Country Overview
Mainland China is a dynamic destination for expatriates, offering a powerful economy, rich cultural heritage, and modern cities alongside ancient traditions. As the world’s second-largest economy and one of its oldest civilisations, China provides vast opportunities for career development across sectors from technology and finance to manufacturing and life sciences.
China is home to approximately 1.413 billion people and around 1.43 million foreign residents. Major economic hubs include Shanghai, Beijing, Guangzhou, Shenzhen, Chengdu, and Chongqing. China operates a strict points-based work permit system, classifying foreign workers into Categories A, B, and C — all foreign nationals require proper work authorisation to be employed.
*This guide is intended for general informational purposes only and should not be viewed as legal or tax advice. The information discussed may change frequently, and Access Financial cannot guarantee that all content remains current at all times.
2026 Key Legislative Updates
Foreigner’s Work Permit salary thresholds strictly enforced from February 2026 (Category A: 6× local average salary; Category B: 4×). A 25% Z-visa fee discount applies through 31 December 2026. The new unified VAT Law took effect 1 January 2026, codifying the 13%, 9% and 6% rates. Expat tax-exempt allowances extended to 31 December 2027. Fines for illegal work now up to RMB 50,000 (worker) / RMB 100,000 (employer).
Contracts
Employment in China is governed by the Labour Contract Law, which sets out the types of contracts permitted, mandatory terms, and termination procedures. All employees must have a written employment contract within one month of starting work.
Contract Types
| Contract Type | Duration | Key Features |
|---|---|---|
| Fixed-Term | Specified end date | Most common for expatriates; typically 1–2 years, renewable |
| Open-Ended (Indefinite) | Indefinite | No set end date; required after 10 years’ service or two renewals |
| Project-Based | Task completion | Ends when a specific task or project is completed; rare in practice |
| Part-Time | Ongoing | Up to 24 hrs/week with one employer; no probation allowed |
Fixed-Term to Open-Ended — Two-Renewal Rule
If a fixed-term contract is renewed twice consecutively, on the third renewal it must become open-ended (unless special circumstances apply). Employees with 10+ years’ service with the same employer may also request an open-ended contract.
What Your Contract Must Include
Mandatory Terms
- Full name and address of both parties
- Contract term (fixed, open-ended, or project)
- Job description and place of work
- Working hours, rest days, and leave
- Salary and pay frequency
- Social insurance contributions
- Workplace health and safety conditions
- Other terms required by law
Common Additional Clauses
- Probation period
- Confidentiality / NDA provisions
- Intellectual property assignment
- Non-compete restrictions (with compensation)
- Training repayment clauses
- Bonus and commission structure
- Performance review procedures
Access Financial drafts Chinese-compliant employment contracts and manages onboarding for EOR engagements.
Working Hours & Overtime
China’s statutory standard working hours are 8 hours per day and 40 hours per week — typically Monday to Friday. Overtime is regulated and must be compensated at premium rates. The “996” working culture (9am–9pm, 6 days per week), once widespread in tech, was ruled illegal by the Supreme People’s Court in 2021.
| Parameter | Rule | Notes |
|---|---|---|
| Standard working hours | 8 hrs/day, 40 hrs/week | Typically Monday–Friday, 9am–6pm with 1-hour lunch |
| Overtime limit | 36 hrs/month | Statutory monthly cap on overtime hours |
| Weekday overtime | 150% of normal pay | For hours worked beyond standard schedule |
| Rest day overtime | 200% of normal pay | If no compensatory time off is given |
| Public holiday work | 300% of normal pay | No substitution permitted; cash only |
| Weekly rest | At least 1 day | Per 7-day period — mandatory |
Flexible Working Hour Systems
Employers may apply for the Comprehensive Working Hour System or Non-Fixed Working Hour System for certain roles (executives, sales, drivers, etc.). These require approval from the local labour bureau and alter how overtime is calculated.
Probation Period
Probation periods are regulated by the Labour Contract Law and are linked to the length of the employment contract. Probation pay must be at least 80% of the agreed salary, and never below the local minimum wage.
| Contract length | Maximum probation | Notes |
|---|---|---|
| Under 3 months | None permitted | No probation allowed for very short contracts |
| 3 months to under 1 year | Up to 1 month | Pay at least 80% of agreed salary |
| 1 year to under 3 years | Up to 2 months | Notice during probation: 3 days |
| 3+ years or open-ended | Up to 6 months | Single probation per employee per employer |
| Part-time work | None permitted | Probation not allowed for hourly part-time roles |
Immigration & Work Visas
China maintains a strict visa regime. Nearly all foreign nationals require a visa to enter mainland China, and working in China absolutely requires the correct work authorisation. There is no equivalent to free movement — each foreigner must have a valid visa and Foreigner’s Work Permit.
