Employer of Record in China

Guide to Hiring Employees in China

Your guide to hiring employees in China, covering the employment landscape, employer of record responsibilities, working customs, and local labor laws.

Hiring Employees In China
Employer Of Record In China

Capital City

Beijing

Currency

Renminbi

 (

¥

)

Timezone

GMT +8

Payroll Frequency

monthly

Tax Year

1 January - 31 December

Employer Tax

31.31% - 42.72%

Languages

Chinese

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How to Hire Employees In China

Hiring in China for the first time can be overwhelming, especially when navigating unfamiliar employment laws.  Whether you hire independent contractors, set up a legal entity, or use an EOR service, understanding the local employment landscape is crucial for success.  Playroll’s comprehensive guide can help you get started if you're hiring locally or relocating a team member.

Companies can hire employees in China in the following three ways:

  • Setting up a local entity. Entity establishment reduces risk exposure and enables direct hiring, but can be costly and time-consuming – making it less practical for companies seeking quick and flexible solutions for hiring in China.
  • Partnering with an Employer Of Record. An EOR, like Playroll, is a third-party entity that serves as the legal employer of your international workforce which hires, pays, and manages compliance with China’s labor laws and tax regulations.
  • Hiring independent contractors. Hiring contractors gives companies a flexible, affordable alternative to hiring local employees, though it involves unique misclassification risks.

Good To Know

Given its status as the second-largest global economy and home to the world's largest population, China offers companies an extensive and advantageous market with abundant opportunities, particularly in manufacturing, IT, and software sectors.

China's workforce experiences consistent growth, fueled by a rising number of college graduates each year. With over 640,000 individuals obtaining master's and doctoral degrees from Chinese educational institutions, international companies have access to a substantial pool of skilled talent.

China has made significant strides in business-friendly policies, as reflected in its 31st position on the World Bank's Ease of Doing Business ranking for the years 2019-2020. This marks a substantial improvement for the country, positioning it among the most improved markets globally for conducting business.

The nation's economic landscape benefits from an expanding network of trade and investment agreements. China is actively engaged in 23 free trade agreements with 26 countries or regions, fostering bilateral and multilateral cooperation and strengthening its position in global commerce.

Employment and Labor Laws in China

Businesses can only operate smoothly in China if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in China below, to avoid any compliance issues.

Employment Contract Requirements

By law, employers must provide employees with a written employment agreement within the first month of starting work. Part-time employees follow different regulations, and while fixed-term contracts are allowed, indefinite terms require completion of a mutually agreed-upon assignment. The contract must include the following information:

  • Identification of both parties
  • Starting date and duration of employment
  • Workplace location and designated working hours
  • Job description, position, duties, and responsibilities
  • Base salary (including compensation and benefits)
  • Total allocated holidays
  • Provision of social insurance
  • Occupational safety and workplace protection measures
  • Adherence to additional legal requisites
  • Probation periods, confidentiality, and the provision of training (if applicable)

Onboarding Process

We can help you get a new employee started in China quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in China

In China, the typical working hours constitute 8 hours per day and 40 hours per week, with a maximum weekly limit of 45 working hours.

Overtime in China

Under China's labour laws, employees receive 1.5 times their regular salary for work beyond the 8-hour workday, with Saturday and Sunday work compensated at double the standard rate. However, employees are limited to 3 hours of overtime on weekdays and a maximum of 36 hours per month.

Probation Period in China

The probationary period for indefinite contracts in China can extend to 6 months, while for fixed-term contracts, it ranges from 1 to 2 months, depending on the length of service.

Employer of Record in China

An Employer of Record (EOR) acts as the legal employer for workers in China, taking on key responsibilities to ensure compliance with local labor laws and regulations. The EOR facilitates the hiring process for businesses that want to employ workers without establishing a legal entity in the country.

The employer of record in China is responsible for:

  • Employment Compliance: Ensure all employment contracts comply with China's labor laws and regulations, including proper classification of employees.
  • Payroll Management: Calculate, process, and distribute employee salaries in accordance with China's payroll laws, including deductions for taxes and social security contributions.
  • Tax Filing and Contributions: Handle the registration, filing, and payment of employer taxes and social security contributions to the relevant authorities.
  • Employment Contracts: Draft and maintain compliant employment agreements, detailing salary, benefits, working hours, and termination terms in line with China's legal requirements.
  • Benefits Administration: Provide mandatory employee benefits as required by China's labor laws, such as health insurance, pension contributions, and statutory leave.
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Payroll Management in China

Fiscal Year in China

1 January - 31 December is the 12-month accounting period that businesses in China use for financial and tax reporting purposes.

