Hiring employees in China can be a rewarding experience for businesses of all sizes. Employers in China can also hire employees from Hong Kong, Macao, and Taiwan without going through the complex regulatory processes for foreign labor. However, most legal formalities to expand business operations and hire and manage employees are carried out in Mandarin.
This guide covers various aspects of the hiring process in China, from legal and regulatory considerations to recommended hiring strategies and trends. Whether you are a multinational corporation or a small startup, understanding how to hire employees in China can contribute to your global expansion efforts.
Labor Law of the People’s Republic of China
PRC has numerous bylaws and regulations at the local level for HR processes. However, global employers must ensure compliance with labor standards established at the center.
The primary sources that constitute China’s labor laws include the Social Security Law 2011 (revised in 2018), the Labor Contract Law 2008 (revised in 2012), and the Labor Law 1995 (revised in 2009). Let’s break it down further to elaborate on the statutory benefits in China.
Working Hours in China
- The standard working hours in China are limited to eight a day or 44 hours a week.
- Businesses in sectors like transportation, fisheries, energy exploration, and so on, or specific job roles like executives, sales personnel, and others, can follow a comprehensive work hour system or flexible work hour system.
- In any case, the average working hours should not exceed the statutory limit.
- Further, employers must offer at least one rest day in a week.
Overtime Pay
- Employers can enforce overtime work for which the statutory compensation is as follows:
- 150% of employee salary on a working day
- 200% of employee salary on a rest day or arrange an alternate rest day
- 300% of employee salary on a public holiday
Probation Period in China
- Employers may only put newly hired employees on a probation period depending on the employment term, such as
| Three years or more |
Six months probation |
| Between one to three years |
Two months probation |
| Between three months and one year |
One-month probation |
Termination of Employment in China
- Employers must serve a written notice of termination 30 days in advance.
- Employers may serve a written notice at least three days in advance for employees under probation.
- However, China’s labor law does not require employers to give advance notice in case of dismissal.
Payroll and Taxes in China
Payroll in China involves calculating and paying employee salaries alongside tax deductions, social security contributions, and paid leave benefits, whether for full-time or part-time employees. Here is a quick overview of the payroll process for employers in the PRC:
Employee salaries & minimum wage:
- There are no prescribed minimum wages in China.
- Employers must follow the principle of wage distribution according to job role and equal pay for equal work.
Tax deductions & social security contributions:
- Employers in the PRC must withhold taxes after applying deductions on the employee income on a progressive basis (tax slabs: 3%, 10%, 20%, 25%, 30%, 35%, 45%).
- Employers in the PRC and employees who are PRC nationals must make mandatory contributions towards:
- Pension insurance
- Medical insurance
- Unemployment insurance
- Work-related injury insurance
- Maternity insurance
- Housing fund
- Only employers must contribute to maternity and work-related injury insurance premiums.
- Foreign nationals from Germany, South Korea, Denmark, Canada, Finland, Switzerland, the Netherlands, Spain, Luxembourg, and Japan may be exempted from participating in the PRC social security schemes. Moreover, any foreign national employed in the PRC may opt out of the housing fund scheme.
- Ultimately, the contribution rates vary across cities. For reference, employer taxes in China is as follows:
| Insurance |
Employer Contribution |
Employee Contribution |
| Pension Insurance |
16% |
8% |
| Medical Insurance |
9.8% |
2% + CNY3 |
| Work-related Injury Insurance |
0.2% - 1.9% |
0% |
| Unemployment Insurance |
0.5% |
0.5% |
| Housing Fund |
5% - 12% |
5% - 12% |
Payroll frequency:
- Payroll frequency in China can be monthly, weekly, or bi-monthly. You can pay salaries through direct deposit, cheque, or cash.
File Your Payroll Taxes:
- Once you have paid your employees, you must file payroll taxes with the Chinese tax authorities. It includes filing your IIT returns and social insurance contributions.
Chinese payroll regulations can change frequently. You may switch to payroll software solutions like Skuad and skip the above steps to manage your payroll in China better with just the click of a button!