Digital Work Permit System — December 2024
Physical Foreigner’s Work Permit cards eliminated from 1 December 2024. Work authorisation is now integrated into the electronic social security card, accessible via mobile app. Visa-free transit covers 55 nationalities at 65 ports (240 hours); a 30-day unilateral visa waiver covers 50 countries (UK and Canada added February 2026).
Work Permit Categories (2026)
From February 2026, salary thresholds for the Foreigner’s Work Permit are strictly enforced. Foreign workers are classified into three categories based on qualifications, salary, age, and skill level.
| Visa / Permit | Salary Threshold | Sponsor? | Duration |
|---|---|---|---|
| Z Visa (Work) | Tied to Category | Yes (employer) | Single entry, 30 days; converts to Residence Permit |
| Category A (High-end Talent) | 6× local average salary | Yes | Up to 5 years; fast-track processing |
| Category B (Professional) | 4× local average salary | Yes | Up to 2 years; age cap 60 strictly applied |
| R Visa (Talent) | No fixed minimum | Endorsement | Up to 5 years; multiple entry |
| M Visa (Business) | N/A — not for employment | No | 30–60 days per entry; multiple entry possible |
| S1 / S2 (Family) | N/A | Worker’s permit | Matches worker’s residence permit |
| Fee | Cost | Notes |
|---|---|---|
| Z Visa application | From USD 30 (with 25% discount) | 25% discount applies through 31 December 2026 |
| Foreigner’s Work Permit | No application fee | Processed via SAFEA online system; 4–8 weeks total |
| Residence Permit (1 year) | RMB 400 | Issued by local Public Security Bureau; 7–15 working days |
| Medical examination | RMB 500–1,000 | At authorised health centre in China |
| Penalty for illegal work | Up to RMB 50,000 / 100,000 | Worker / employer respectively — strictly enforced |
AF’s immigration team manages Z visa applications, Foreigner’s Work Permits, Residence Permits, and family S1 visas across China.
Leave Entitlements
China’s statutory leave entitlements are modest by international standards but are typically supplemented by employer policies, particularly at multinational firms.
Annual Leave
Paid annual leave is granted after a full year of cumulative work experience (not necessarily with one employer) and increases with total years of service.
| Total work experience | Statutory leave | Notes |
|---|---|---|
| Less than 1 year | 0 days | No statutory entitlement; employer may grant pro-rata |
| 1 to under 10 years | 5 days/year | Statutory minimum; in addition to public holidays |
| 10 to under 20 years | 10 days/year | Cumulative work history across employers counts |
| 20+ years | 15 days/year | Statutory maximum |
| Multinational standard | 10–15 days from year one | Many employers offer above the statutory floor |
Parental Leave
| Leave type | Duration | Pay | Notes |
|---|---|---|---|
| Maternity (national) | 98 days | Full salary or maternity allowance | Includes 15 days before due date |
| Maternity (Beijing/Shanghai) | 158 days | Maternity allowance via insurance fund | Province-level extensions common |
| Paternity | 5–15 days | Full pay | Shanghai 10 days; Beijing 15 days |
| Parental Leave (Beijing/Shanghai) | 5 days/year | Full pay | Each parent, until child turns 3 (since 2022) |
| Marriage Leave | 3 days (national) | Full pay | Some provinces extend to 10–15 days |
| Bereavement Leave | 1–3 days | Full pay | For immediate family |
Sick Leave
| Parameter | Rule |
|---|---|
| Sick pay rate | 60–100% of salary (depending on length of service) |
| Minimum sick pay | Not below 80% of local minimum wage |
| Sick leave period | 3 months (under 5 years) up to 24 months (20+ years) |
| Medical certificate | Required from approved hospital |
Public Holidays 2026
China has 7 statutory public holidays in 2026, totalling 13 rest days. The State Council often designates weekends as compensatory working days to create longer breaks. The 9-day Spring Festival in 2026 is the longest in PRC history.
| Date | Day | Holiday | Duration |
|---|---|---|---|
| 1–3 January | Thu–Sat | New Year’s Day | 3 days |
| 15–23 February | Sun–Mon | Spring Festival (Chinese New Year) | 9 days (longest ever) |
| 4–6 April | Sat–Mon | Qingming Festival (Tomb-Sweeping) | 3 days |
| 1–5 May | Fri–Tue | Labour Day | 5 days |
| 19–21 June | Fri–Sun | Dragon Boat Festival | 3 days |
| 25–27 September | Fri–Sun | Mid-Autumn Festival | 3 days |
| 1–7 October | Thu–Wed | National Day (Golden Week) | 7 days |
Notice Periods
Notice requirements under China’s Labour Contract Law differ for employee resignation and employer-initiated termination. Most professional contracts specify the statutory notice or longer.
