Employee Benefits in China: What Global Employers Need to Know in 2025
Expanding your business into China offers enormous potential, but it also introduces complex responsibilities when it comes to employee benefits. Understanding how China’s benefit system works is essential for staying compliant, attracting top talent, and building a strong local presence.
China’s system centers around mandatory statutory programs, most notably the Social Insurance System and Housing Provident Fund. These government-regulated programs form the foundation of every benefits package and are strictly enforced across all provinces.
In this quick guide, we’ll cover the basics, including who qualifies for benefits, what’s legally required, and which additional perks can give your company a competitive edge in China’s fast-evolving talent market.
We’ll also explore how partnering with an Employer of Record (EOR) in China can help you outsource benefits administration and compliance with other local regulations completely, giving you time back to focus on more pressing business priorities.
Who Qualifies for Statutory Benefits in China?
In China, employees with standard employment contracts—whether full-time, part-time, or fixed-term—are typically eligible for statutory benefits under the country’s Social Insurance Law. These benefits include:
- Medical Insurance (医疗保险)
- Pension Insurance (养老保险)
- Unemployment Insurance (失业保险)
- Work-related Injury Insurance (工伤保险)
- Maternity Insurance (生育保险)
Employers are legally required to enroll eligible employees in these programs and contribute on their behalf, along with employee contributions.
Eligibility typically begins upon the commencement of employment, assuming the employer registers the employee with the local Social Insurance Bureau.
Workers must usually be employed under a labor contract in accordance with the Labor Contract Law of the People's Republic of China. Regional practices may affect the implementation details (e.g., contribution rates and thresholds), but eligibility is not typically restricted by an income threshold.
Who Is Excluded?
Some categories of workers are not be entitled to full statutory benefits under the social insurance system, including:
- Freelancers and Independent Contractors: Generally excluded from mandatory participation unless they voluntarily enroll in certain schemes (e.g., pension or medical insurance) as individual contributors through local bureaus.
- Interns: If not formally employed under a labor contract, they are often not covered by the social insurance system, though some provinces may require limited coverage.
- Agency or Temporary Workers: Usually covered by social insurance, but the responsibility lies with the staffing agency, not the host employer.
- Foreign Workers: As of recent updates, foreign nationals working in China must be enrolled in the social insurance system in most major cities, though enforcement and requirements may vary by location.
For a comprehensive understanding of statutory benefit eligibility, visit China’s official Social Insurance Authority for detailed guidelines.
Statutory Employee Benefits in China
Like in any country, understanding and complying with statutory benefit requirements in China is crucial for employers to maintain legal compliance and uphold their reputation. Failing to provide these benefits can result in legal penalties, compliance issues, and damage to an employer's reputation.
Below is a list of the legally mandated benefits employers must provide under China's Social Insurance Law and related regulations:
Basic Pension Insurance (基本养老保险):
- This insurance provides income for retirees and is based on contribution years and wage history.
- Both employers and employees are required to contribute to the pension system.
- Contributions vary by region but are typically around 16% of the employee’s wage for employers and 8% for employees.
Basic Medical Insurance (基本医疗保险):
- Mandatory for urban employees, this insurance covers healthcare costs like hospitalization, outpatient services, and prescription drugs.
- It requires contributions from both the employer and employee.
- Employers contribute approximately 10%, and employees contribute 2% plus a fixed medical savings amount, subject to local policies.
Work-related Injury Insurance (工伤保险):
- Fully funded by the employer, this insurance compensates employees for work-related injuries or illnesses, offering financial security without requiring employee contributions.
- Contribution rates depend on the industry risk classification but typically range from 0.2% to 1.9% of the employee’s wage.
Unemployment Insurance (失业保险):
- Employees are eligible for financial support during unemployment as long as they’ve contributed for at least one year before they become involuntarily unemployed.
- Both employers and employees contribute to this fund.
- The standard contribution is 0.5% from the employer and 0.5% from the employee, though this may vary by location.
Maternity Insurance (生育保险):
- Employers contribute to cover childbirth costs and provide maternity leave, which is critical for supporting employees during and after pregnancy.
