China PEO

Hiring in China

China’s vast workforce and low labor costs make it an attractive country for hiring, but understanding its labor laws can be difficult. Employment relationships in China are governed by such laws as the Labor Law of the People’s Republic of China (1995) and the Labor Contract Law (2008), which serve as legal frameworks for workers’ rights, employer obligations, and procedures for labor disputes.

Additionally, Chinese law places specific regulations on the use of temporary and agency workers. The Labor Contract Law stipulates that labor dispatch is permitted only for temporary, auxiliary, or substitute positions, and the number of dispatched workers must not exceed 10% of the employer’s total workforce. Employers must provide written employment contracts detailing terms and conditions and ensure compliance with statutory requirements such as minimum wage standards and working time regulations.

Because of the complexity of China’s labor and tax laws, compliant employment contracts are a critical business requirement. With Safeguard Global as your partner, you can hire employees in China with confidence, knowing that every contract meets legal standards. We also provide guidance on cultural expectations and hiring best practices, while helping you stay current with regulatory changes.

Relying on an employer of record (EOR) in China

An employer of record (EOR) provides an easier way for organizations to hire and pay local talent in China. Because of its in-country presence, the EOR can employ the workers a company needs and lease them to that company, taking care to comply with China’s labor laws. As a result, the organization doesn’t have to establish a legal presence or manage compliance in China.

The EOR can hire and onboard employees in as little as two weeks and manage ongoing responsibilities such as payroll, benefits, and taxes. A full-service EOR can also manage recruitment. Together, these EOR services significantly reduce the administrative burden for an organization.

Visit our employer of record services page to learn how we can help you meet your international employment needs in China.

Doing business in China

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Human Resources

Accounting & Tax Rates

Data Privacy

Anti- Bribery & Anti-Corruption Law

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How to hire in China

hire in china To expand globally, an organization usually must build its workforce first in that local region. The question is, how can you hire employees in China? Hiring employees from other countries can be challenging because of the different laws and regulations in each location. This can lead to various complications and difficulties.

Hiring employees in China can be challenging for international businesses due to the different laws, customs, and practical factors to consider. Understanding the intricacies of the Chinese labor market is crucial for successful recruitment and employee management.

How can businesses hire in China?

China has the second-largest economy globally and is a prominent economic and technological dominion in eastern Asia. Additionally, the country has the world’s most significant hydroelectric power potential and numerous mineral resources. However, China can be a complicated country for newcomers since it has several provinces, each with its own set of rules and regulations.

Even still, China is a popular business location and Chinese labor laws are the backbone of the hiring process. Compliance with these laws is non-negotiable and requires a deep understanding of local laws, regulations, and employment contracts.

In China, legal frameworks help employers understand rules about employment contracts and working hours. This includes salaries, labor disputes, and other related topics.

There are three options for employers planning to hire in China:

Independent contractors
Direct employees through an entity
Professional Employer Organization (PEO)

Hiring Contractors

As a result of China’s rapid economic growth and changing demographics, the employment landscape is also dynamic and constantly evolving. With an annual GDP of $17.96 trillion in 2022 and a population of 1.4 billion people, there is a wide range of skills and top talent in China. Corporate tax rate is 25% and VAT rate is 13% for most goods and services.

When hiring independent contractors in China, you need to be aware that this process has the highest potential for human error. This can lead to expensive penalties and fines if left uncorrected. Independent contractors in China are subject to a set of employment laws that define their rights and responsibilities. While independent contractors have more flexibility compared to regular employees, they still must adhere to the defined regulations of the country. These laws cover aspects such as contract agreements, tax obligations, and social insurance contributions.

Additionally, they must adhere to Chinese labor laws regarding working hours, workplace safety, and protection against discrimination. Compliance with these laws is essential for maintaining legal standing and ensuring fair treatment in the Chinese labor workforce.

U.S. companies hiring and paying international contractors in China need to complete IRS Form W-8BEN. This certifies their status as foreign workers in the eyes of the U.S. government. Although this step resolves tax compliance for the employer in the U.S., China’s employment laws will still apply.