| Scenario | Statutory notice | Notes |
|---|---|---|
| Employee resignation (during probation) | 3 days | Written notice required |
| Employee resignation (post-probation) | 30 days | Written notice to employer |
| Employer termination with cause (non-misconduct) | 30 days or 1 month pay in lieu | Plus severance pay |
| Immediate termination for serious misconduct | None | No severance; high evidentiary bar |
| Economic redundancy / restructuring | 30 days + procedural requirements | Must notify labour bureau if 20+ employees |
Termination & Severance
Chinese labour law strongly protects employees. Employers can only unilaterally terminate for specific statutory reasons, and severance is generally required. Many separations are resolved by mutual agreement to avoid disputes.
| Length of service | Severance pay | Cap (2026) |
|---|---|---|
| Less than 6 months | ½ month’s average pay | Capped at 3× local average wage |
| 6 months to under 1 year | 1 month’s average pay | Counted as one full year |
| 1 year and above | 1 month’s pay per year of service | Maximum 12 years for high earners |
| Shanghai monthly cap | RMB 36,549 | 3× Shanghai average wage 2025/26 |
| Beijing severance cap | RMB 44,619 | 3× Beijing average wage 2025/26 |
Wrongful Dismissal — Double Severance
If an employer terminates without lawful cause, the employee can claim double severance (2× the standard formula) or reinstatement. Document fair processes carefully — labour arbitration in China is free for employees and frequently sides with the worker.
Income Tax
China’s tax year is the calendar year (1 January to 31 December). Employers withhold Individual Income Tax (IIT) monthly via the PAYE-style system, with annual reconciliation between 1 March and 30 June of the following year.
Individual Income Tax Bands 2026
| Band | Annual Taxable Income (CNY) | Rate | Quick Deduction (CNY) |
|---|---|---|---|
| 1 | 0 – 36,000 | 3% | 0 |
| 2 | 36,001 – 144,000 | 10% | 2,520 |
| 3 | 144,001 – 300,000 | 20% | 16,920 |
| 4 | 300,001 – 420,000 | 25% | 31,920 |
| 5 | 420,001 – 660,000 | 30% | 52,920 |
| 6 | 660,001 – 960,000 | 35% | 85,920 |
| 7 | Above 960,000 | 45% | 181,920 |
Expat Tax-Exempt Allowances — Extended to 2027
Foreign nationals may continue to claim tax-exempt benefits (housing, children’s education, language training, home leave) until 31 December 2027. Alternatively, expats can opt for the resident special additional deductions (children’s education, mortgage interest, rent, elderly care).
VAT (2026 — New Unified Law)
| Rate | % | Applies to |
|---|---|---|
| Standard | 13% | Most goods, manufacturing, leasing tangible property |
| Reduced | 9% | Transport, construction, real estate, agricultural products |
| Services | 6% | Most services including consulting, finance, IT, R&D |
| Small-scale taxpayer | 1% (reduced) | Reduced rate extended to 31 December 2027 |
| Zero rate | 0% | Exports of goods and qualifying services |
Let Access Financial handle your China payroll — seamlessly and compliantly, with local specialists in Shanghai and Shenzhen on call.
Benefits
China’s statutory benefits centre on the Five Insurances and Housing Provident Fund. To attract foreign talent, employers commonly add private health cover, housing allowances, and other supplemental benefits.
Mandatory Statutory Benefits
| Benefit | Rate / Amount | Notes |
|---|---|---|
| Pension Insurance | 24% total | 16% employer + 8% employee |
| Medical Insurance | ~11.5% total | ~9.5% employer + 2% employee (incl. maternity) |
| Unemployment Insurance | 1% total | 0.5% each side |
| Work Injury Insurance | 0.16–1.52% | Employer only; rate by industry risk |
| Housing Provident Fund | 10–14% total | 5–7% each side; refundable on departure |
| Annual Leave | 5–15 days/year | Based on cumulative work experience |
| Severance Pay | 1 month per year of service | Capped at 3× local average wage |
Market-Standard Supplemental Benefits
| Benefit | Prevalence | Typical provision |
|---|---|---|
| Private Medical Insurance | Standard for expats | International plans (Bupa, Cigna, AXA, IMG) |
| Housing Allowance | Common | RMB 8,000–20,000/month in tier-1 cities |
| Annual Home Leave Flights | Common for expats | 1–2 trips/year for employee and family |
| International School Tuition | For senior expats | RMB 150,000–300,000/year per child |
| Annual Bonus (13th month) | Very common | Often 1–3 months’ salary at Chinese New Year |
| Meal & Transport Allowance | Standard | RMB 500–2,000/month, often tax-exempt |
| Language Training | Common for expats | Mandarin classes; tax-exempt under expat regime |
Pension System
China’s basic pension system is part of social security, with contributions from both employer and employee. Foreigners are generally required to participate but can typically reclaim their personal contributions when they leave China permanently.
