Is a 13th-Month Salary Mandatory in China?

For ordinary employment at a company in mainland China, no national law requires a 13th-month salary. The obligation comes from what the employer puts in writing: once a labor contract, a collective agreement or a lawfully adopted company rule promises it, it is pay you owe like any other wage, and paying it the same way every year can be used as evidence that it was promised.

This guide is for employers setting pay for staff in mainland China. It covers when a 13th month becomes binding, what happens when people join or leave part-way through the year, and what the extra month does to tax, social insurance and severance.

When a 13th month becomes something you owe

The Labor Contract Law makes pay a required term of every labor contract (Article 17) and requires the employer to pay it in full and on time, as agreed (Article 30). It says nothing about a 13th month. In Guiding Case 183, the Supreme People’s Court’s guiding case on year-end bonuses, the appeal court put it plainly: no law sets mandatory rules for paying year-end bonuses. The employer sets them, and they have to be fair and reasonable.

The main local wage rules don’t add a general requirement either. Neither Shanghai’s Enterprise Wage Payment Measures (in force since 1 August 2026) nor Shenzhen’s Employee Wage Payment Regulations require one, though Shenzhen does have a rule about bonuses when someone leaves (covered below).

So the question is what creates the obligation. The main sources are:

1. The labor contract. A definite amount or formula in the contract is wages. An offer letter works the same way when its wording is definite and it carries into the signed contract.
2. A collective agreement, where one applies to the employer.
3. Company rules. Rules on pay have to be adopted through consultation with staff (Labor Contract Law, Article 4) and shown to employees. Rules adopted that way can decide the parties’ rights in a dispute, under Article 50 of the Supreme People’s Court’s Interpretation (I) on labor disputes. The same article lets an employee ask the court to apply the contract wherever a rule says something different. A handbook can set conditions for a discretionary bonus. It can’t quietly withdraw a 13th month the contract promises.
4. Past practice. Paying the same amount every year, without conditions, is evidence that it was promised. There is no statutory number of years after which it becomes binding. How much weight it carries depends on the records and on what employees were told each time.

Stopping a payment people have come to expect is the expensive version of this question. If the employer decides to reduce pay and the employee disputes it, the employer carries the burden of proof for that decision (Interpretation (I), Article 44).

13th-month salary or year-end bonus

In everyday use, 十三薪 (shísān xīn, “13th salary”) means an extra month of pay, often a fixed one. 年终奖 (niánzhōng jiǎng, “year-end bonus”) means an award tied to company or individual results. Those are habits of speech, not legal categories.

Both count as wages. Bonuses are one of the six components of total wages in the National Bureau of Statistics rules on wage composition (Articles 4 and 7), and Shanghai’s 2026 contribution guidance applies those rules. Calling a guaranteed payment a “bonus” doesn’t make it discretionary. If you want discretion, write the criteria and the discretion down.

Joiners, probation and leavers

Joiners. No national formula prorates a 13th month for someone who starts in, say, August. The contract, a collective agreement or the company’s rules decide. A contract that says nothing leaves the question for the first payout, which is the worst time to settle it.

Probation. Probation pay can’t fall below 80% of the lowest grade for the same post or 80% of the agreed contract wage, and never below the local minimum wage (Labor Contract Law, Article 20; Implementing Regulations, Article 15). That is a floor on pay. It says nothing about whether probation months count toward a 13th month, so the contract has to.

Leavers in Shenzhen. When employment ends before a bonus cycle is complete, Shenzhen applies the labor contract, then the collective contract, then lawfully adopted rules. If none of them says anything, monthly, quarterly and year-end bonuses are paid pro rata for the time actually worked (Shenzhen Regulations, Article 14). So in Shenzhen, proration applies to a leaver unless one of those three documents says otherwise.

Leavers elsewhere. Guiding Case 183 is the case courts look to. The employee’s role was eliminated in a restructuring and her contract ended on 29 December. The handbook said anyone who left before the bonus was paid (usually around March) got nothing. The appeal court ordered the bonus paid anyway, RMB 138,600 before tax. The court’s guiding point tells courts to weigh the reason for leaving, the timing, performance and contribution. Its rule favours the employee where three things line up: the contract didn’t end through the employee’s fault or resignation, the year’s work was done, and the employer can’t show performance fell short of the bonus standard.

This is where the handbook and the outcome can part ways. A “must be employed on the payment date” clause may not defeat a claim where the facts match Case 183. The case doesn’t decide resignations either way, so a resignation clause still needs to say what happens.

