Most foreign investors are concerned about their employees’ benefits and want to know to what extent the costs affect their business operation.
In practice, there are many kinds of employee benefits and vary from company to company. Some are statutory and others are voluntary. Today, we’ll take a closer look at these items.
Five insurances and one fund
Which stands for Pension insurance, Medical insurance, Unemployment insurance, Maternity insurance, Work-related injury Insurance and Housing fund. Those are regarded as the most important employee benefits in a company. Of course, it is 100% forced. The costs see the below table1. (Local standards)
Table 1.
Items | Percentage |
Pension insurance | 14% |
Medical insurance | 11% |
Unemployment insurance | 2% |
Maternity insurance | 0.7% |
Work-related injury Insurance | 0.7%-1% *depends on the industries |
Housing fund | 8% |
**The amount employer pays those insurances is based on the employee’s previous year’s monthly average salaries. | |
Statutory Holidays
There are 7 statutory holidays in China. And during these holidays, the employees must be paid as usual. More details see the table2.
Table 2.
Names | Days off |
New year (January 1st) | 1 |
Chinese New Year | 3 |
Qing Ming(Tomb-sweeping day) | 1 |
International Labor Day(May 1st) | 1 |
Duan Wu (Dragon Boat Festival) | 1 |
Zhong Qiu(Mid-autumn Festival) | 1 |
National Day ( October 1st to 3rd) | 3 |
Total | 11 |
**Sometimes the holidays follow with the weekends, so the actual off days will be longer. | |
Allowances
According to the Chinese business tradition, the employees will get allowances or the bonuses from the employer from time to time, and it often happens during some national holidays. It is not statutory, but a way to retain talents. For example:
Year-end Bonus, it is the most concerned by the employees, in some WFOEs, the amount is the extra month salary or two months’, and in other companies, it is probably a specific percentage of the company’s or department’s total income (i.e. commission or performance bonus). Certainly, the bonuses must be paid off prior to the Chinese New Year.
Lunch grants, some companies (most trading companies) will pay these subsidies from RMB10 to RMB30 per day per person. And for most manufacturing companies (more bigger space), they will provide the free catering service to the workers (of course the standard is limited to a certain amount).
Mid-Autumn/National Day gift/Chinese New Year Gift (AKA Hongbao, Red envelope ), the employees will get this gift (cash) during these holidays or one of them. The amount will vary from different companies, RMB100-RMB1000, it depends on a company’s financial position.
Ice cream allowances, it is also called Hot Weather grants, each year the local government will release current year’s standard to the public, the grants will last four months each year (June, July, August and September) i.e. in Year 2014, the standards are RMB130/RMB160/RMB/200 per month for workers in offices , workers in plants and workers in outdoors respectively.
What’s more, some companies will set up more diverse employee benefits to recruit and retain people, such as training fee reimbursement, annual group trip, body check-up, driving allowances, paid long-term holiday leaves, etc.
For more information about the employment benefits design, please contact Victor at victor.tu@victortruman.com.
Keywords: Ningbo accounting, Ningbo Auditor, Ningbo accountants, Ningbo CPA
关键词：宁波会计，宁波审计，宁波会计师，宁波涉外会计，宁波注册会计师
Victor & Truman，CPAs 宁波纬度会计师事务所（普通合伙）