| Parameter | 2026 | Notes |
|---|---|---|
| Employer contribution | 16% | Of contribution base (up to 3× city average wage) |
| Employee contribution | 8% | Refundable to expats on departure |
| Minimum vesting | 15 years | Required to draw monthly pension at retirement |
| Statutory retirement age | Rising progressively | Phased reform: 63 (men), 55–58 (women) by 2040 |
| Personal pension account | 8% of salary | Refundable lump sum on permanent departure |
| Contribution base cap (Shanghai) | RMB 36,549/month | 3× Shanghai average wage 2025/26 |
| Contribution base cap (Beijing) | RMB 33,891/month | 3× Beijing average wage 2025/26 |
Insurances
Public health insurance is mandatory via social security. Most expatriates also hold private international health cover for access to Western-standard facilities and overseas treatment.
| Insurance | Coverage | Required by |
|---|---|---|
| Public Medical Insurance | Outpatient ~70% / Inpatient ~85% (after deductible) | Social Insurance Law 2011 |
| Work Injury Insurance | Workplace accidents and occupational disease | Employer-only contribution; mandatory |
| Motor Insurance (compulsory) | Third-party liability | Road Traffic Safety Law |
Professional Indemnity Insurance — Contractors
Independent consultants in engineering, financial advisory, or technology may want PII cover to protect against negligence claims. While not legally mandatory for individuals in China, it is often required contractually by end-clients. AF can advise on appropriate cover for your sector.
Private Health Insurance
| Provider | Typical annual cost (individual) | Type |
|---|---|---|
| Bupa Global | USD 3,000–6,000 | International, comprehensive |
| Cigna Global | USD 2,500–5,500 | International, modular |
| AXA / IMG | USD 2,000–5,000 | International, mid-tier |
| Local China plans (Ping An, PICC) | RMB 5,000–15,000 | Domestic, in-network only |
AF Solutions
Access Financial operates from Shanghai and Shenzhen and supports end-clients, recruitment agencies, and contractors across mainland China.
For End-Clients
Managing a contingent workforce in China can be complex. Our solutions streamline workforce management, making it simple, compliant, and cost-effective.
For Recruiters
We offer a complete suite of services, allowing you to simply, compliantly, and efficiently place your candidates in China, with minimum fuss.
For Contractors
Focus on what you do best and let us take care of your payroll, tax compliance, social security, and immigration needs in China.
Free consultation
FAQ
Find answers to our most frequently asked questions below.
What solutions do you offer in China?
In China, Access Financial provides one compliant engagement model:
Employed/EOR (umbrella): We become the legal employer of your employees in China. Your business retains full control of the day-to-day work and deliverables, while we carry the employment, payroll, and tax liability.
When should a company consider using an EOR?
An EOR is especially useful in a range of scenarios. It is the most efficient route when you want to convert existing contractors into compliant employees and reduce misclassification risk, or when you need to hire talent in a country where you do not have a local entity. It also allows you to onboard quickly without going through a lengthy and complex company registration process, while ensuring full compliance with local employment law, payroll, and tax regulations. Beyond these core use cases, an EOR is equally valuable when you are testing a new market before committing to a long-term investment, or when you simply need temporary or project-based hires abroad.
Can we hire both local nationals and foreign employees through an EOR?
Yes. Our EOR services cover both local nationals and foreign hires. For foreign nationals, additional visa or work permit requirements apply, and we can support the application process end-to-end — including sponsorship in jurisdictions where we hold the relevant licence.
Is permanent establishment (PE) risk avoided?
An EOR is a third-party business that legally employs international workers on your behalf, creating a clear layer of separation between your company and the staff based in other countries. The EOR becomes the legal employer for those workers, so although the employees continue to deliver services to your business, the legal distancing helps mitigate many common PE risks. That said, PE is determined by the facts on the ground (the nature of the activity, contract-signing authority, where revenue is generated, and so on), not solely by who issues the payslip. We therefore recommend reviewing each engagement with our specialists to confirm the appropriate structure.
What is your pricing model?
Our standard management fee is 5% of the contract value, with a minimum of €550. We also offer volume discounts on bulk engagements. To discuss pricing for your specific scenario, please get in touch with our team here: https://accessfinancial.com/#get-started.
Social Insurance
China’s social security system, known as the “Five Insurances and One Fund”, covers pension, medical, unemployment, work injury, and maternity insurance, plus the Housing Provident Fund. Since 2011, foreign employees are generally required to participate unless exempt under a bilateral agreement.
Pension Refund on Departure
Foreign employees can claim a refund of their personal pension contributions when permanently leaving China. The employer’s portion remains in the pool. Apply via the local social security bureau after deregistering your work permit and visa.
Employer Contributions (Shanghai, indicative)
Employee Contributions