Tax, contributions and severance

Tax. Until 31 December 2027, a qualifying annual one-off bonus paid to a resident can be taxed on its own rather than added to the year’s other income. Divide the bonus by 12, find the rate and quick deduction for that monthly figure in the monthly table, then tax the whole bonus: bonus × rate − quick deduction (MOF/STA Announcement 2023 No. 30). The employee can instead choose to fold it into annual income. Separate taxation often lowers the tax, but not always, which is why the employee keeps the choice.

Two limits matter. The method can be used once per taxpayer per tax year (国税发〔2005〕9号, Article 3, reaffirmed in the Shanghai Tax Bureau’s 2025 FAQ). And it covers bonuses based on the year’s performance and assessment, including year-end raises and annual or performance pay settled on assessment (Article 1). A fixed, guaranteed extra month may qualify; whether it does depends on how it is set up, so payroll has to assess the actual arrangement.

Contributions. Housing fund contributions are the employee’s previous year’s average monthly wage times the contribution rate (Housing Provident Fund Regulations, Article 16, unchanged by the amendment in force since 20 September 2026). Shanghai and Beijing also use the previous year’s average wage for social insurance, with local rules for new hires and other exceptions. In Shanghai, employers declare each employee’s average monthly wage for the previous calendar year, counted with bonuses included, against a 2026 range of RMB 7,546 to 37,731 a month from July (Shanghai Tax Bureau, 26 August 2026). Beijing uses the 2025 calendar-year average for 2026 (Beijing declaration notice), within RMB 7,270 to 36,348 from July 2026 (京人社发〔2026〕7号).

So a 13th month paid this year feeds next year’s average. Whether the contribution actually rises depends on where the employee sits: contributions may stay the same if the revised average is still below the floor or was already above the ceiling. The China labor cost calculator applies each city’s limits, and the housing fund rates by city cover the employer’s rate choice.

Severance. The monthly wage used for economic compensation is earned pay, including bonuses, allowances and subsidies (Implementing Regulations, Article 27), averaged over the 12 months before the contract ends. For high earners it is capped at three times the local average monthly wage, for no more than 12 years (Labor Contract Law, Article 47). How an annual payment is spread across that 12-month average is a common point of dispute, and local practice differs. The payment date alone doesn’t settle it. Our severance guide shows how N is worked out.

Worked example: two ways to pay RMB 312,000

Package A pays RMB 24,000 a month plus a 13th month of RMB 24,000. Package B pays RMB 26,000 a month with no 13th month. Both come to RMB 312,000 of gross cash pay a year. Neither figure includes employer contributions or service fees.

The tax illustration assumes a resident employee paid all of it within one calendar year, a 13th month that qualifies for separate taxation, and only the RMB 60,000 basic deduction (Individual Income Tax Law, Article 6). Real employees also deduct their own social insurance contributions and any special additional deductions, so treat this as arithmetic, not a take-home quote.

On these assumptions the employee in Package A pays RMB 4,080 less tax. If A’s 13th month were folded into annual income instead, A’s tax would also be RMB 33,480.

What else differs is everything tied to the monthly wage. Package A’s monthly wage is RMB 2,000 lower, which lowers the 80%-of-contract-wage comparator in the probation rule (RMB 19,200 against 20,800). In Shanghai, the overtime base is the normal monthly wage for the post and excludes year-end bonuses (Shanghai Measures, Article 9). A genuine year-end bonus is excluded; whether a fixed contractual 13th salary gets the same treatment depends on the arrangement. Other cities set their own base.

What doesn’t differ, despite what’s often assumed, is the contribution average or the severance average. Count the same year’s earnings and both packages average RMB 26,000 a month. The real trade-off is a possible tax saving for the employee against a lower monthly wage and the timing rules from the previous sections: a new hire may get no 13th month in their first January, and a leaver’s entitlement depends on how the contract is worded.

Before you issue the offer

Whichever structure you choose, the offer and contract should answer these:

• Is it guaranteed or conditional? Use those words.
• The amount or formula, and which pay it’s based on (base salary only, or base plus allowances).
• The payment month, which also decides the tax year.
• Proration for people who join part-way through the year, and whether probation months count.
• What happens on resignation, on dismissal for cause and on other terminations. In Shenzhen, a leaver is paid pro rata if the labor contract, collective agreement and lawful company rules contain no provision.
• Where the rule lives. If it’s in the handbook, it was adopted through consultation and shown to staff, and it doesn’t contradict the contract.

How NNRoad supports this

With China Employer of Record, a registered Chinese employer holds the labor contract and NNRoad runs payroll and HR, so the 13th month is written into that contract and paid through the same payroll as salary. Companies with their own China entity can use China payroll, which covers gross-to-net calculation, IIT withholding, social insurance and housing fund contributions, payslips and year-end payroll data. Either way, the decision that matters is made before the offer goes out. Send us the proposed package and we’ll review how the 13th month is worded and how it will run through payroll.

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