ChinaAn employer’s guide to employment laws, regulations, and Employer of Record (EOR) in China.
Looking to hire in China? An EOR can help.
Expanding into China? AnEmployer of Record (EOR) service allows you to recruit, onboard, and manage employees without needing to establish your own legal entity.
An EOR acts as the official employer for your staff, handling local recruitment, payroll administration, benefits provision, and tax compliance – all in accordance with Chinese labor regulations.
Using an EOR to streamline and automate the management of global employees enables you to bypass the complexities of international employment law and concentrate on expanding your business. You’ll maintain control over business operations and your employees’ day-to-day.
How to hire in China
Step 1: Choose between an entity and an EOR
When expanding your business into China, your first choice is whether to set up a local entity or use an Employer of Record (EOR) service. Establishing a local entity gives you full control over your operations. It allows for a direct relationship with your employees and creates a strong market presence.
This option is ideal for companies planning to hire many employees. However, it requires a significant investment of time and resources. You must navigate local regulations, establish a business entity, and ensure compliance with various legal requirements.
On the other hand, an EOR simplifies the process by managing all legal and administrative aspects of employment. This method enables your business to enter and exit the market more easily and with less risk.
Step 2: Finding an EOR
Choosing the right EOR for your Chinese team is essential. Picking an unsuitable service can lead to compliance issues, unexpected expenses, and a negative experience for your new employees.
Consider these factors when evaluating EOR options:
- Legal compliance. Ensure the EOR is well-versed in Chinese labor laws, employee rights, tax regulations, and local benefits. Look for a provider with a strong track record and experience in your specific industry.
- Customer service. Check if the EOR offers comprehensive support. Multiplier, for example, provides 24/5 support and dedicated account managers.
- Transparent pricing. Be wary of EORs with low upfront costs but hidden fees or unclear pricing structures.
- Total cost of ownership. Focus on value rather than just the lowest price. Sometimes, opting for the cheapest option can result in higher costs due to inadequate service or hidden issues. Ensure you’re investing in a quality solution that meets your budget without compromising on essential services.
Step 3: Employing and onboarding in China
Send over the contract
After deciding to hire in China, the next step is to prepare an employment contract that adheres to Chinese labor laws. Provide the contract in both English and Chinese to ensure clarity for all parties.
The contract should outline crucial details such as job duties, salary, working hours, and termination conditions. Your EOR can create contracts that are fully compliant with Chinese regulations and customized to your needs, often in a matter of minutes.
Once finalized, your EOR will securely send the contract to the candidate for signing.
Enhance compensation with competitive benefits
To attract top talent in China, include a competitive benefits package in the contract. Instead of sourcing local vendors yourself, leverage the packages your EOR provides. They can even handle sending necessary IT equipment to your new hires.
Get all your documentation in order
Onboarding involves gathering the new hire’s tax and banking details. An EOR like Multiplier can automate this process, setting up payroll efficiently and minimizing paperwork.
With Multiplier’s streamlined system, you can complete the entire onboarding process in as little as two weeks.
Step 4: Run payroll for employees based in China
Handling payroll for employees in China requires careful attention to local tax regulations and mandatory contributions. China has a progressive income tax system with rates from 3% to 45%.
An EOR like Multiplier simplifies the payroll process by managing accurate and timely salary payments, local taxes, and contributions. Multiplier’s global solution allows you to manage payroll for all international employees from a single platform, eliminating the need for multiple local providers.
Employ top talent in China through an EOR
Onboard, pay, and manage all your international employees
Employment laws and regulations in China
In China, employers must adhere to a set of regulations that govern workforce management. These rules cover aspects such as working hours, overtime pay, mandatory benefits, and termination procedures.
The typical workweek in China is capped at 44 hours, with a daily maximum of 8 hours. Overtime work is permitted but must be compensated at a rate set by the government, generally 1.5 times the standard hourly rate for regular overtime and 2 times the rate for work on public holidays. Special rules also apply to night shifts and specific industries.
Employers are required to provide several benefits, including contributions to the Social Insurance Fund, which covers pension, medical, unemployment, work injury, and maternity insurance. Female employees are entitled to at least 98 days of paid maternity leave, with additional leave available for certain conditions.
For further insights on how these laws affect hiring and managing staff in China, consult Multiplier’s guide on employment law in China.
Employee benefits and compensation
In China, the current minimum wage varies by region, with the highest rates in major cities like Shanghai and Beijing. Labor laws in China also outline several standard employee benefits, including:
- Annual leave. Employees are entitled to a minimum of 5 days of paid annual leave after one year of service, which increases with years of employment. Longer tenures can lead to additional leave days.
- Sick leave. There is no fixed statutory provision for paid sick leave across all industries. Generally, employees use their annual leave or other types of leave for illness. Employers may offer paid sick leave as part of their benefits package.
- Parental leave. China provides paid maternity leave for at least 98 days. Parental leave policies vary by region, but many areas also offer additional days for fathers and adoptive parents. New regulations continue to evolve to support family needs.
Employers often offer additional benefits beyond the statutory requirements to attract and retain skilled employees.
For detailed guidance on providing competitive and compliant benefits in China, check out Multiplier’s Global Benefits Administration.
Termination and offboarding procedures
In China, terminating employment involves following specific regulations related to notice periods and severance pay. The standard notice period is typically 30 days, though it can vary based on the terms of the employment contract.
Severance pay is required by Chinese law, generally calculated as one month’s salary for each full year of service. The precise amount may be defined by the employment contract or follow statutory requirements.
For companies facing organizational changes or financial difficulties, offering notice pay in lieu of the notice period is permissible, provided this is specified in the employment contract.
Navigating these procedures can be complex, particularly for those unfamiliar with Chinese labor laws. An EOR like Multiplier can simplify the process. By handling offboarding procedures, an EOR ensures adherence to local regulations and supports a seamless transition for both the employer and the departing employee.
Visa and work permit assistance
Hiring foreign employees in China requires obtaining the proper visas and work permits. The specific visa required depends on the job role, employment duration, and the employee’s nationality.
Here are the main visa categories for foreign professionals:
- Work Visa (Z Visa). For foreign nationals employed in China. This visa is issued based on an employment contract and must be converted into a residence permit upon arrival. It is typically valid for one year but can be extended.
- Business Visa (M Visa). For individuals traveling to China for business purposes, such as meetings or negotiations. This visa does not permit direct employment but can be used for short-term business activities.
- Residence Permit for Talent (R Visa). For highly skilled professionals or those with specialized skills. It offers a longer stay and is issued based on the applicant’s qualifications and the needs of the employer.
- Student Visa (X Visa). For individuals studying in China. Graduates can use this visa to seek employment related to their field of study, but it must be converted to a work permit if they secure a job.
Navigating visa applications and renewals can be intricate and time-consuming. Professional assistance is often needed to ensure compliance with Chinese immigration laws.
Multiplier provides expert support for visa and work permit management as part of its Employer of Record (EOR) services. For more information on how we handle global immigration issues, visit our Global Immigration page.
Get started with Multiplier’s EOR services
Employer of Record (EOR) services offer an efficient solution for expanding your team in China.
With Multiplier, you can hire employees without needing to set up a local entity and manage all HR responsibilities seamlessly while maintaining a positive experience for your employees.
Our EOR services encompass the full employment lifecycle. We handle compliant contracts, manage payroll and tax requirements, and provide a range of customizable benefits that align with local standards. This allows you to navigate compliance challenges effortlessly and concentrate on growing your business.
Book a demo with Multiplier.
