How to hire employee in China is one of the frequently asked questions among foreign investors who are new comers to the China market. This article is going to guide foreign investors regarding different type of options that can enable them hiring employees in China in a quick and compliance manner.
3 Compliance ways to hire employee in China
Labour Law of the People’s Republic of China is quite complex. There are three different kinds of options for foreign companies to hire employee in China to start their business follow the law.
Hire Employee in China through China PEO & Employment agency before having a company established in China
Hire employee in China through a China PEO and employment agency is the best hiring option for foreign investors who are just getting started in the China market and want to hire some staff before registering a company there. The PEO in China or the employment outsoucing agency in China will sign the local employment contract with the employees you choose, handle the monthly salary calculation and disbursement, contribute the statutory benefits such as social insurance and housing fund, and ensure tax compliance in China under the China PEO and employment solution.
What type of business should hire employees in China using a China PEO & Employment solution?
- Company who has no long-term plan in China and would like to test the China market.
- Companies that are in the process of establishing a business in China but want to hire employee in China first.
- Company who is not willing to set up the company in China and only want to hiring in Chinese.
The advantages of hiring employees through a China PEO or employment agency.
- No legal entity and company required.
- Fast. Able to on-boarding employee within 2 weeks in China.
- Ensure payroll and employment compliance in China.
Understand more on Steps to engage a PEO in China.
Hire Employee in China through China WFOE
For foreign companies already has their WFOE (Wholly Foreign Owned Enterprise) established, hiring employees through their China WFOE is the most common option in China as the WFOE already has the capacity to hire employees directly. In this case, China WFOE will directly sign a China local labor contract with their employees and ensure that China payroll and mandatory benefits are processed on time. Because of the complexities of China’s local regulations, it is highly recommended that foreign companies hire a China HR outsourcing firm to handle their employees’ payroll and benefits in order to ensure compliance.
Before you decide to hire employees through your China WFOE, make sure you check the following items:
- Understand and learn China salary structure and average salary in China.
- Make certain that the corporate registration and bank account are fully completed.
- Ensure that the company has already established a corporate account for social security and housing funds.
- You can only contribute the social security in the city where your WFOE is registered. If your employee is located in other city in China, you shall engage a China payroll service provider to handle the social security.
- Make sure that you already have a comprehensive China labor contract to sign with your Chinese employees. Contact JSC for China labor contract template. Understand more of China labor contract.
Hire Employee in China through China Representative Office
Representative office in China is also one of the common entity types among foreign investors. It is critical for foreign investors to understand that the China representative office is not permitted to hiring in Chinese directly; all hiring under the China representative office must go through a China labor dispatch agency or employment outsourcing agency in China. The Chinese employees will be officially hired and dispatched to work for the China Representative Office by a China labor dispatch agency. The foreign parent company can hire foreign employees, and the China representative office can register the foreign employees as representatives to work in China for the China representative office.
Hiring employees in China through a oversea entity is not compliant.
Many foreign companies choose to hire their employees directly through their overseas entity, which is very risky and illegal in China and can be interpreted as avoiding the liability of tax and mandatory social security contributions. Without a written labor contract in China with a China registered company, neither the employee nor the employer are protected. Hiring employees in China through a China PEO and employment agency is one option to avoid hiring through an overseas entity.
What is the best way to hire employee in China?
If you have no company in China, China PEO and China employment solution is the best option for you to hire employee in China without a legal entity.
If you have a legal entity in China, hire employee in China under your own China WFOE is the best option.
Once you have decided which hiring option you are going to us, you shall also learn about the hiring tips in China, check our article about Top Tips For Hiring Employees in China [2022 Complete Hiring Practices]
JSC is a professional service company that assists foreign-invested companies in doing businesses in China.
Our core services China PEO and employment solution enables foreign investors to hire employees in China without setting up any company which allow them to expand into China market in days, not months. Our in-country local experts are also experienced in assisting businesses to compliantly establish their own legal entity in China.
Please contact us if you require any other information on China PEO.