Despite the importance of payroll in a company, many businesses are still unclear on the types of payroll solutions available and how to evaluate them to determine the best fit for their needs.

To help you decide whether outsourcing payroll or adopting a Human Resource Management System (HRMS) cloud solution is better for your company, we have prepared a helpful comparison guide below. But before that, here is an overview of each solution.

When a company outsources payroll, it hires a specialist payroll provider to handle some, or all, of its payroll functions. Outsourced payroll providers should offer a wide range of services to allow businesses to select the options best suited to their specific needs.

Outsourcing administrative payroll functions can streamline your company’s operations, allowing your HR team to focus their time on delivering key strategic imperatives.

An HRMS cloud solution, such as BoardRoom’s Ignite HRMS, offers an all-in-one payroll platform that automates in-house payroll processing.

Typically, small businesses will choose to manage employee databases and payroll processing in-house, while the payroll software vendor will manage data backups and software upgrades.

Pricing models vary depending on the quality of the HRMS cloud solution. Most commonly, software vendors offer subscription-based, ‘pay as you go’ pricing.

At BoardRoom, we offer the best of both worlds. Our team of experts can manage all aspects of your payroll, while our advanced HRMS cloud solution, Ignite HRMS, is an all-in-one platform that automates and streamlines payroll processing. This means that we are able to offer a seamless payroll solution for all stages of your company’s growth, from a newly established start-up to a mature multi-national corporation.

Speak to our payroll specialists today about how we can tailor a payroll solution to meet your company’s specific needs.

Your company’s most valuable assets are its employees. A critical, yet often overlooked, component of maintaining employee satisfaction is accurate, efficient and reliable pay runs. However, achieving this in-house can be incredibly time-consuming.

Do you know how many hours your in-house team spends on payroll processing? It might be time to consider outsourcing payroll, so that you can focus on what really matters: the strategic business drivers that grow your company.

To help you make the best decision for your business, consider the following key advantages of engaging an outsourced payroll services provider in China.

One of the most significant risks that employers face when executing payroll in China is non-compliance with the country’s complex labour and tax laws. Staying informed of the latest regulatory changes that impact payroll, and then accurately applying them, takes considerable time.

Outsourcing your payroll to a specialist service provider like our team of experts at BoardRoom can minimise your exposure to compliance risks and help give you the confidence you need to focus on higher-value business tasks. Let us take care of the following compliance considerations so that you and your team don’t have to:

• Tax deductions: these vary from region to region (and even city to city) across China, but they usually total around 40% of an employee’s salary.
• Withholding tax: employers must withhold approximately 15% of employees’ wages for individual income taxes, and pay these to China’s tax bureau before the 15th of each month. Employers are also required to withhold and pay a shares tax, bonus tax or severance tax when applicable.
• Social insurance schemes: Employers and employees are required to contribute to China’s mandatory social insurance schemes. These include pension, medical, industrial injury, unemployment, maternity and Housing Fund (HF) insurance. The HF scheme allows employees to save towards purchasing their own homes.

Social insurance and HF contribution rates are adjusted annually, with rates based on the average salary of the specific city or region where the employee works.

Employers must also pay insurance withholdings to the Bureau of Labour Insurance, National Health Insurance Council, and the Employee Pension Board before the 15th of the following month.

• Minimum wage-setting: Generally, local government agencies across China set minimum wages. However, the country’s labour bureaus set standard minimum wages for specific job types.
• Working hours: China has an eight-hour workday with an average working week of no longer than 44 hours, and (most commonly) two days off per week.
• Pay cycles: Salaries in China are typically paid monthly.
• Employment termination: An employee may terminate their employment by giving 30 days’ written notice of termination. Employers must also give their employees 30 days’ notice if they wish to terminate the employment.

Unless the employee failed to satisfy the conditions of their employment contract, or they violated any laws or company policies, the employer must also issue severance pay.