- Previously separate, maternity insurance is now merged with the medical insurance scheme in most provinces.
- Employers contribute around 0.8% to 1% of the employee’s wage. It covers prenatal checkups, childbirth costs, and maternity leave payments.
Housing Provident Fund (住房公积金):
- Mandated by the Housing Fund Regulations, this benefit covers housing-related expenses and promotes long-term financial security.
- Both employers and employees contribute equally, typically 5% to 12% of the employee’s monthly wage (rates vary by city).
- Funds can be used for buying, building, or renovating a home or paying off mortgages.
Minimum Wage (最低工资标准):
- Minimum wage standards are set regionally and reviewed annually. Employers must comply with China’s regional minimum wage standards to ensure fair employee compensation.
- At the time of writing, these are some of the current wage minimums for key cities:
| Province or Region | City | Monthly Minimum Wage (RMB) | Hourly Minimum Wage (RMB) |
| Shanghai | Shanghai | 2,690 RMB | 24 RMB |
| Guangdong | Guangzhou | 2,300 RMB | 22.2 RMB |
| Beijing | Beijing | 2,420 RMB | 26.4 RMB |
| Tianjin | Tianjin | 2,250 RMB | 21.2 RMB |
| Hubei | Wuhan | 2,210 RMB | 22.4 RMB |
Occupational Health and Safety Compliance (职业健康安全合规):
- To comply with safety and hygiene standards under China’s Workplace Safety Law, employers must ensure safe working environments and take steps to reduce the risk of workplace injuries.
- This includes training, protective equipment, and incident reporting.
Anti-discrimination Policies (反歧视政策):
- While China’s Labor Law includes basic anti-discrimination provisions (e.g., gender, ethnicity), comprehensive enforcement is evolving.
- Employers are expected to avoid discrimination in recruitment, promotion, and employment terms.
Employers should consult the Ministry of Human Resources and Social Security (MOHRSS) or local bureaus for city-specific regulations, as these benefits are subject to regional variations and frequent updates.
Compliance with these statutory benefits not only ensures legal adherence but also enhances employee satisfaction and retention.
Leave Entitlements in China
China provides a variety of statutory leave entitlements to protect employee well-being and ensure a healthy work-life balance. These leave policies are governed by China’s Labor Law, Regulations on Paid Annual Leave, and local labor bureau guidelines.
Below is an overview of the different types of leave entitlements offered in China:
Annual Paid Vacation (带薪年假):
Employees who have worked continuously for more than one year are entitled to annual paid leave, based on cumulative years of service (including previous employers):
- 5 days: 1–10 years of service
- 10 days: 10–20 years of service
- 15 days: More than 20 years of service
If the employer fails to grant this leave, they must compensate the employee at 300% of the regular wage for the unused days.
Public Holidays (法定节假日):
China mandates 11 national public holidays each year, including:
- Spring Festival (Chinese New Year) – 3 days
- National Day – 3 days
- Labor Day, Tomb Sweeping Day, Dragon Boat Festival, Mid-Autumn Festival, New Year’s Day – 1 day each
These holidays may be supplemented by regional or employer-specific days off. The actual break period is often extended by rearranging adjacent weekends.
Sick Leave (病假):
- Employees are entitled to sick leave for illness or injury, with compensation typically ranging from 60% to 100% of their salary, based on their length of service and variations in local regulations.
- The duration of sick leave and specific pay rates are governed by local Human Resources and Social Security Bureaus and the employee’s length of tenure.
Maternity Leave (产假) and Paternity Leave (陪产假):
- Maternity Leave: National law guarantees 98 days of maternity leave, with an additional 15 days for difficult labor, multiple births, or late childbirth (as defined locally). Some provinces extend the standard leave to 158–180 days.
- Paternity Leave: Not mandated by national law but widely implemented through regional regulations, typically offering 7–30 days of paid leave depending on the province.
