China Employment Law Update

Executive Summary

1. Local minimum wage and local monthly average salaries have been updated in various cities across China.
2. 28 provinces specify the standard amounts that can be received in respect of High Temperature Allowance, which will begin to be issued from this month.
3. Employers' statutory required contributions for social insurance and housing provident fund are reduced again in China.

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Updates to regional minimum monthly and hourly salary levels

Since the beginning of the year, minimum monthly and hourly salary standards have been implemented across various regions in China. The table below details the salary levels in each region, including the date on which they were, or will be, implemented:

N.B: the figures above set out the highest minimum rate in the relevant province.

Three major cities, Shanghai, Beijing and Shenzhen, have announced a figure for the local average monthly salary over the last year. The average monthly salaries were RMB 5939, RMB 7086 and RMB 6753 respectively. These new figures will increase the cities' contribution of social security and the cap of statutory severance pay.

28 provinces specify the standard amount of high temperature allowance

In accordance with the Administrative Measures for Heatstroke Prevention and Cooling, as amended in 2012, employers must provide a high temperature allowance to all employees who complete outdoor work in temperatures exceeding 35℃, or to those employees whose workplace cannot be cooled to a temperature of 33℃ or below. 28 provinces have specified the standard allowances (shown in the table below), which will begin to be issued this month.

A Decrease in Social Insurance and Housing Fund Deposit

There is good news for employers as the statutory-required contributions for social insurance and housing provident fund are reduced.

According to the Circular of the Ministry of Human Resources and Social Security and the Ministry of Finance on Periodically Reducing Social Insurance Payment Rates (the "Circular"), employers' required contribution rates to the basic pension insurance of enterprises has been capped at 20% from 1 May 2016. The rate for companies that were already making a contribution of 20% has been reduced to 19%. In addition, the overall unemployment insurance payment rate has been further reduced by 1-1.5%, following a 1% reduction in 2015. Work-related injury insurance rates have been reduced by 0.25% and the maternity insurance payment rate has been reduced by 0.5% under paragraph 3 of the Circular. The reduction in rates aims to reduce business costs and promote business vitality.

The current supra-deposit ratio for housing fund will be capped at 12%, according to the executive meeting of the State Council, which took place on 13 April 2016. Provinces including Hebei, Jilin and Ningxia have already issued practical implementation details to benefit businesses. At the same time, the statutory release that companies in financial difficulty can apply for to suspend their required contribution offers them a 'buffer' period to adjust. They are entitled to raise the deposit rate or make up for missed contributions at a later stage when the company becomes profitable again.