• Paid holidays: these include the first three days of the traditional Chinese lunar calendar, three days for International Labour Day on May 1-3, three days for National Day from October 1-3, and one day on 1 January. China’s government occasionally also establishes special holidays on short notice.
• Annual leave: employees are entitled to between 5-15 days of paid annual leave, depending on their length of service with the company. Employees can also apply for sick leave, marriage leave and funeral leave, when applicable.
• Parental leave: maternity leave entitlements are 98 days, paid by the employer. Some provincial regulations extend the amount of leave available by as much as three months in some instances. Paternity leave entitlements are between 7-20 days, with some extensions permissible.

When you outsource payroll, your in-house HR team can focus on achieving more strategic objectives, such as increasing employee engagement and productivity. With the time saved by outsourcing, your company can then reallocate staff towards core business activities. Outsourcing payroll can also save your company money because it can:

• avoid the need to hire an in-house payroll expert;
• implement more streamlined payroll processes; and
• avoid maintaining  payroll software or managing paperwork and tax liabilities in-house.

One of the biggest risks employers face with executing payroll in China is not fully complying with the country’s labour laws. Employees are generally required to have proof of residence in the city in which they apply for employment, and employers must file the appropriate social insurance paperwork.

Employees may be hired on a permanent or temporary basis; a temporary contract can be for a fixed period of time or until the occurrence of a certain event. Workers from abroad can be employed only with special permission from the local authorities and after obtaining an employment certificate for the employee.

Minimum wages are set by local government agencies across China, and the country’s labour bureaus set standard minimum wages for certain types of jobs. China has an eight-hour work day with an average working week no more than 44 hours long and (generally) two days off per week. Salaries and payroll-run in China are generally paid monthly.

An employee may terminate employment with 30 days’ written notice. Employers must provide 30-day advance notice to an employee to part ways with mutual consent and must pay severance unless the employee failed to satisfy the conditions of his or her employment contract and/or violated any laws or company policies.

Required tax deductions vary from region to region (and even city to city) across China, but they usually total around 40 percent of an employee’s salary. Since all employees pay income tax, China mandates that employers withhold around 15 percent of employees’ wages for individual income taxes and pay, paying them to China’s tax bureau before the 15th of each month. Employers are also required to withhold and pay a shares tax, bonus tax, or severance tax when applicable.

Employers and employees are required to contribute to China’s mandatory social insurance schemes – pension insurance, medical insurance, industrial injury insurance, unemployment insurance, and maternity insurance – as well as to its Housing Fund which allows the employees to save money towards purchasing their own home.

The amount of social insurance and Housing Fund contributions are adjusted each year for every city or region, with the amount determined using the average salary in each city. Respective government officials often implement the changes at different times, placing an important administrative burden on employers to stay abreast of all required payroll compliance guidelines.

The required withholdings must also be paid to the Bureau of Labour Insurance, National Health Insurance Council, and the Employee Pension Board before the 15th of the following month.

As in most other Asian countries, workers in China receive about 10 paid holidays per year. These generally include the first three days of the traditional Chinese lunar calendar, three days for International Labour Day on May 1-3, and three days for National Day from October 1-3. They also receive a paid holiday for January First on the Western calendar and China’s government occasionally establishes special holidays on short notice.

Employees are entitled to between 5 and 15 days of paid annual leave at a sliding scale based on their length of service to the employer. Employees can also apply for sick leave, marriage leave, and funeral leave, when applicable.

Women are generally entitled to 98 days of maternity leave, paid by the employer, though certain provincial regulations extend the amount of leave available (in some instances, by as many as three months). Fathers are entitled to 7-20 days of paternity leave, with some extensions permissible.

Most companies operating in China have engaged a regional payroll services provider to take care of China’s complex payroll considerations and tax requirements. To ensure all employer’s liabilities are complied with according to the local regulations, consider outsourcing your payroll operations in China to a trusted managed services provider like BoardRoom.

BoardRoom has extensive experience operating in China with a local team and a new cloud-based HRMS solution, Ignite, that delivers a superior user interface and an intuitive mobile application.