in China to two new employees

By Ashutosh Agarwal, Manager, Global Benefits, GoGlobal

China is a great choice for any organization looking to expand its products or services into new markets. The country’s rapidly growing and diversifying economy are opening up boundless possibilities for companies of all sizes and across various industries.

The Chinese labor market is the largest in the world and holds great potential for skills and expertise. The government recently announced a special three-year plan to build its digital workforce. This includes incentives in housing, startup investment and schooling and jobs for the families of digital workers.

International businesses hiring in China are looking beyond cost-effective labor, tapping highly skilled professionals who can drive innovation and growth. This evolution has made the Chinese workforce highly attractive for global hiring, and more competitive. At the same time, the complexity of China’s employment laws can present significant challenges for international companies.

Navigating benefits is mission-critical for employers in China, both for ensuring compliance and attracting top talent. To assist in this endeavor, we have created a comprehensive two-part blog series on offering employee benefits in China.

In this first installment, we focus on the statutory benefits that all employers in China must provide to employees.

Social insurance schemes in China

Social insurance is the cornerstone of employee benefits in China, comprising five main types of insurance:

Both employers and employees contribute to these funds, with specific contribution rates varying by region.

Housing Provident Fund in China

The Housing Provident Fund (HPF) is another mandatory benefit aimed at helping employees save for housing-related expenses.

Both employers and employees contribute a percentage of the employee’s salary to the HPF.  

Unlike other funds, the money withheld for this benefit is not pooled nationally. It is instead allocated to the employee’s personal HPF account.

Funds from the HPF can be used for various housing-related purposes, including:

  • Down Payment and Purchase: Assisting with the down payment or full purchase of a home.
  • Construction or Renovation: Funding the construction or renovation of a house.
  • Mortgage Repayment: Paying back the mortgage on a home.

Managing the Housing Fund involves specific administrative steps. Employers must:

  • Register with the Housing Fund Bureau within 30 days of establishment.
  • Set up automated payments with a bank within 20 days of registration.
  • Register a new employee within 30 days of his or her start date.

Foreign employees are notably exempt from Housing Fund withholdings, as it is reserved for Chinese citizens.

Workers’ compensation in China

Workers’ compensation insurance provides coverage for employees who suffer work-related injuries or occupational diseases. This includes medical expenses, disability compensation and benefits to dependents in the event of a worker’s death.

Employers in China typically bear the full cost of workers’ compensation insurance.

Additional statutory benefits in China

There are other statutory benefits that employers must provide, including:

  • Paid Leave: Employees are entitled to annual leave, sick leave and various types of statutory leave, including maternity and paternity leave. Duration and eligibility are governed by national laws and can vary based on local regulations.
  • Public Holidays: China has several public holidays that employers must observe, including the Chinese New Year, National Day and others. Employers must be aware of these dates and give employees time off as required.

Key takeaways and points to remember

Ensuring compliance with Chinese labor laws and efficiently managing benefits administration are important to the success of a benefits program. The following are key takeaways and points to remember:

  • Failure to offer statutory benefits is a labor violation, resulting in fines or bans from operating in China.
  • It is important to outline statutory employee benefits in employment contracts to ensure clarity and avoid any misunderstandings.
  • Local experts and global HR platforms can help international companies navigate Chinese regulations and streamline the administration of benefits.

Up next: supplemental benefits

In the next blog post of this two-part series on providing benefits in China, we will focus on supplemental benefits. While not mandatory like statutory benefits, they can serve as a powerful tool for attracting and retaining talent in China.

Contact us today to discover how the GoGlobal Global Benefits Team can help you design benefits that fuel business expansion and hiring in China.