Minimum Salary Changes in Shanghai

Maggie Jia

Maggie Jia is a partner and heads the firm’s Employment & Compliance practice.

I. Minimum Salary Standard
The monthly and hourly standards have been both increased: beginning on July 1st, 2021, the monthly standard is adjusted to RMB 2,590/m and the hourly standard is adjusted to RMB 23/h.

Legal significance:

Minimum monthly standard:
This is applicable to full-time employees, meaning that if an employee has worked the statutory working hours or the contractually agreed-upon working hours, the monthly salary paid by the employer cannot be lower than the monthly minimum standard.

Minimum hourly standard:
This is applicable to part-time employees. In general, part-timers work no more than four hours a day on average and no more than 24 hours a week for a given employer.
Also note that the monthly and hourly minimum salaries mentioned here should exclude overtime pay, special allowances, etc. According to local regulations in Shanghai, the minimum standards also do not include social insurance contributions paid by the employee and the employer. In addition, as the minimum salary is much lower than the threshold of the Individual Income Tax, they should represent net salary.

II. Local Average Salary of the Previous Year
The Shanghai Municipal Bureau of Statistics and Municipal Human Resources and Social Security Bureau announced Shanghai’s average salary for the previous year (2020): RMB 124056 per year, or RMB 10338 per month.

Legal significance:
For employees with high salaries, if the employer needs to pay economic compensation (i.e. severance), it would be calculated as follows: RMB 31014 per month (RMB 10338 x 3) multiplied by the number of years he/she has worked for the employer (a final period longer than 6 months but shorter than 1 year shall be counted as 1 year, and a final period shorter than 6 month shall be counted as 0.5 year).

III. Social Insurance and Housing Fund Contributions
Finally, as of July 1, 2021, the calculation basis for social insurance contributions has been adjusted to maximum RMB 31014 per month (RMB 10338 Yuan x 3); the minimum is RMB 5975 per month.
From July 1, 2021, the calculation basis for housing fund contributions has been adjusted to maximum RMB 31014 per month; the minimum is RMB 2480 per month.

DaWo Law Firm will of course keep you up to date on labor issues such as this. If you have any specific questions, please do not hesitate to contact us.

References:
最低工资标准
社会平均工资
社会保险、住房公积金缴纳基数