Payroll Cycle in China

The payroll cycle in China is usually monthly, with employees being paid on the last working day.

Minimum Wage in China

The minimum wage for employees in China is typically 14.38 CNY - 15.13 CNY per hour, amounting to ~2,300 CNY - 2,420 CNY per month for a typical 40 hour work week.

Bonus Payments in China

Although not mandatory, is a common practice in China to provide employees with a 13-month or even a 14-month salary, disbursed during the Lunar New Year or Spring Holiday, as stipulated in the employment contract.

Employment Taxes in China

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 31.31% - 42.72% on top of the employee salary in China.

Tax TypeTax Rate
Pension Fund15% - 16% (varies by region)
Health Insurance5.35% - 9.8% (varies by region)
Unemployment Fund0.5% - 0.8% (varies by region)
Work Injury Fund0.16% - 1.52% (varies by region)
Housing Fund8% - 12% (varies by region)
Maternity 0.8% - 1% (only applicable in certain regions)
Disability Fund1.5% - 1.6% (varies by region)

Employee Payroll Tax Contributions

In China , the typical estimation for employee payroll contributions cost is around 15.2% - 22.5%%.

Tax TypeTax Rate
Pension8%
Unemployment Insurance0.2% - 0.5% (varies by region)
Medical Insurance2%
Housing Fund (some cities permitting rates exceeding 12%)5% - 12%

Individual Income Tax Contributions

The individual income tax is computed using progressive rates in China, where the tax rates rises as the gross annual income increases.

Income BracketTax Rate
0 - 36,000 CNY3%
36,001 CNY - 144,000 CNY10%
144,001 CNY - 300,000 CNY20%
300,001 CNY - 420,000 CNY25%
420,001 CNY - 660,000 CNY30%
660,001 CNY - 960,000 CNY35%
960,001 CNY And above45%

Pension in China

In private companies, male employees typically retire at the age of 60, while female employees retire at the age of 55. Employers are obligated to enrol their employees in mandatory pension insurance (基本养老保险), with funding provided by both parties. The employer contribution rates vary by location, with Shanghai and Beijing having employers contribute 16% and employees contributing 8%.

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The tax-related information provided in this guide is intended for general guidance and informational purposes only. Reach out to our dedicated team for insights on remote hiring in China tailored to your needs.

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Work Permits & Visas in China

Annual Leave & Company Policies In China

Mandatory Leave Entitlement in China

The annual leave entitlement in China is 5 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In China

China observes the following 7 national holidays spread across several days:

HolidayDate
New Years Day [元旦]1-3 January
Spring Festival/ Chinese New Year [春节]January, days change yearly
Ching Ming Festival [清明节]April, days change yearly
Labor Day [劳动节]30 April - 4 May
Dragon Boat Festival [端午节]June, days change yearly
Mid-Autumn Festival [中秋节]September, day changes yearly
National Day Holiday [国庆节]1-7 October

Paid Time Off in China

Paid leave in China, as specified in the employment contract, varies with years of service. Employees receive 5 days for the first to tenth year, 10 days for 10-20 years of service, and a maximum of 15 days for over 20 years of service.

Maternity Leave In China

Pregnant employees in China receive 98 days of maternity leave, starting 15 days before the expected delivery date, paid by the relevant Social Security Bureau. The payment is based on either the average monthly salary or three times the minimum wage, whichever is greater. Maternity leave entitlements vary across the following provinces:

  • Beijing: 158 days
  • Shanghai: 158 days
  • Chengdu: 158 days
  • Guangzhou: 178 days

Paternity Leave In China

In China, fathers typically receive 15 days of paid paternity leave, although this can vary depending on the location. The paternity leave entitlements differ in the following cities:

  • Beijing: 15 days
  • Shanghai: 10 days
  • Chengdu: 15 days
  • Guangzhou: 15 days

Sick Leave In China

In China, employees have the right to paid sick leave, with durations extending up to 180 days. The payment rates and responsible parties vary based on the employee's tenure and location. Common sick leave entitlements are:

