Salary and Contract Basics Salary Annual Leave Insurance and more

In some cases working these items may be similar to local companies in your country. Sometimes they are very different. Here I listed the essentials to expect at a local company.

These are items you should make clear when applying for the job and when hired. I have seen many times one month after a foreigner takes a job and gets his salary the reaction is ‘The contact says XXXX amount, this is too low!’, and they reply ‘No, we took out the tax and social insurance’. Know these details before you start.

Salary

For salary, please check the expected salary section. You should make more than 10,000RMB per month and I would never expect lower than this even if you are fresh out of university. And you can get much more.

Tax

In general tax is calculated as below, legally. One key factor, legally you only pay tax is you have a Working Visa (Z). For other visas you are technically illegal, and they do not pay tax for their illegal workers. If they pay you cash it’s more than likely under the table.

Tax is calculated as:

Salary – 4500RMB x .2 = Tax payable

Many companies also offer a slight bit more for tax, as seen below

Salary – 4500RMB x .2 + 350 (set by company) = Tax payable

For example if your salary is 12,000RMB

12,000 – 4500 x .2 = 1,500RMB tax payable

Social Insurance

Legally all foreign employees are required to pay social insurance. This includes pension, medical insurance, unemployment insurance, maternity insurance and workers compensation.

This an vary city to city the percentage paid per month. In Beijing, as of some time ago, it was a total of 9% of your salary. Remember, this would come out of your salary after tax, so it will mean you will get even less in your bank account.

The good news, 8% of this is pension. Officially pension can be collected after participating for 15 years. As a foreigner you more than likely will not stay that long. The good news is that foreigners are able to apply to get this in one lump sum when they leave China. I have even heard of others applying to get this annually and in January getting a lump sum payment. So it’s kind of like a savings account, money socked away that you will be able to save for the future.

13th month salary

Most companies in China will offer you a 13th month of salary. In most cases this comes in January. Based on your position and negotiation you may be able to get more. For example managers can get 14 months or 16 months salary, so every 3 months would be double salary. Make sure this is in the contract and you discuss this.

Bonuses

Based on companies have a clear bonus system in place. This should be written down. If the bonus is verbal there is a good chance it won’t happen, if it’s vague there is a good chance it won’t happen. So don’t get your hopes up unless it is in writing.

Annual Salary Increase

Every year there will be an annual evaluations and salary increase. The first year could be the most dramatic. I have seen some people start on very low salaries and get 50% or 80% increases to adjust to a normal salary. In general you should expect a 10% to 15% increase for good performance. If you hit all the goals they set, 15% is a good expectation.

Annual Leave

Technically the first year gets 0 leave days. Yes, 0 days. After one year you get 5 annual leave days. Make this clear with the company and negotiate longer annual leave terms. Once the contract is set it’s hard to change for a year.