Employer of record in China
China-based INS Global provides employer of record services to companies that want to hire employees and manage payroll in China without establishing a subsidiary or branch office. With the help of their recruitment team, they will handle the sourcing, hiring, and onboarding of staff while ensuring that they comply with China’s employment laws. The company offers full control over the staff while providing these services.
When planning to employ staff and establish a business in China, it is crucial to put everything in writing to prevent misunderstandings and disputes. The law requires employers to provide employees with a written employment contract within the first month of their employment, and failure to do so may result in double wages for the employee.
To expand a business in China, it is essential to understand Chinese culture, especially the concept of “Face,” which is a measure of respect and reputation. When discussing anything with personnel, it should be done in private to avoid insulting them in front of colleagues. Companies should also be aware of the practice of giving a “thirteenth-month salary” bonus to employees.
Mandarin is the official language in China, but different regions speak various languages. Companies that plan to establish a subsidiary in China must consider various factors, including industry, business type, nationality, trade agreements, and business partnerships. It is also essential to seek advice from China’s official employer to ensure compliance with local regulations. The employment contract should contain specific details, including costs, regulations, and availability that differ between cities and regions.
In China, the minimum salary for employees may differ depending on the province or city they work in. For instance, the minimum wage in Shanghai is around 2,480 CNY, while in Shenzhen it is approximately 2,200 CNY and in Guizhou it is about 1,570 CNY. Employers may choose to pay wages either in cash or through bank transfers. Additionally, a bonus may be offered according to market regulations. Employers can specify the monthly compensation, payment terms, and total annual compensation in the initial contract. Although bonuses are not mandatory, they can be provided under acceptable circumstances.
The Labor Law regulates most of the employment rules in China; however, employers can change the working hour criteria if approved by the labor union or the appropriate labor administration body and the employees. For specialized professions like field personnel, managerial staff, security personnel, or sales staff, changes may be necessary.
In China, the regular workweek is from Monday to Friday, with a maximum of 44 hours per week. The office is open from 8 am to 6 pm, including a two-hour lunch break. However, government offices open from 9 am to 5 pm. Offices remain closed on weekends, and some employers offer one holiday per week, while others provide two.
The bonus offered to employees in China may vary depending on their position and employer. Year-end bonuses are commonly provided to Chinese workers, and all employees may receive an extra month’s salary. Sales employees may be offered a commission scheme. Nonetheless, such bonuses are not obligatory in China, and they are discretionary incentives provided by employers during Chinese New Year.
During the probationary period, which is a predetermined length of time at the beginning of an employee’s tenure, they are not entitled to all contractual benefits. It is prohibited by Chinese law for part-time, temporary, and freelance employees to undergo a trial period. The probationary employee can be excused from work without notice if both parties agree. The contract may not include more than one probationary period, even if it is renewed.
The duration of the probationary period is usually based on the length of the employment contract. If the contract is between three months and one year, the probationary period cannot exceed one month. For contracts between one and three years, the maximum probationary period is two months. For contracts over three years, the probationary period is limited to six months. Typically, employees have a three-month probationary period.
Termination of the contract can take place during the probationary period. For indefinite contracts, the probationary period may last up to six months. Different industries have different timeframes for submitting a notice of termination. The duration of the notice is usually based on the length of employment. For instance, one week’s notice is usually enough for one month to two years of employment.
It is required to document the reasons for terminating the contract. It is illegal to terminate the contract of a female employee who is pregnant, on maternity leave, or breastfeeding. Contracts that bind both parties typically have longer contractual rights. Contracts may also include a payment in lieu of notice (PILON) clause, which allows employers to pay employees instead of requiring them to work out their notice period. Payment in lieu of services can satisfy an employee’s contractual rights, after which they may have statutory rights against the employer.
China Employer of Record (EOR) Benefits
Let INS Global simplify your expansion process by providing assistance with personnel hiring, payroll management, and expense management. With our partnership, you can confidently launch your global business in China.
Market Entry – When entering an unfamiliar market, the quickest way is to rely on the expertise of a professional Employer of Record. By using EOR services, a global company can gain access to the Chinese market quickly and easily while also having the burden of payroll and HR matters taken care of.
Compliance is critical when operating a business in a foreign country, and regulations can be complicated. With China Employer of Record services, a company can navigate the country’s complex regulations when hiring foreign or local workers, including issues such as income tax, social security contributions, withholding fees, and corporate tax. By partnering with an EOR or PEO organization, compliance is guaranteed.
Diverse Solutions – Whether your company is already established in a foreign country or you plan to do so, an Employer of Record can provide valuable assistance. The Global Employer of Record Company can help you hire employees in China without having to establish a subsidiary there. Utilizing EOR to manage payroll activities is also an efficient solution for tax and accounting obligations in the country.