After examining your pay slip, have all deductions from your salary before tax been made legally? Have you found anything that just doesn’t look right?
The salary you receive is a reward for all the hard work you do every month, and thus every deduction made from it directly impact your personal benefits. Any illegal deduction should not be left out of question. The salary that expats receive and take home every month shrinks because part of their wages are distributed to social insurance funds, taxes, etc...
Necessary payroll deduction
Withholding and remitting social insurance
Under the New Policy, all expatriates are now allowed to receive social insurance benefits similar to those for Chinese citizens (with the exception of housing funds). They will consequently need to pay social insurance premiums. The New Policy comprises five separate funds including pension, medical care, work-related injury, unemployment and maternity insurance. The rates differ from province to province and are subject to caps.
The term expatriate comprises all foreigners who work in China and hold a working permit. It includes expats employed by Chinese and overseas-funded companies, social groups, law firms and foundations that register in China, as well as those foreigners assigned to China on secondment by overseas-registered companies. It also includes expats working for branches and representative offices.
Withholding and remitting income tax
Initial deduction is RMB 3,500 for PRC residents and 4,800 for foreigners. As mentioned in the primer, you nearly always have to pay tax in the country you move to and China is no exception, you'll have to pay income tax in China. The only slightly "simple" way of avoiding it is below, but for 95% of people reading this, you'll be paying tax (Well unless you don't earn enough).
Unwanted payroll deduction
Basic wage can't be deducted
Laborers' basic wage calculation standard is based on the labour contract or country & enterprise's rules and regulation. For instance, payroll comprises piece wage, hourlly wage. Any enterprises have no right to deduct employees' basic wage. As for the deduction of the floating wage, such as performance-related pay, bonus, shall be agreed upon by both parties.
There can never be any legitimate basis for deducting wage when one is late for work. But there are a lot of enterprises implement deduction on being late for work. It is no ground for blame that enterprises take some action to manage employee, but if any employee who doesn't cause direct economy lost on their company, employers have no right to deduct the wage.
According to the Provisional Regulations of Wages, provided that employees who caused direct economic loss to their company, employers can ask for compensation based on the labor contract, which can't be more than 20% of employee's monthly income
Photo credit: K.sina.com
Illegal deduction for donation
According to the Law on Donations for Public Welfare, any type of donation shall be based on employees' willingness, they also have the right to decide the donation amount. An enforcement deduction is breaking the law.
Other deduction condition
Any deduction shall be in accordance with the law. The cost of upbringing, alimony, and other fees that is adjudged by the Court can be deducted from the wage