Hiring Employees Directly

To hire part-time or full-time employees in China, you need to have a legal entity. Establishing an entity can take three to six months to complete the whole process. Businesses need to follow all regulations, such as understanding China’s laws, corporate requirements, payroll, opening bank accounts, and tax information.

We highly recommend working with an incorporation specialist if this is the direction you choose. If the structure has any errors or mistakes, it can quickly become costly to maintain and inefficient. Legal entities in a country can affect all parts of a business, like finance, accounting, IT, and supply chain functions. These are important functions for running a business smoothly.

In general, there are three primary components to incorporating a business in China:

Incorporation and Registration
- Prepare entity registration documents.
- Prepare local entity articles of incorporation.
- Advise on corporate governance structure – local director/shareholders requirements.
- Apply for and obtain a business license and entity registration approval.
- Apply for and obtain a tax ID.
- Register the newly incorporated entity to be a local employer.
Post Incorporation
- Payroll setup
- Statutory benefits and social security registration
- Data protection registration
- Accounting setup, including bookkeeping and reporting
- Local bank account setup
- Local indirect tax – VAT | GST | HST
Corporate Annual Compliance
- Preparation of group consolidated accounts and financial statements under IFRS, US GAAP, or other local GAAP and statutory audit support
- Tax, payroll, and statutory returns.
- Handling of correspondence and other administrative duties

Outsource Hiring to a PEO Provider

You can hire and pay employees in China without the hassle of DIY processes by using a Professional Employer Organization (PEO). Global PEOs, sometimes called an Employer of Record (EOR), act as partners to your business. Many businesses work with a PEO to reduce international risks and liabilities, since the PEO is responsible for all compliance requirements. This allows them to focus on managing their international workforce.

Put differently, the PEO handles the administrative burden related to hiring and paying international employees, which in turn allows the business to focus on other important growth initiatives. Because PEOs use their existing legal entity network for hiring, companies can hire much faster without sacrificing compliance. Here are a few of the administrative services a PEO provides:

Fast international hiring
Payroll management
In-country compliance
Reduced risks with international contractors
Global talent acquisition
Best-in-class HR technology for international workforces
Chinese employment contracts

Related: China Employer of Record

Employment Law in China

China’s Employment Contracts

The Labor Contract Law of 2008 tightened the rules governing employment agreements to promote workers’ rights, and the government has taken some steps toward promoting collective bargaining and providing an explicit right to strike.

The different types of employment relationships are:

Permanent Employment – A permanent employment relationship is also known as a contract without a fixed term as there is no indication of an end date in the agreement. Under these contracts, terminations can be complex.
Fixed-Term Contracts – Defined as a labor contract in which both parties have agreed on the period of termination, fixed-term agreements are authorized under the Labor Law of China.
Short-term Employment – Often, employers can use employment service agencies or labor dispatch agencies for temporary work that is less than six months.

Employers must enter a written employment contract with each employee within a month of a worker’s start date. If an employer fails to establish a written contract within one year, the employer is deemed to have concluded an indefinite contract.

Employment contracts become effective either upon a specified date or on the date of contract execution. The employment contract is required by law and must contain the following information:

Employer’s and legal representative details and contact information
Employee’s details and identification card or other identity document
Contract terms
Work location and working hours
Job description
Compensation, leave entitlements, and rest periods
Social insurance and employee benefits
Workplace safety protections
Other information that may be required by law or statute

Probation Period

According to China’s Labor Contract Law, probation periods vary from one to six months depending on the length of the contract.

Minimum Wage

Six Chinese jurisdictions increased their monthly and hourly minimum wages from 2024 onwards, they are:

