How to hire employees through an Employer of Record in China

Step #2: How to choose the best EOR for your business

Before you choose a platform, consider the EOR services you will need and how much you plan to grow your global hiring presence.

• Is the EOR service active in the countries in which you need to hire? The first, and perhaps most obvious, consideration when choosing an EOR for global expansion.
• Does the EOR own its own entities in the countries it services? If the EOR does not own the entities, it means they are partnering with a local or third-party provider.
• How does the EOR protect your sensitive and confidential information? Your EOR needs to have the appropriate data protections in place, as well as secure technology that eliminates potential disclosures of private information, to remain compliant with Chinese data privacy laws.
• Does the EOR offer automated solutions? You may want to look for an employer of record service that automates the busy work like onboarding and benefits enrollment and other common HR and IT tasks.
• What is the EOR’s support model? It’s essential that your EOR has support staff that are both easy to contact and experts in the regulations of the countries in which you are hiring.

Get the full checklist in our guide: What is an EOR?

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Step #3: How to hire and onboard your Chinese employees

Once you’ve researched China employers of record and picked one that works for your needs, it’s time to begin the onboarding process. Here’s what you’ll need from your new Chinese employees:

• Name (matching the account where you’ll deposit their pay)
• Nationality
• Date of birth and date of hire
• Contact information, including their mailing address in China and their email
• Identity certificate number
• Amount to be paid in the people's renminbi (RMB), also known as Chinese Yuan (CNY).
• Direct deposit information

Because of China's strict Personal Information Protection Law, only collect necessary data and use encryption and other security measures to collect and store that data.

Next, you need to send out an employment agreement that outlines key working conditions, such as notice periods, annual leave, and employee benefits. This agreement needs to be issued within one month of their first day at work. Otherwise, you may be penalized by having to pay the employee double their salary. Remember: All your labor contracts should be translated into Standard Chinese or else they could be found invalid. (Though both Cantonese and Mandarin are commonly spoken in the country, the dialects share the same writing system.) 

An EOR makes things easy by automatically localizing and distributing employment agreements so that every Chinese hire will have a legally compliant contract. This includes statutory requirements for probationary periods, working hours, minimum wage, benefits, and termination policies.

For example, let’s say you hire two full-time Chinese employees who live in different provinces. In addition to Chinese national laws, there are local rules, meaning that these two different employees may be bound to different regulations. For example, minimum wage may vary depending on that region’s economic development. When you use an EOR for these Chinese hires, the EOR will generate separate employment agreements to account for the differences.

In China, you should also have employees read and sign an employee handbook. This is considered a legal document in China and includes terms and regulations for the workplace.

If you don’t use an EOR, you will need to register your employee with the State Taxation Administration, the local Social Insurance Bureau, and the Housing Fund Bureau. If you use an EOR, they will take care of this registration for you.

You can onboard new hires anywhere, end to end, with Rippling. Request a demo today.

Step #4: Run payroll

After you’ve collected a new hire’s information, both parties have signed employment agreements, and you’ve registered with the appropriate governmental institutions, an EOR will pay your Chinese employees in CNY/RMB and also withhold legally required taxes. This includes contributions to:

• Federal income tax (there are no local taxes for personal income in China)
• Pension fund
• Unemployment fund
• Medical fund
• Occupational fund
• Maternity fund

Frequently asked questions about hiring through an EOR in China

How much does an employer of record service cost?

Typically, EORs employ one of two pricing structures:

• Percentage of payroll, plus any applicable taxes
• Fixed monthly fee per employee

Whichever method the EOR uses, there may be additional administrative fees, onboarding charges, and other costs for supplemental features. Remember that you don’t need to use an EOR for your whole workforce. Instead, you can choose to segment its use to specific countries or for certain employees, and will only be charged for the employees who fall under the EOR.

What is the difference between an EOR and PEO?

Professional employer organizations (PEOs) co-employ a company’s workforce and provide administrative services, including paying employees, handling compliance, and filing payroll taxes. The company and PEO are jointly responsible for the workforce. A PEO does not, however, allow you to hire in other countries where you haven’t set up a local entity. 

An EOR allows companies to work with employees in other countries without setting up a legal entity. EORs are the sole employer of the portion of your workforce you use it for and, as such, assume all the associated liabilities. 

Does an EOR protect your sensitive and confidential information?

Outsourcing your payroll management to an EOR can spare you time and compliance risk. However, sharing your data with companies who use third-party vendors could leave you vulnerable to data breaches from manual uploads, which is a major risk in China, as the country has strict data privacy laws. 

Seek out EORs that prioritize data protection, including:

• Compliance with industry-standard privacy regulations in different countries
• Secure infrastructure with around-the-clock maintenance
• Carefully vetted personnel

You can also establish a data processing agreement (DPA) with a payroll service that mandates sound privacy practices and provides legal protection. 

Does an EOR help with Chinese tax filings?

Yes, EORs can automatically calculate and file taxes for your employees in China. 

Only employees who make more than RMB 120,000 (approximately $16,500 USD) per year must file an individual income tax (IIT) return. As an employer without an EOR, there are specific steps you’d need to take, including submitting an annual individual tax return (form B) and individual income tax credit details to the local authorities. 

What are the mandatory benefits for Chinese employees?

The following benefits are mandatory in China:

• State-administered benefits include retirement benefits, medical care, and unemployment. Employers contribute to social security.
• Workers’ compensation
• Maternity and paternity benefits
• Sick leave
• Paid leave/vacation, which ranges between 0 and 15 days depending on the length of the employee’s service
• Seven public holidays, which include New Year’s Day, the Spring Festival (known as Chinese New Year), the Qingming Festival, Labor Day, the Dragon Boat Festival, the Mid-Autumn Festival, and National Day

What are the employer costs for full-time employees in China?

Social security contribution rates are based on a percentage of that month’s salary for the employee and vary depending on the region. Employers are responsible for deducting the following from their full-time employees’ paychecks. Find some examples below:

Rippling helps you hire, pay, and manage people worldwide. Request a demo today.

Rippling and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.