Payroll Outsourcing in China

• Boost employee productivity
• Avoid payroll errors and enjoy cost savings
• Remain compliant with local expertise

Have Your Payroll Processes Managed By Local Experts

China’s payroll operations significantly differ from other payroll systems in the world. The country has complex financial and taxation guidelines that make it challenging for most businesses to maintain regulatory compliance. For instance, companies operating in China have to adhere to the Individual Income Tax (IIT) system, which has separate rules for local and foreign employees. Plus, the social contributions and benefits systems are multi-tiered. Meaning, you will have to set aside plenty of time and resources to do it on your own.

A cost-efficient and less time-consuming alternative to achieving your international expansion goals is to work together with an expert local payroll service provider.

Enjoy The Edge Advantage In Managing Payroll

With numerous years of expertise, an unparalleled understanding of the Chinese regulatory environment, and a proven track record, we at Edge make payroll management less stressful. Our payroll outsourcing services cover everything from handling employee data to calculating monthly salaries, ensuring your staff are paid accurately, and filing tax reports.

We understand that every business is unique. Your payroll business needs might differ entirely from those of another company in your sector. For this reason, the primary step of onboarding with us involves a comprehensive session with our qualified payroll professionals. Through this meeting, we will work together to help you with an efficient payroll processing strategy that aligns with your goals.

More than doing everything related to payroll processing on behalf of your business, we also take pride in educating you about the local regulations and measures for payroll compliance. This way, you will be empowered to take over the Chinese corporate market with your business offerings.

We Make Payroll Outsourcing Easy & Flexible

At Edge, we prefer working according to your needs. While we have a standardized payroll outsourcing model, we are adaptable to your needs. For instance, small businesses often benefit from outsourcing a few tasks. So, if you have a human resources (HR) team in-house with just enough ability to handle the recruiting tasks, outsourcing your payroll to us would be more advantageous for you. On the other hand, if you don’t already have an in-house payroll or HR team, Edge can work as your global payroll and HR services partner.

How much of your payroll functions you wish to outsource is your choice. We are happy to accommodate your needs and offer you the best results.

Your Payroll Data Is Safe With Us

A core function of our outsourced payroll services is data security. We have stringent policies to ensure the safety of all the sensitive data you hand over to us. This includes an encrypted database that prevents unauthorized access. Rest assured, no one will ever be able to access your employee details or payment information from our payroll software.

The Payroll Processing Model In China

The Chinese government takes labor security and welfare seriously and has strict laws against discrimination. So, you will be asked to pay heavy fines in case of even the slightest payroll errors and non-compliance. In the most severe cases, organizations may also face business license revocation.

The labor laws in China don’t tolerate inequality based on gender, race, or religion. All organizations are mandated to pay a comparable salary to employees who hold the same corporate-level positions.

Laws Governing The Payroll Process

China, as stated earlier, has a complex payroll model with several laws to ensure the rights of employees, as follows:

• All employees have the right to minimum wage.
• They are entitled to receive a housing fund.
• They have the right to enter a formal employment contract with the employer.
• The maximum number of working hours per week is 40, after which they are eligible for overtime payment.
• They have the right to take days off on annual holidays.
• They are entitled to pensions, healthcare, and unemployment contributions.

Social Contributions When Outsourcing Payroll

The Chinese social welfare system mandates employers to provide contributions to specific funds. The contributions are to be made by both the employer and the employee, but it is the employer’s responsibility to withhold the specific amount every month and deposit it to the respective government-run fund.

The mandatory contributions vary across China, depending on the city in which you plan to establish your business functions. Generally, you’ll be contributing to medical, maternity, occupational injury, pension, and unemployment funds.

While most other contributions are considered ordinary in other countries, the housing fund is entirely unique to China. To give you a better idea, the housing fund works similarly to the 401(k).

It is worth noting that the housing fund only applies to Chinese employees and not foreign staff. Additionally, the employer contributes a higher portion (5-25% of the staff’s annual salary) to the housing fund than the employees. You have the right to negotiate the percentage of housing contributions you wish to make with the employee during the hiring phase.

China’s Payroll Taxes

The tax system in China is very advanced, which also makes it very complicated. There are two types of applicable taxes. The income taxes for individuals, known as the Individual Income Tax (IIT), only apply to employees (both Chinese and international). Apart from this, processing payroll also involves additional tax-deducible benefits for foreign employees. This includes parental support, children’s education costs, house rental expenses, etc.

When it comes to social security insurance, the maximum and minimum contributions will vary every year based on an employee’s salary. It is the employer’s responsibility to process the payroll accordingly and make accurate payments to the tax authorities on time.

This makes the process more complex and stressful. An easier alternative is to outsource payroll to an expert payroll provider in China. If you have queries or need help understanding the payroll function in China or payroll outsourcing companies, contact our team at Edge.

 Leaves And Holidays

The Chinese government mandates 11 public holidays annually. Apart from this, they might also announce public holidays at short notice, which complicates the entire process of deciding employee time off.

Employees are entitled to around 5-15 days of paid annual leave besides the non-Chinese holidays. The exact number of days varies depending on how long the employee has worked at the company. Staff also get maternity leaves, marriage leaves, etc., and weekends off.

Hiring In China

When hiring an employee in China, the employer should enter an employment contract with them. This contract lasts one month and starts from the day the employee begins working at the company. If the contract is not drafted, and the employee is onboarded without any terms in place, they are to be paid double the monthly salary. Once an employee completes working one year for a company without a contract, they are then entitled to an open-term contract.

The probation period is typically decided by the employer. It is the duration of time when the employee can dismiss the employee without many legal complications, given the employee is found not to be a good fit for the job role. During this period, the employee can also leave the company, provided they give a notice 3 days in advance.

Overtime Payment

The Chinese run payroll and calculate overtime rates a bit differently than in other parts of the world. The overtime wages are calculated based on the standard, comprehensive, or non-fixed work hours (the comprehensive and non-fixed work hours are implemented after approval from higher authorities).

Under the standard work-hour system, employees are entitled to receive overtime payment if they work more than 8 hours a day or if their normal workweek exceeds 40 hours. In addition, all employees should receive at least one rest day every week.

The following rules are applied when calculating overtime payments for employees.

• 150% of the base hour wage for working overtime on weekday evenings.
• 200% of the base hour wage for working overtime on weekends.
• 300% of the base hour wage for working overtime on national holidays.