Employee Benefits in China
Public Holiday
Employers in the PRC must grant eleven days of paid holidays, including
- New Year's Day
- Tomb-sweeping Day
- Dragon Boat Festival
- Labor Day
- Mid-Autumn Festival
- Spring Festival, and
- National Day
Further, employers may arrange for work on rest days to compensate for public holidays except New Year's Day and Dragon Boat Festival.
Paid Vacation
Employers must provide paid annual leave, subject to employees’ total work experience:
- Minimum one year or more: five working days' statutory paid annual leave.
- Ten years or more: ten working days' statutory paid annual leave.
- 20 years or more: 15 working days' statutory paid annual leave.
Leave Policy
Employers must pass on the following leave benefits in China to their employees:
Maternity leave:
- The paid maternity leave in China is 98 days, of which employers may grant 15 days before delivery.
- Furthermore, local authorities may prescribe additional days of maternity leave. For reference, in Beijing and Shanghai, the prescribed paid maternity leave is 158 days.
Paternity leave:
- Employers may follow local regulations to award paternity leave in China.
- For reference, Beijing prescribes 15 days of paid leave while Shanghai prescribes 10 days to eligible male employees.
Shared parental leave:
- Employers may draft a shared parental leave arrangement per the local regulations.
- Employers in Beijing and Shanghai may offer five days of paid parental leave every year until the child turns three years of age.
Sick leave:
- Employers may award sick leave per their internal policy and local regulations.
- In case of an occupational disease or work-related injury, employers cannot dismiss the employee for 12 months. Employers must also ensure normal pay during this period.
Dependent leave:
- Employers in Beijing may offer ten days of paid elderly care leave every year.
Cost of Hiring an Employee in China
The cost of hiring an employee in China can vary significantly based on whether you set up a subsidiary or use an Employer of Record (EOR) service in China. Here's a breakdown of the utility associated with each approach:
Establishing a Subsidiary vs. Employer of Record (EOR) in China
| Criteria |
Establishing a subsidiary |
Partnering with Skuad |
| Initial setup cost |
You will incur upfront admin, legal, and professional fees for registration, compliance risks, and office establishment in China. |
You can use Skuad’s EOR service to hire and manage employees in China, without the high costs of setting up a subsidiary. |
| Setup duration |
Companies create new legal entities that may take several weeks or months to operationalize. |
Skuad’s established infrastructure enables companies to start hiring in China within days. |
| Cost of operation |
HR, payroll compliance, and office overheads constitute significant operating costs in China. |
Automates the payroll process and ensures compliance with Chinese regulations at a nominal fee. |
| Managing employment liabilities |
The subsidiary and the parent company are liable for compliance risk management while hiring in China. |
Skuad’s EOR platform manages compliance risk while hiring in China. |
| Criteria |
Partnering with Skuad |
Establishing a subsidiary |
| Initial setup cost |
You can use Skuad’s EOR service to hire and manage employees in China, without the high costs of setting up a subsidiary. |
You will incur upfront admin, legal, and professional fees for registration, compliance risks, and office establishment in China. |
| Setup duration |
Skuad’s established infrastructure enables companies to start hiring in China within days. |
Companies create new legal entities that may take several weeks or months to operationalize. |
| Cost of operation |
Automates the payroll process and ensures compliance with Chinese regulations at a nominal fee. |
HR, payroll compliance, and office overheads constitute significant operating costs in China. |
| Managing employment liabilities |
Skuad’s EOR platform manages compliance risk while hiring in China. |
The subsidiary and the parent company are liable for compliance risk management while hiring in China. |
Compliance Risks of Hiring Employees in China
When hiring employees in China, you must be aware of compliance risks like:
- Contractual Issues: You must establish written employment contracts outlining job roles, responsibilities, salary, benefits, and working conditions within one month of hiring employees. Moreover, it is executed in Chinese. Inadequate or improperly drafted employment contracts can lead to disputes and legal challenges.
- Permanent establishment: Only a capitalized entity can hire employees in China. Therefore, companies with representative offices (RO) in China should not hire staff directly. Failure to follow may lead to fines and penalties.
