Written by
Fancy Fan – HR Specialist
Minimum wages in China continue to grow. Local governments are required to update their minimum wages at least every few years but have the flexibility to adjust wages according to local conditions.
The minimum wage standard shows how much the company should pay the employee when this one is in a legal employment relationship.
The minimum labor remuneration generally does not include overtime pay, allowances under special working conditions, and statutory welfare benefits.
So how does the minimum wage affect the company and employees? And what are the recent updates of the law related to the minimum wage in China?
Continue to read to know more!
Overview of Minimum Wages in China
First of all, in the picture below you can see an overview of the monthly minimum wage standard and the hourly minimum wage standard in China.
Recent updates of the minimum wage law
1) Sick pay has been increased during the sick leave
According to relevant regulations, the company shall pay sick leave wages according to the following standards if the employee takes a vacation within 6 months for illness or non-work-related injury:
| Continuous working age (year) | Sick pay (the base is employee’s salary) |
| <2 | 60% |
| 2≤X＜4 | 70% |
| 4≤X＜6 | 80% |
| 6≤X＜8 | 90% |
| ≥8 | 100% |
At the same time, the company shall pay no less than 80% of the minimum wage standard for the employees of the city’s company during the year of sickness pay or sickness relief during the employee’s sick leave.
If the minimum wage standard is raised, the sick leave wages will also increase accordingly.
2) Employees on probation period are paid more than before
According to the Labor Contract Law, the probation period is included in the labor contract period.
The wages of laborers during the probation period shall not be lower than the minimum salary of the same position of the unit or 80% of the wages agreed in the labor contract, and shall not be lower than the minimum wage standard in the location where the employer is located.
Therefore, even during the probation period, the company should guarantee the minimum wage standard.
3) If the employer stops production, the payment of labor remuneration will be increased
Article 12 of the “Interim Provisions on Wage Payments” stipulates:
- If the company stops work or production and this is not caused by a worker’s reason, the employer shall pay the worker’s wages in accordance with the standards stipulated in the labor contract.
4) The economic compensation for the employees goes up
Article 47 of the “Labor Contract Law” stipulates:
- economic compensation is paid to the worker according to the standard of the worker’s length of work in the company and one month salary per full year (based on the worker’s 12 months before the labor contract is terminated). The average wage is the standard, if it is lower than the minimum wage standard, it will be calculated according to the local minimum wage standard. If the minimum wage standard is raised, the economic compensation received will also increase.
Clarifications About Minimum Wages in China
1) Why are there differences in the minimum wage in different provinces and cities?
According to the “Minimum Wage Regulations”, different administrative regions, provinces, autonomous regions, and municipalities may have different minimum wage standards. Local governments have the flexibility to change the levels of the minimum wage standards.
2) Does the minimum wage include the social insurance and the housing fund?
In fact, regarding whether the minimum wage standard includes the “five insurances and one payment” paid by individuals, local regulations are not consistent, so the value of the minimum wage is different.
Most places are explicitly included. For example, Sichuan clarified that the minimum wage standard includes the social insurance premium and housing accumulation fund that should be paid by individuals.
Some places clearly do not include, for example, Beijing and Shanghai make it clear that the various social insurance premiums and housing provident funds payable by individual workers are not part of the minimum wage standard, and the employer should pay separately according to the regulations.
3) What if the wage is lower than the minimum wage?
According to the “minimum wage regulation”, when the employee is in a legal employment relationship, the salary that the company should pay cannot be lower than the local minimum wage after excluding the below items:
- Pay for extended working hours;
- Allowances under special working conditions such as middle shift, night shift, high temperature, low temperature, underground, toxic and harmful;
- The laborer welfare treatment set by the law, code, and country.
Conclusion
We hope that this overview will give you an idea of the recent updates of the wages law in China and the minimum wage standard levels in China.
Our service can handle the complete employee payroll for your company in China in compliance with the local policies. As a non-state-owned consulting firm, we can directly hire employees for a company not having a legal entity in China by our specialized Employee Leasing / Talent dispatching services.