Parental Leave (育儿假):
- Several provinces have introduced parental or childcare leave policies to support extended caregiving needs, especially following the Three-Child Policy instituted in August 2021. For example:
- Beijing: Up to 5 days/year of parental leave for children under age 3
- Sichuan & Guangdong: Similar short-term parental leave policies
These are region-specific and not mandated by national law, but are increasingly being adopted to support family well-being.
Providing these leaves helps employers foster a more productive and engaged workforce, benefiting both employees and the organization.
Common and Additional Employee Benefits in China
While not mandated by law, many employers in China provide additional benefits to improve employee satisfaction, support retention, and remain competitive in attracting top talent—particularly in tier-1 cities and multinational companies. These benefits often supplement the statutory system and reflect growing expectations for comprehensive employee welfare.
Here's a look at some commonly offered additional benefits:
Private Pension Plans:
Some employers offer enterprise annuity plans, a form of voluntary corporate pension scheme that supplements basic pension insurance.
Contributions are usually shared between employers and employees and invested under government-regulated frameworks to grow retirement savings.
Supplemental Health Insurance:
In addition to statutory medical insurance, many companies provide additional medical coverage beyond the basic medical insurance, ensuring employees have access to a wider range of healthcare services.
This additional insurance often covers:
- Private hospitals and international clinics
- Critical illness protection
- Dental and vision care
- Family coverage for dependents
Offering supplemental health insurance is more common in foreign-invested enterprises and high-level executive roles, especially those based in tier-1 cities.
Company Cars or Transportation Allowances:
Providing company vehicles remains a common benefit for sales, client-facing, or executive roles.
Many urban employers also opt for transportation allowances or ride-hailing reimbursements instead, especially in cities with heavy traffic and well-developed public transport.
Performance Bonus:
Performance-based bonuses are standard across many sectors in China. These bonuses may be monthly, quarterly, or annually, or they may be linked to KPIs or performance reviews, achieving team or departmental goals, or tied to company profitability.
Technology or Remote Work Allowances:
As remote and hybrid work arrangements become more common in China’s tech and services sectors, some employers offer:
- Laptop or home office stipends
- Internet and phone reimbursement
- Flexible work hours
This is more common in multinational companies or digital-focused firms in cities like Shanghai and Shenzhen.
13th Month Salary:
Often referred to as a “year-end bonus”, this additional month’s salary is customarily paid before Chinese New Year.
Though not required by law, it is widespread and culturally expected, especially in urban regions and white-collar roles.
Christmas Bonus:
While not rooted in Chinese tradition, some international firms offer a goodwill bonus or small gift around Christmas, especially in multinational environments.
Spring Festival Gifts: It is common for employers to distribute gifts or cash envelopes (called hongbao) during the Spring Festival (also known as Chinese New Year).
These can include physical gifts (like food hampers or electronics) or monetary bonuses given in red packets. Hongbao are symbolic of good luck and prosperity and are widely expected as part of corporate holiday culture in China.
Vacation Bonus:
Some companies offer “vacation subsidies” or bonuses for taking annual leave, either as a retention strategy or to promote employee well-being. These bonuses may be fixed or discretionary and are more common in foreign or tech companies.
While these benefits are not legally required, they’re essentially considered mandatory benefits from a cultural perspective. As such, they significantly influence employee satisfaction, engagement, and long-term loyalty. In addition, implementing these benefits can help to foster a more engaged and productive workforce.
Companies failing to meet cultural expectations will face competitive barriers in the modern labor market to attract and retain top talent, especially younger, urban professionals who appreciate well-being, work-life balance, and adequate financial planning for the future.
Benefits That Attract Top Talent in China
In China, leading companies go beyond statutory and customary benefits to offer modern, high-impact perks designed to attract and retain top talent—especially in high-growth sectors like technology, finance, pharmaceuticals, and professional services. These progressive benefits help create an appealing workplace culture and differentiate employers in a competitive labor
Below are some of the most sought-after remote and soft benefits:
Flexible Work Options:
Many top employers now offer remote work, hybrid schedules, or flexible working hours, particularly in tech, consulting, and multinational sectors. This trend accelerated after COVID-19 and continues to be a key decision factor for younger and urban professionals seeking work-life balance.
