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- Human Resources and Payroll in China 2016-2017 (5th Edition)
3.5 Additional Payroll Costs
Certain cities and regions require additional mandatory payments bemade to employees. Although
these additional fees do not appear high, especially by Western standards, we include them in
this chapter to highlight the fact that there are regional policies in place affecting the amount of
compensation payable to employees. Companies that do not follow these rules can be fined. Such
regional allowances should be considered when processing the monthly payroll.
Winter Heating Fee
North China – defined according to the Huai River-Qin Mountains line – gets very cold in the winter,
with temperatures below -30 degrees Celsius in some areas. Heating is supplied to all apartments
during the winter, but the costs vary per city. Each household can expect to pay a fixed fee of around
RMB 2,000 to RMB 4,000 for constant heating through the winter months.
To ensure that all households are able to afford their heating bill, many local governments require
companies to set aside a heating allowance each month for all employees.
For example, in Dalian, this amount is calculated according to the job title and issued per month.
Additionally, companies must contribute two percent of the average salary of all employees with
a Dalian hukou to a fund that helps retired people pay for their annual heating fees. This amount is
paid together with the monthly social security contribution to the social security bureau.
Summer Heat Allowance
Areas of both South and North China get very hot in the summer, prompting local governments to
require companies to compensate employees during the hot months. For example, in Guangdong
Province, during the period of June–October, companies should pay an additional RMB 100 per
month to their employees working indoors and RMB 150 per month to any staff working outdoors.
Disabled Worker Assistance Fund
The Chinese government has set a minimum quota of disabled employees that a company must
hire. The national average is 1.5 percent of a firm’s workforce, but the rate can differ by province. The
quota does not apply to companies under three years old andwith a workforce of less than 20. Eligible
companies that do not meet this quota have to pay into a fund called the Baozhang Jin (
保障金
), with
the necessary amount again varying according to location. Below, we provide examples of how the
fund works in Beijing and Shanghai.