Employer of Record in China: A Complete Guide for 2026

Introduction

Foreign companies cannot sign direct employment contracts with Chinese nationals without a registered local entity because social insurance contributions vary city by city. 

Labor law enforcement runs at the provincial level, not just the national one, and the standard EOR (Employer of Record in China) model, where a third party simply employs workers on your behalf, may not apply in China the way it does in other countries.

This lack of awareness results in delayed onboarding, compliance gaps, and payroll structures that don't hold up to local scrutiny. 

This guide covers what hiring in China actually involves, such as employment contracts, payroll and tax obligations, statutory benefits, visa and work permit rules, and how a workforce management platform helps foreign companies hire compliantly without setting up a WFOE (Wholly Foreign-Owner Enterprise) or joint venture.

Employer of Record in China

Skuad’s Employer of Record in China (EOR) solutions make business expansion to China easy and hassle-free. Our unique platform allows companies to engage employees in China without having to set up a separate legal entity.

It streamlines the process of hiring and onboarding a remote team by handling payroll management, taxation, and other legal compliances. To learn more about Skuad, book a demo today.

China at a glance

Estimated Population: 1,416 billion

Currency: Yuan (CNY) and Renminbi (RMB)

Capital city: Beijing

Languages: Mandarin, Cantonese

GDP: USD18.74 Trillion 

Employment in China

The employment laws and regulations in China apply to both national and foreign employees. However, there are some variations in the benefits and entitlements. A formal and written employment contract is a must for every full-time employee hired in China. There are two types of employment contracts.

1. Definite contract: Lasts only for a specific period.
2. Indefinite term contract: Does not have any definite expiration period.

The Chinese government offers all its citizens and residents a basic health insurance plan. Apart from this, many organizations also offer supplemental insurance benefits to their employees.

In addition, employees are also entitled to retirement benefits, employee health benefits in China, unemployment benefits, disability benefits, and maternity benefits during their employment. These benefits are given under The Labour Law, The Social Security Law, The Work Safety Law, and The Union Law. 

The Chinese government updates its labour laws from time to time. Keeping track of the latest provisions and updating work procedures can be a daunting task for foreign employers, especially when social insurance rates vary by city, and employment protections differ across provinces.

Skuad’s Employer of Record Services supports this complexity end-to-end by helping to manage employment contracts, statutory benefits, social insurance filings, and payroll compliance across China from a single dashboard, so your team stays focused on the work.

Companies expanding into China use Skuad to move from offer to compliant onboarding without setting up a WFOE (Wholly Foreign-Owner Enterprise) or navigating provincial employment rules independently.

Book a demo to see how Skuad gets your first hire in China onboarded within weeks. 

Mandatory employee benefits

Leave, accrual, and statutory holidays

In general, the Chinese leave policies are not as generous as those of Western countries. Therefore, many local and foreign companies choose to stretch the minimum limit and offer more leave and rest days to the employees as a negotiating tool.

Contractors vs. full-time employees

Companies planning to expand operations abroad or hire foreign talent have to choose between independent contractors and full-time employees. 

Hiring contractors in China works well for short-term, project-based work. There are no statutory benefit obligations, no entity requirements, and the engagement ends when the project does. 

The risk, however, is misclassification because China's labour authorities look closely at contractor relationships that resemble full-time employment in practice, and the penalties for misclassification can be significant. 

Hiring full-time employees gives companies more control, stronger IP protection, and a stable foundation for long-term China operations. The trade-off is compliance complexity, including employment contracts, social insurance filings, and city-specific payroll obligations, all of which require local infrastructure that most foreign companies don't have. 

Skuad supports both hiring models from a single platform: 

EOR for full-time employees

• Acts as the legal employer in China, so you can hire without setting up a WFOE or joint venture
• Helps draft and managelocally compliant employment contracts aligned with Chinese labour law
• Supports city-specific social insurance filings, including pension, medical, unemployment, housing fund, and occupational injury contributions
• Supports payroll processing in 70+ currencies with automated tax withholding and year-end reconciliation
• Helps administer statutory benefits, paid leave, and maternity entitlements in line with local requirements

Contractor management

• Helps onboards contractors in China with locally compliant agreements that reduce misclassification exposure
• Helps with invoice generation, approval workflows, and payment processing in local currency
• Supports processing of multi-currency payouts across 70+ currencies with no manual reconciliation

Both models are available on the same platform, at rates built for growing teams. See Skuad's pricing

Hiring in China

Hiring independent contractors

• It is mandatory to define the terms of work for any company that wants to hire independent contractors in China. However, the contractor has the last word on working methods, timing, and machinery used.
• It is mandatory to have a written agreement or contract that specifies the mode of payment of fees and the terms of the contract.
• Some independent contractors might also want to use incremental or escrow (third-party) payment systems to protect themselves against non-payment issues.