Family-Inclusive Insurance Plans:
Leading companies expand medical insurance to include spouses, children, and even parents, helping employees manage family health risks and reducing out-of-pocket expenses. Family coverage is especially valued in China's evolving demographic landscape with aging parents and young children to care for.
Mental Health Resources:
With growing awareness of mental well-being, some forward-thinking employers now offer:
- Access to Employee Assistance Programs (EAPs)
- In-office counseling or mental health hotlines
- Workshops on stress management and mindfulness
This is particularly common among foreign-invested firms, where global well-being strategies are localized for China.
Housing Allowance:
To ease the high cost of urban living in cities like Beijing, Shanghai, and Shenzhen, some employers offer a monthly housing allowance, rental subsidies, or relocation stipends. This is particularly common for mid- to senior-level talent relocating from other provinces or countries.
Meal Allowance:
Providing a daily or monthly meal stipend or access to subsidized cafeteria meals is common in urban offices. This benefit supports employee satisfaction, improves onsite attendance, and reduces minor daily costs.
In addition, many standout employers show continued appreciation for their staff through other food-related perks, including group meals gifts like mooncakes during cultural festivals.
Tuition Reimbursement and Learning Support: Support for further education and skill development encourages employee growth and loyalty.
To foster employee growth and career development, top-tier employers may offer:
- Tuition reimbursement for approved degree or certification programs
- Language training (especially English or Mandarin for cross-border teams)
- Access to online learning platforms or professional development budgets
These benefits enhance retention and position the employer as an advocate for continuous learning.
While none of these benefits are mandatory, they are increasingly seen as essential tools to compete for top-tier talent. A 2024 survey by Robert Half found that over 60% of professionals in China would consider changing jobs for a more comprehensive benefits package, underscoring the importance of tailored perks that meet modern employee expectations.
In China’s dynamic labor environment, especially in sectors like technology, finance, and international trade, employers offering flexible, family-oriented, and development-driven benefits gain a significant edge in both recruitment and retention.
How to Set Up and Manage Employee Benefits in China
Establishing and managing employee benefits in China requires careful attention to local regulations, regional nuances, and cultural expectations. The social insurance system, taxation rules, and employment practices can vary widely across provinces and cities, so strategic setup is essential for ensuring compliance and employee satisfaction.
Here’s how to approach it effectively:
1. Partner with Local Benefits Providers
Collaborating with local insurance companies, healthcare providers, and third-party administrators makes it easier to offer tailored benefit packages that meet employee expectations while complying with Chinese regulations.
Local providers are well-versed in regional policies (e.g., contribution rates for social insurance and housing funds) and can facilitate benefits like:
- Supplemental commercial insurance
- Group health plans
- Enterprise annuity (private pension) schemes
Partnering locally also simplifies claim processing and service delivery for employees.
2. Ensure Compliance with MOHRSS Regulations
Stay informed about the Ministry of Human Resources and Social Security (MOHRSS) guidelines to align your benefits offerings with legal requirements. Regularly review updates to avoid legal repercussions. To remain compliant:
- Register employees for social insurance and the housing provident fund within 30 days of employment
- Contribute based on local standards (rates and base salary caps vary by location)
- Submit regular reports and payments through the local HR and Social Security bureaus
It’s critical to stay updated on regional labor bureau announcements, as provinces like Shanghai, Beijing, and Shenzhen often issue policy adjustments throughout the year.
3. Communicate Benefits to Employees
Clearly communicate the details of employee benefits packages through regular updates and informational sessions to employees understand and value their benefits. Consider using:
- Employee handbooks outlining benefits in Mandarin and English
- Orientation sessions for new hires
- HR self-service portals with real-time access to benefits information
Clear communication builds trust, reduces confusion around entitlements, and increases benefit utilization, especially for flexible or optional perks like commercial insurance and training allowances.
4. Monitor and Update Benefits Offerings
Continuously assess and revise your benefits packages in response to employee feedback and market trends. This adaptability helps maintain competitiveness and employee satisfaction.
