# Payroll in China: employer costs, taxes and compliance

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> Canonical page: https://payrolloverview.com/countries/china/
> Methodology: every figure carries a source and a date in our database; ratings are averages of third-party platforms (https://payrolloverview.com/methodology/).
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> Data updated: September 2026
> Every figure below carries its statutory source and year.

Running payroll in China means doing several things every month: calculating each employee's gross salary, withholding their income tax and social insurance contributions, adding your own employer contributions on top, and filing everything with the relevant local authorities. All of that happens on a monthly cycle, so there is no quarterly shortcut. Foreign employers also need a legal entity in China before they can hire directly, which shapes how most overseas companies approach the market.
This guide walks through what it costs to employ someone in China, how the monthly pay cycle works, what leave and termination rules mean for your payroll runs, and when it makes sense to hand the whole thing to a specialist provider. The tables on this page carry the exact figures.

## Employer costs & taxes

| Item | Value | Source |
|---|---|---|
| Employer social security (on top of gross salary) | 24.6% | ISSA Country Profiles (2024) |
| Employee social security (withheld from pay) | 11% | ISSA Country Profiles (2024) |
| Corporate tax rate | 25% | OECD (2026) |

## Pay & payroll operations

| Item | Value | Source |
|---|---|---|
| Payroll cycle | monthly | Perplexity (AI gap-fill) (2026) |
| 13th-month salary | none | Perplexity (AI gap-fill) (2026) |
| Minimum wage (per month) | CN¥1,930 | ILOSTAT (2024) |
| Statutory work week | 44 hours/week | National government (2026) |

## Leave & time off

| Item | Value | Source |
|---|---|---|
| Paid annual leave | 5 days | National government (2026) |
| Public holidays | 13 days | Perplexity (AI gap-fill) (2026) |
| Maternity leave | 12.9 weeks | National government (2026) |
| Paternity leave | 0 weeks | Perplexity (AI gap-fill) (2026) |

## Termination

| Item | Value | Source |
|---|---|---|
| Notice period | 4.3 weeks | National government (2026) |
| Severance pay (at 1 year tenure) | 23.1 weeks | National government (2026) |

## Labor market context

| Item | Value | Source |
|---|---|---|
| Retirement age | 58 | OECD Pensions at a Glance (2024) |
| Unemployment rate | 4.6% | World Bank Open Data (2025) |
| GDP per capita | $13,862 | World Bank Open Data (2025) |
| Union density | 44.2% | ILOSTAT (2017) |
| Collective bargaining coverage | 45% | ILOSTAT (2017) |

## Employer contribution breakdown

| Contribution | Rate |
|---|---|
| Pension & disability | 16% |
| Health & long-term care | 6% |
| Unemployment insurance | 2% |
| Work injury insurance | 0.61% |

Total: about 24.61% of gross salary, paid by the employer on top of pay.

The gap between what an employee sees on their payslip and what you actually spend is meaningful in China. Employers pay a significant layer of social insurance contributions on top of gross salary, roughly a quarter again on top of what you pay the employee. That covers things like pension, medical, and other statutory schemes. Add the employee's own contributions, which come out of gross and sit closer to a fifth of salary, and the total tax wedge on labor is substantial.
In plain terms, if you budget only for the gross salary number, you will underestimate your true cost by a wide margin. A hire that looks affordable at the gross level can look quite different once employer contributions are included. Check the table below for the precise rates and how each component breaks down.

Payroll in China runs monthly, so you are processing one cycle per month for every employee. There is no statutory thirteenth-month payment required, which keeps the annual calendar predictable. Minimum wages are set locally and vary by region, so check what applies where your employees are based; the table below carries the reference figure. Make sure gross salary clears that floor before any deductions, not after.

Annual leave starts at five days for most employees and can increase with tenure, so your payroll system needs to track accruals and flag any unused balance at termination. China also has thirteen public holidays in the calendar year, and how those interact with working schedules affects what counts as overtime. On the termination side, notice runs to just over four weeks and severance can reach the equivalent of roughly twenty-three weeks of pay depending on the situation. Both of those become line items in a final payroll run, so it is worth modeling them before you start an exit process rather than after.

If you do not already have a registered entity in China, you cannot run payroll there directly, and setting one up takes time and money. Even with an entity in place, payroll filings happen in Mandarin, rates change, and local rules differ city by city. A global payroll provider or employer of record can take on the entity requirement, handle the monthly filings, and absorb the overhead of keeping up with contribution rate updates. That tends to make sense for companies with a small headcount in China, or for those moving fast and not ready to commit to a permanent local structure.