In Gansu, monthly minimum wages range from 1,850 yuan (US$258.57) to 2,020 yuan for full-time workers, up from 1,670 to 1,820 yuan, effective November 1, 2023. Hourly minimum wages for part-time workers range from 19.5 to 21 yuan, up from 17.4 to 19 yuan.
In the autonomous region of Guangxi, monthly minimum wages for full-time workers range from 1,690 yuan to 1,990 yuan effective November 1, 2023, up from 1,430 to 1,810 yuan. Its hourly rates range from 17 to 20.1 yuan, up from 14 to 17.5 yuan.
In Hainan, monthly minimum wages are 1,850 or 2,010 yuan effective December 1, 2023, up from a range of 1,680 to 1,830 yuan. Its hourly rates are 16.3 or 17.9 yuan, up from 14.9 to 16.3 yuan.
In Henan, monthly minimum wages range from 1,800 yuan to 2,100 yuan effective January 1, 2024, up from a range of 1,600 to 2,000 yuan. Its hourly rates range from 17.6 to 20.6 yuan, up from 15.6 to 19.6 yuan.
In both Jiangsu and Zhejiang, monthly minimum wages range from 2,010 yuan to 2,490 yuan effective January 1, 2024, up from 1,840 to 2,280 yuan. Their hourly rates range from 20 to 24 yuan, up from 18 to 22 yuan.

Bonuses

Many companies in China offer a 13th-month salary payment during the month of the Chinese New Year or Spring Holiday, but it is not required by law.

Working Hours

The standard workweek in China is eight hours per day, 40 hours per week.

Employers may extend working hours if they consult the employees and labor union if one exists. In general, the workday cannot be extended by more than one hour per day, with three-hour extensions permitted in certain circumstances.

Holiday Entitlement

Employees who have worked continuously for more than one year are entitled to paid vacation. The amount of paid leave depends on the total number of years they have worked, not just their years with their current employer.

At least one but less than 10 total work years: Five days of annual leave
10 years to less than 20 years: 10 days
20 years or more: 15 days

In addition to the annual leave, employees receive paid public holidays. The dates of some of these public holidays vary from year to year depending on the lunar calendar:

New Year’s Day
Spring Festival (three days)
Tomb Sweeping Day
International Labor Day
Dragon Boat Festival
Mid-Autumn Festival
National Day (three days)

Chinese employees also receive the following additional leaves:

Maternity leave
Paternal leave
Paternity leave
Sick leave

Additionally, cultural and language considerations play a significant role in building successful teams in China. When hiring in China, international companies must navigate the language barriers and adapt to cultural expectations.

The linguistic diversity within China is surprising, with hundreds of languages and dialects spoken throughout the nation. This diversity can set considerable challenges when communicating with Chinese employees.

Understanding and respecting local customs and business etiquette, such as formal greetings can facilitate smoother interactions and show respect for Chinese culture. To succeed in the Chinese market long-term, cultural sensitivity enhances the hiring process and helps to build a harmonious work environment.

Payroll & PEO in China

China Payroll Outsourcing & Management Services

Hire and pay employees in China without setting up a legal entity. With our China payroll and PEO services, you select the candidate, and we handle the rest.

After successfully hiring and onboarding your employees, we manage all aspects of the payroll process, ensuring your employees are always paid accurately and on time.

Our China payroll experts have an in-depth understanding of local payroll requirements and provide you with in-depth guidance and compliance support.

Our China PEO Payroll Solutions Cover:

Struggling to Manage Payroll for Independent Contractors?

Global PEO Services eliminates the complexity and liabilities associated with employing and paying independent contractors. We allow you to hire your contractors as employees through our China PEO. The individual continues to work for you, while we manage all aspects of payroll, HR, tax, and compliance.

The Solution to Low Headcount Payroll

Finding a payroll option for countries where you have low headcounts can be a challenge. Global PEO Services provides the solution. By using our China PEO to manage your payroll, you leverage our pre-existing payroll infrastructure, teams, and processes, even if you only need payroll for just one employee. Stay flexible, save time, all while getting the payroll services and support you need.

Want to learn more about our PEO Payroll Services? Reach out to us today!

Work with Global PEO Services

Growing globally can be an exciting time for an organization. While there are always risks and challenges during global expansion, Global PEO Services (GPS), a Safeguard Global company, can help mitigate these risks, while still giving you control over your day-to-day operations.

With laws and regulations frequently changing, hiring and paying in China can be challenging when keeping track of compliance, legal and tax requirements. We manage all the legal requirements and payroll, while the business manages the international team on their daily tasks. For companies hoping to hire and pay in China, GPS can help you grow and remain compliant.

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