- Hiring foreign employees: You must provide the Public Security Bureau (PSB) with the employee's passport, visa, and other supporting documentation for their work permit in China. The same would apply for a residence permit. Employers must also support foreign employees to obtain Z-visa or R-visa.
- Social credit score penalties: China has a corporate social credit system that scores businesses on their compliance with laws and regulations. Businesses with low social credit scores may be subject to penalties, such as restricted access to government contracts and financing.
How to Hire Talent in China
You may rely on internal resources to hire employees in China or outsource your hiring requirements. The following are the most recommended ways of business expansion by hiring in China:
Option 1: Form a Subsidiary
- Setting up a subsidiary in China is required to hire employees.
- It is a proven strategy for business expansion that provides control over employees’ activities.
- However, forming a local corporate entity entails legal, financial, and managerial costs. Furthermore, it is appropriate for long-term corporate growth in China.
Option 2: Hire as a Contractor
- China’s labor laws allow companies to hire local or foreign professionals (including freelancers and remote workers) on a contractual basis.
- Hiring as a contractor allows you to escape from employment obligations and not extend statutory employee benefits in China.
- However, hiring on a contractual basis may give you less control over day-to-day employee activities.
Option 3: Switch to EOR Solutions - Skuad
- Global companies opt for EOR solutions to offset their cost of hiring in China.
- Partnering with an employer-of-record (EOR) company is a cost-efficient solution to hiring and managing employees in China without forming a local legal entity.
- EOR companies like Skuad act as the legal employer for your hired employees, manage payroll, minimize compliance risks, and take up administrative tasks.
Top Job Listing Sites in China
With Skuad, you can find the top talent in China for any job vacancy. Our expert team can connect you with suitable local professionals. Moreover, Skuad's all-in-one services make it easy for you to hire employees in China and handle payroll rules without actually being obligated to follow the employment laws.
Other websites can assist you in finding talent in China, like
- Zhaopin: the oldest and most popular job listing site in China.
- 51job: particularly for blue-collar and technical jobs.
- BOSS Zhipin: known for its direct recruitment model, which allows employers to contact job seekers directly.
- Liepin: well-known for its high-quality job listings.
- HiredChina: specifically designed for foreigners who want to work in China.
Global employers may choose relevant job boards based on industry type, free job posting, candidate search by location, experience, and ability to showcase company profiles to hire in China.
Recent Hiring Trends in China
China is experiencing increased hiring across sectors like industrial & manufacturing, chemicals, logistics & freight forwarding, and FMCG/retail. Top employers are now scouting for talents with additional in-demand skills like cross-functional communication, client-facing skills, a digital skillset, project management, and business acumen.
Numerous reports have noticed employees in China are increasingly looking for jobs that offer work-life balance, competitive salaries, and career development opportunities. As a result, employees are taking up more freelancing and contract-based jobs.
Now is the right time for traditional employers to rethink how they hire to get and keep the best people. They should also spend on training programs to teach their workers new skills for the future of work in China.
Try Skuad for Hiring in China
While there are many advantages when you hire in China. There are also specific challenges and regulatory requirements, such as navigating labor laws and tax regulations, background checks, understanding cultural nuances, and adapting to market dynamics. It is in the best interest of global companies to seek expert advice to ensure a successful hiring process in China.
Consider Skuad. We make it easier for your company to hire and on-board new employees in China. With Skuad, you can seamlessly manage onboarding, multi-currency payroll, benefits, taxes and more, compliantly.
Want to learn more? Speak to our experts today!
FAQs
1. Can a US company hire someone in China?
Yes, any US company can hire in China. However, such companies must be aware of legal and logistical considerations like work visas, labor law compliance, contractual employment obligations, payroll, and taxation procedures, among others.
2. How can a foreign company hire employees in China?
In principle, foreign companies cannot hire employees in China unless the employment contract is executed through a locally established legal entity. Skuad’s EOR service is another preferred way by foreign companies to hire employees in China.
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