Compensation and Benefits Management
What the domain tests
Compensation and Benefits Management (薪酬福利管理) tests job evaluation, pay structure, market positioning, variable pay, and statutory benefits. China-specific calculations-overtime, social insurance base, housing fund, and annual leave-are common.
Core rules
- Job evaluation establishes internal equity: point-factor, ranking, classification, or Hay-style factor comparison. Market surveys establish external competitiveness. Pay bands combine both.
- Compa-ratio = actual pay ÷ midpoint. A ratio below 1.0 suggests pay below range midpoint; above 1.0 suggests above midpoint. It is not a performance score.
- Statutory costs: social insurance (pension, medical, unemployment, work injury, maternity) and housing fund. Bases are usually the employee’s prior-year average monthly wage, subject to a local floor and a cap (commonly 60%–300% of the local average wage).
- Overtime: at least 150% on normal workdays, 200% on rest days if not compensated with time off, and 300% on statutory holidays. Overtime is capped at 3 hours per day and 36 hours per month in general.
- Paid annual leave: 5, 10, or 15 days based on cumulative service of 1–10, 10–20, or 20+ years. Unused leave is usually compensated at 300% of the daily wage, including the normal wage already paid.
- Variable pay should have a written plan with eligibility, metrics, payment timing, and leaver rules.
Worked example
Monthly salary CNY 8,000. Daily wage = 8,000 ÷ 21.75 = CNY 367.82; hourly = 45.98. Eight hours worked on a statutory holiday: 45.98 × 8 × 300% = CNY 1,103.45. If the employee also worked one rest day (8 hours) without time off: 45.98 × 8 × 200% = CNY 735.68. Using base salary of CNY 5,000 instead of normal wage understates both payments and is a common audit finding.
Traps
- Using “basic wage” rather than normal wage as the overtime base.
- Ignoring the social insurance cap and floor.
- Treating a discretionary bonus as contractual, or vice versa.
- Miscalculating annual leave with cumulative rather than company service.
- Designing incentives with no clawback or leaver clause.