Hiring full-time employees

• Hiring full-time employees in China is a complex procedure.
• Companies need to have an official employment contract for every employee.
• It is also mandatory to maintain employee files along with their compensation details.

Finding talent in China

Most companies source candidates through local platforms like Zhaopin, 51job, and Boss Zhipin, which are China's dominant job boards. LinkedIn has limited reach in China due to platform restrictions, making local job boards the primary hiring channel for most roles.

The volume of applications on these platforms is high, but so is the risk of unverified credentials. Fake profiles, inflated qualifications, and unverifiable employment histories are common enough that background verification is a standard step in compliant China hiring.

Skuad supports background checks as part of the hiring workflow, covering identity verification, employment history, and education credentials, so you know exactly who you're onboarding before contracts are signed. Combined with Skuad's local EOR infrastructure, the entire process from candidate verification to compliant onboarding runs through one platform.

Probation & termination

Probation & termination regulations in China are quite different from those in other nations. Here are some of the laws and regulations to consider.

Termination of employment in China

Employees in China cannot be terminated unilaterally by the companies. The ‘at will’ employment policy does not apply in China. Every company operating in China should be aware of the termination rules and regulations. Failure to comply with these rules can result in penalties, employee payments, and employee reinstatement.

EOR solution in China

Setting up a WFOE or joint venture in China takes two to four months, requires registered capital, and commits your legal and finance teams to ongoing entity maintenance, before a single employee is onboarded.

An employer of record removes that dependency entirely. Skuad becomes the legal employer in China, so your company can hire, onboard, and pay employees without entity setup, local legal counsel, or in-house China payroll infrastructure.

Here is what Skuad helps you with:

• Employment contracts drafted in line with Chinese labour law and city-specific requirements
• Social insurance filings across pension, medical, unemployment, housing fund, and occupational injury
• Payroll processing in 70+ currencies with accurate tax withholding and statutory deductions
• Termination and offboarding are managed compliantly, including notice periods and severance
• Work permit and visa support for foreign nationals joining your China team
• Background verification covering identity, employment history, and criminal records before onboarding

The result is a compliant China workforce without the overhead of entity registration, local HR infrastructure, or a dedicated compliance team monitoring provincial law changes.

Book a demo to see how Skuad gets your first China hire onboarded in weeks

Types of visas in China

There are seventeen types of visas in China.

Requirements to obtain a work visa in China

All work visa applications require submission of the original passport, offer letter from the employer, photograph, health certificate, and valid employment license to the Chinese authorities. 

However, companies can also get in touch with the officials of the Ministry of Foreign Affairs or the Consulates / Embassies of the People’s Republic of China for the latest information on China’s work visa requirements.

Work permits

Foreign nationals taking up employment in China require a work permit before they can legally start working. The process involves obtaining a Foreign Expert Certificate or Alien Employment License, followed by a Visa Z application, and converting to a residence permit within 30 days of arrival.

Managing this sequence, across government departments, documentation requirements, and provincial variations, adds significant lead time to any international hire.

• Sponsoring the work permit application for foreign employees joining your China team
• Coordinating Visa Z documentation with municipal or provincial labor authorities
• Managing the residence permit conversion after the employee arrives in China
• Tracking documentation requirements and deadlines across the full permit lifecycle
• Keeping your team compliant as permit renewals and regulatory requirements change

This means your HR team doesn't need to navigate China's immigration bureaucracy independently. Skuad's in-country expertise supports you from application to approval.

Book a demo to see how Skuad facilitates China work permits end-to-end 

Payroll & taxes in China

Payroll

When understanding the system of payroll & taxes in China, it is important to understand the four payroll options:

1. Remote payroll: When a foreign employer or a non-resident organization hires resident employees in China, it comes under remote payroll.
2. Local payroll: At times, companies register their business in China under the Representative Office, Joint Venture, or Wholly Foreign-Owned Enterprise. However, some companies prefer to have another organization administer their payroll. This is termed local payroll. In this case, the EOR is fully responsible for obedience to tax, work permits, payroll, immigration, and employment regulations.
3. Internal payroll: Internal payroll is when large-scale companies wish to operate their local payroll across all their employees, be it local or foreign.
4. Fully outsourced payroll and employment: At times, companies decide to outsource the employment and payroll from the Global Employment Organization (GEO) in China. Such companies come under the fully outsourced payroll and employment system.