You can periodically assess your benefits by:
- Conducting employee surveys or focus groups
- Benchmarking against your industry competitors (especially in tier-1 cities)
- Adapting to demographic shifts, such as caregiving support or family-inclusive benefits
This iterative process ensures your benefits remain competitive, cost-effective, and aligned with workforce needs.
5. Outsource Benefits Management to a Chinese EOR Service
If you want to avoid all the hassles described above, or for foreign companies who want to hire talent in China without opening a local legal entity, partnering with a Chinese Employer of Record (EOR) is an option worth exploring.
Working with an EOR in China is a streamlined solution for managing employee benefits, and numerous other tasks. Other responsibilities you can outsource to an EOR include:
- Employment contracts and onboarding
- Social insurance and housing fund registration and payments
- Payroll and tax compliance
- Benefits administration and employee communication
- Visa and work permit assistance (including separate requirements for working in Hong Kong)
Relying on an EOR partnership helps you remain compliant with Chinese labor laws while avoiding the complexity of establishing a local subsidiary and, ultimately, giving you peace of mind that you won’t run into legal challenges.
In a country as complex as China, EOR relationships are extremely powerful. This is even more true for small companies with lean HR teams that want to hire remote employees in multiple provinces where local government rules vary widely.
Why Compliant is Important
Non-compliance with employment laws in China can result in severe legal, financial, and reputational consequences.
The following are key risks companies face when failing to adhere to local requirements:
- Employee Misclassification: Misclassifying full-time employees as independent contractors to avoid tax or benefit obligations is illegal under Chinese labor law. If identified:
- Employers may be ordered to sign labor contracts retroactively
- Pay back wages, social insurance contributions, and fines
- Face increased scrutiny during audits or labor inspections
- Underfunding Social Security Contributions: Failure to properly register employees or make full contributions to the five mandatory social insurance programs (pension, medical, unemployment, injury, and maternity) and the housing fund can result in:
- Payment of arrears with interest
- Fines up to three times the underpaid amount
- Legal action by employees or local bureaus
- Corporate Fines and Penalties: General non-compliance (such as failing to sign a written labor contract within 30 days of employment) can result in fines of RMB 10,000 to 20,000 per incident and may trigger broader inspections!
- Employers could also be added to public credit watchlists, potentially damaging the business’s reputation and access to public tenders.
- Employers could also be added to public credit watchlists, potentially damaging the business’s reputation and access to public tenders.
- Legal Disputes: Employees can file claims through labor arbitration committees, which are the first step in formal dispute resolution in China.
- Common employee claims include: unpaid wages or overtime, illegal termination, and denial of benefits
- Companies that lose arbitration may face court litigation, back pay, reinstatement orders, or damage awards.
- Loss of Business License: In cases of repeated or willful violations, particularly involving non-payment of wages or social insurance, local authorities may suspend or revoke your business license, especially if violations affect large numbers of employees or provoke public complaints.
To avoid these compliance risks, it’s critical to:
- Stay current with national and regional employment regulations
- Maintain accurate HR and payroll records
- Conduct periodic internal audits
- Seek legal counsel or partner with a local HR compliance or EOR provider
Staying compliant not only protects your business operations in China but also strengthens employee trust and your employer brand. For authoritative legal guidance, consult with locally licensed HR or legal professionals.
Get Support Setting Up Benefits in China
Establishing employee benefits in China requires a careful balance between compliance with legal obligations and meeting employee expectations in a dynamic labor market.
A well-designed benefits package not only helps attract and retain top talent, but also fosters a more productive and loyal workforce.
However, managing the intricacies of regional compliance requirements and evolving benefit preferences is complex, especially if you don’t have a cultural touchpoint in China already. That’s why many companies choose to outsource these tasks to a Chinese EOR service, to simplify the process substantially.
If you’re ready to take the next steps, here’s my list of the best EOR providers in China to save you hours of your own research:
Join For More Global Hiring Insights
Want more insights like this? Subscribe to our newsletter for expert guidance on global HR, compliance tips, and the latest in workforce trends—delivered straight to your inbox.