  • Less than 5 years: 3 months sick leave
  • 5-10 years of service: 6-9 months sick leave
  • 10-15 years of service: 12-18 months sick leave
  • 15-20 years of service: 18 months sick leave
  • More than 20 years: 24 months sick leave

Parental Leave In China

Parents in China are provided with Childcare Leave, with the duration varying based on the specific provinces:

  • Beijing & Shanghai: 5 days of leave yearly until the child turns 3
  • Chengdu: No additional parental leave mandated
  • Guangzhou: 10 days of leave yearly until the child turns 3

Bereavement Leave

In China, if an employee experiences the death of an immediate family member, they are eligible for up to 3 days of leave, contingent on the terms of the employment contract and the region.

Marriage Leave

If an employee gets married in China, they are entitled to a leave of 3 to 10 days, depending on the terms outlined in the employment contract and the region.

Employment Termination and Severance Policies in China

Termination Process in China

Termination procedures in China vary based on the province and region. Employers are not permitted to carry out at-will terminations beyond the probation period; instead, terminations must be justified. To provide an example, the following are acceptable termination instances in Shanghai:

  • Employee resignation (with notice)
  • Mutual consent
  • Employer-initiated termination (based on probationary period, objective reasons, disciplinary measures, or job unsuitability)
  • Contract expiration

Notice Period in China

In China, standard notice periods are generally established at 30 days. In cases where notice is not given, employers may opt for payment in lieu. Similarly, employees are obligated to provide their employers with a 30-day notice before resigning. If the employer decides to terminate the employment during the probation period, they must give the employee at least 3 days' notice.

Severance in China

In China, mandatory severance pay depends upon eligibility and is contingent on the employee's tenure:

  • Less than 6 months: half a month's salary
  • More than 6 months: one month's salary for each year of service (capped at three times the minimum wage and not exceeding 12 months).
  • The maximum number of years service considered is 12 years.

Disclaimer

THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). Playroll does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect Playroll’s product delivery in any given jurisdiction. Playroll makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.

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ABOUT THE AUTHOR

Jesse Weisz

Jesse is an experienced R&D Analyst at Playroll, a leading Employer of Record (EOR) provider. With a strong background in data analysis and market research, Jesse specializes in identifying emerging trends and driving innovation in global HR solutions. She is an all-rounder, critical thinker and success-seeker (often inextricably linked to being a late-night tea drinker).

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FAQS

FAQs About Hiring In China

Questions and Answers

What Is an EOR in China?

An Employer of Record (EOR) in China is a third-party organization that legally employs workers on behalf of your company. The EOR handles all local employment tasks, including compliance with labor laws, payroll, taxes, benefits, and employment contracts. This allows businesses to easily hire talent in China without the need to set up a legal entity there, saving time and ensuring compliance with local regulations.

Can I Hire in China Without an Employer of Record?

Yes, you can hire in China without an Employer of Record, but this typically requires setting up a legal entity in the country. Establishing a local entity involves navigating registration processes, tax systems, and employment regulations. This can be costly and time-consuming, often taking between 4-6 months to enter a new market. An EOR provides an alternative by allowing you to hire talent quickly and compliantly without the need to establish a legal presence in China.

How Much Does It Cost To Employ Someone In China?

The cost of employing someone in China includes more than just their salary. You also need to consider mandatory contributions such as taxes, social security, insurance, and benefits. These additional costs can vary based on the role, location, and specific employment laws in China. When using an Employer of Record, there are additional service fees, usually charged as a percentage of the employee's salary or as a monthly or annual fee. This ensures compliance and covers administrative tasks.

What Is the Minimum Wage In China?

As of January 1, 2024, China's minimum wage rates are:

  • 14.38 CNY - 15.13 CNY p/h CNY per month.
  • Applies nationwide across all sectors.
  • Adjustments typically occur annually.

How Does an EOR Help You Run Payroll In China?

An EOR simplifies payroll management in China by handling all aspects of salary payments, tax deductions, and compliance with local labor laws for your international employees. The EOR calculates gross pay, deducts necessary taxes and contributions, and ensures employees are paid accurately and on time. They also manage year-end tax reporting and compliance filings, reducing the administrative burden on your team and minimizing the risk of errors or penalties.

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