Social security contributions

Employer taxation

Employee taxation

Bonuses

Bonuses are awarded at the end of the year which equals one month of salary of the employee.

Incorporation

Incorporating a holding company in China involves several formalities and documentation procedures. It is vital for any company planning to expand into China to be aware of all the laws and formalities involved in incorporating a holding company.

Professional Employer Organization

A Professional Employer Organization China (PEO) is an organization that partners with a business entity to offer various HR services such as tax filing, employee benefits, payroll, and processing. 

This concept is also known as co-employment, wherein the hiring company takes care of the HR matters of the employees. As a company, PEO gives you better control over business operations.

On the other hand, an Employer Of Record (EOR) is an alternative payroll solution offered by global HR platforms. An EOR provides the same services as a PEO, but an EOR becomes the payroll employees’ legal employer.

Since an EOR is a legal employer, it takes care of compliance, payroll, timekeeping, unemployment claims, work permits in China, and worker’s compensation. As a legal employer, EOR holds all the responsibilities and liabilities of the employees.

Organizations planning to expand into new territories are better suited with a global EOR which becomes the legal employer on behalf of the organization. Instead of associating with a PEO, a co-employment partner, organizations have more to gain by utilizing the services of an EOR solution. 

The EOR solution safeguards organizations from unexpected policy changes, loss of control, and potential risks as the EOR bears every legal liability for the organization. In addition to these, the EOR handles payroll, tax, and employment law compliances. 

Hiring in China gets easier with the right EOR partner

With the growing markets, a wide range of business opportunities in China, and swelling spending power, China is a smart choice for any organization seeking business expansion. 

However, adhering to complex employment contract laws, setting up payrolls, getting through work permits, and understanding labor laws discourage companies from moving in this direction.

Therefore, companies often seek alternatives to simplify this business expansion and employee management process. 

Skuad supports the operational complexity of hiring in China, employment contracts, social insurance filings, payroll, statutory benefits, work permits, and compliance monitoring, so your team can focus on the work.

Companies across SaaS, logistics, e-commerce, and technology use Skuad to enter the Chinese market faster, stay compliant as regulations change, and scale their China workforce without building local HR infrastructure from scratch.

Book a demo to see how Skuad gets your first China hire onboarded in weeks

FAQs

1. What is an employer of record in China? 

An employer of record in China is a third-party organization that legally employs workers in China on behalf of a foreign company, managing payroll, taxes, social insurance, and compliance with Chinese labor law. It lets foreign businesses hire Chinese nationals without setting up a local entity like a WFOE or joint venture.

2. Can a US company hire employees in China without setting up a local entity? 

Yes. Through an EOR or workforce management platform that holds a licensed local entity in China, a US company can hire compliantly without incorporating. The EOR signs employment contracts, runs local payroll, and remits social insurance, while the US company manages the employee's day-to-day work.

3. How much does an employer of record in China cost? 

EOR service fees typically range from $199 to $600 per employee per month. On top of that, mandatory social insurance and housing fund contributions add 27% to 38% of gross salary, varying by city. Shanghai and Beijing carry higher contribution rates than lower-tier cities, making location a significant cost variable.

4. What is the difference between an EOR and a PEO in China? 

An EOR is the sole legal employer and carries full compliance and payroll liability. A PEO operates on a co-employment model where the original company retains more employer obligations. For foreign companies without a Chinese entity, an EOR is typically the more practical structure, as Chinese law does not easily accommodate co-employment with unregistered foreign principals.

5. How long does it take to onboard an employee in China through an EOR? 

Standard onboarding through an EOR takes two to three weeks once documents are confirmed, significantly faster than entity setup, which typically takes three to six months. For foreign nationals requiring a work permit, processing adds 15 to 30 working days on top of the standard onboarding timeline.

6. Who owns intellectual property when hiring through an EOR in China? 

The client company retains full ownership of employee-created IP. EOR contracts include assignment clauses transferring inventions, code, and creative work to the client. Given China's complex IP enforcement environment, verify that your EOR includes these clauses as a default contract term, not an optional add-on.