Register your Chinese Staff for Social Welfare
This article provides the overall information related to register Chinese staff for social welfare:
- What is payment of social security and housing fund and
how important is it
- What are the five insurances plus the housing fund
- What is the best practice to maintain social security fund and public housing fund contribution in China
- Benefits for outsourcing the payroll in China
- How can a payroll agency help a company to contribute the social security fund bureau and the public housing fund bureau
What is payment of social security and housing fund and how important is it?
For improvement of the overall Social Security safety net for Chinese residents. The Company has to contribute to their Employee’s Social Security Fund and Housing Fund in accordance with the laws and regulations of PRC for the duration the employees are employed by the Company. Every month the Company has to pay the Employees towards Social Security insurances and the Housing Funds according to PRC labor law and the Employees also need to pay their own part which will be deducted from their salaries. The Company needs to maintain the Social Security Fund and Public Housing Fund Calculation and Filing for its employees including Chinese and expats.
What are the five ‘insurances’ plus the housing fund?
- Pension: Cost to Company is usually 20% of the Employee’s salary, substantially lower in some cities and cost to the Employee is usually 8% of the Employee’s salary, uniform rate nationwide.
- Medical Insurance: Cost to Company is usually between 7%-12% of the salary, substantially lower in some cities and cost to the Employee is usually 2% of the Employee’s salary, substantially lower in some cities.
- Work-Related Injury Insurance: Cost to Company from 0.4%-3% of salary depending on the location and degree of danger of business engaged in and cost to the Employee ‘ No contribution required.
- Unemployment Insurance: Cost to Company is usually 2% of salary but sometimes 1% and only 0.4% in Shenzhen and cost to the Employee is usually 1% of the Employee’s salary.
- Maternity Insurance: Cost to Company from 0.5% of salary depending on location (no contribution at all in Dongguan). Cost to the Company. For more policies and regulations regarding Maternity issues in China, please refer to ‘China Maternity Leave Policies‘.
- Housing Fund: Contribution towards Housing Funds are mandatory and come from both the Company and the Employee determined by local Government, Housing Fund regulations apply to the Employees in all geographic regions of the country. Contributions must be calculated based on each Employee’s average monthly wage over the last year. The actual percentage differs per city or province.
What is the best practice to maintain social security fund and public housing fund contribution in China?
Maintaining and managing new businesses can be a really tough experience. Payroll is among the different necessities one has to deal with and also managing to pay salaries, keeping accurate records, paying individual income tax. Numerous small foreign enterprises in China are finding that they can simplify the process by using an outsourced payroll provider to manage the entire payroll process and by doing so, save time and have the job done efficiently. One can have their own system managed locally, however, that using a local payroll provider or outsourcing the process can add up to an extra security measure to complete the process.
Benefits for outsourcing the payroll in China?
- Relieving the burden of handling complex processes and ensuring payroll accuracy and compliance
The local payroll provider can help in dealing with the complexity as China have different policies and regulation and its difficult for a small foreign Company in China to know all the rules and regulations of each province and city.
- Relieving administrative burdens so you can focus on your core HR processes
It helps the Company reduce the tedious paperwork and extensive communication with the local Social Security Bureau, Housing Fund Bureau and any other local authorities.
- Minimizing or eliminating the need for an in-house HR operation team
It lowers labor costs and helps in substantial savings because SMEs in China only need a admin to be the contact person, no need to hire in-house HR people to handle the payroll, social security fund and public housing fund. If you would like to know the labor cost in China, HROne labor cost calculator can help you easily calculate the labor cost breakdown.
In many cases with the foreign SMEs where the team is very small and depending on one HR person is not a good idea as the Company becomes too dependent on one HR person and in the event the HR person exits the Company, it will have a negative impact on the whole Company’s payroll, last but not the least outsourcing helps the Company to focus more on the core business leading to a hassle-free environment for growth in China.
How can a payroll agency help a company to contribute the social security fund bureau and the public housing fund bureau?
A professional payroll agency which have expertise in China and which is also familiar with the legislation and requirements of different government authorities in different cities can help a Company to distribute the payment to the Social Security Fund and Housing Fund Bureau in different cities in China.
The payroll service provider helps with carrying out the following services:
- Open company social security account and public housing fund account with the local government bureaus to handle filing of social security fund and public housing fund
- Social Security Fund and Housing Fund related process management for new hires and quit Employees
- Monthly salary calculation and delivering
- Employee’s individual income tax calculation and deduction
- Annual report for individual income tax
- Online E-payslip
- Monthly Social Security and Housing Fund calculation, deducting and contribution
- Annual Social Security Insurance (e.g., disability insurance) calculation and contribution
- Local policy maintenance and updating
How HROne can be beneficial to your business
HROne’s service can handle the complete employee benefits for your company in compliance with the local policies and also can take care of the visa for your company’s expatriate employees. We can directly hire employees for a company not having a legal entity in China by our specialized Employee Leasing / Talent dispatching services.
The information contained in this article is valid on June 7th, 2016. For updated information, please contact us via email at [email protected]