Hire and manage employees in China
Hiring in China? Rippling can help your company grow globally without missing a beat. With Rippling, you can effortlessly onboard and manage new hires in China and across the world—whether you have a workforce of 2 or 2,000.
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Hire and manage employees
in China with Rippling
Onboard Chinese employees and contractors in 90 seconds
Set up new hires in China with everything they need, from country-specific trainings to 3rd-party apps like Slack.
Manage HR, IT, and Finance in one system
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Understanding and complying with Chinese laws is hard work. Rippling does it for you.
The essential guide to hiring in China
Your employees are crucial to the success of your business, so you need to ensure you hire them compliantly. Whether you’re a foreign company hiring in Shanghai, Beijing, or elsewhere in China, the process can be daunting if you don't understand China's labor and employment laws.
In this guide, we'll take you through the most important things you need to know before hiring in China, including information on Chinese labor laws, how to classify Chinese employees, which benefits are required, and more.
Employer of Record (EOR) vs. entity
One of the first steps to hiring in China is deciding whether to set up your own legal entity there or hire employees through an EOR.
- Legal entity in China. Setting up your own local entity in China requires choosing a business structure, registering with the government, opening a local bank account, and consulting with Chinese labor law experts to ensure compliance with tax and labor laws. You're also fully responsible for compliantly running payroll, administering benefits, and handling taxes for your employees.
- Chinese EOR. An EOR is a third-party service that hires employees on your behalf. It handles legal requirements and compliance issues, including payroll, contracts, and benefits.
There are pros and cons to establishing a legal entity or using an EOR—ultimately, deciding between an EOR and your own entity depends on your company's size, resources, and future plans to scale in China. Here are some pros and cons to consider for each:
Cost and implementation
Faster to set up.
You can start hiring within days.
Becomes costlier as you scale.
Can take up to six months to set up—and requires registration fees.
More cost-effective once you’ve hired enough employees in China.
Quickly set up new hires, often within one to 14 days, depending on the provider.
Supports large-scale growth in a new market.
Manages all of your compliance work for you, takes on liability, and provides localized employment contracts.
Can’t customize certain policies, and other HR/legal processes, to your specific business needs.
Requires expert understanding of local regulations and tax laws, as well as internal legal resources since your company is liable for all compliance infractions.
Can tailor policies, and other HR/legal processes, to your business needs.
Payroll & Benefits
Quickly pay and insure employees worldwide.
Taxes are filed for you.
Need to manually track statutory deductions and employee entitlements for every employee.
Classifying China workers: employees vs. contractors
Like many countries, China legally distinguishes between employees (who are hired indefinitely) and independent contractors (who are on a fixed-term contract). But employers should beware that the People’s Republic of China (PRC) is known as a high-risk country for hiring independent contractors. Chinese labor laws strongly favor employment and the risk of misclassification is high. Misclassifying workers in China can come with serious penalties, including fines, back payments, and even bans from operating in China.
Here's a brief overview of some of the ways China distinguishes between contractors and employees:
Self-employed as an individual in China, not necessarily engaged in work by a registered company in China.
Employed by a registered company in China, which can be a legal entity or an Employer of Record (EOR).
High level of worker control. Contractors are generally given more autonomy to determine how to complete their work and when to do it.
More direction from the employer. Employees are generally subject to more control and instructions from their employer, who provides guidance on how the work should be performed and when it should be completed.
Paid upon completion of work.
Paid a monthly salary.
No entitlement to benefits. Contractors are not entitled to the same benefits and labor protections as full-time employees.
Entitled to benefits. Employees receive certain employment benefits and protections, such as overtime pay, minimum wage, annual leave, and vacation pay.
Responsible for their own taxes. This includes tax payments, social security contributions, and reporting their own taxes annually.
The employer reports taxes and makes contributions. This includes declaring the employee’s individual income tax monthly, plus contributing to social security and the housing fund on their employee’s behalf.
Can have their contract agreement terminated at any time.
Thoroughly protected from termination.
Contractors own their work. Unless stated otherwise in writing, the contractor owns the intellectual property they create.
The employer typically has full ownership over the employee’s work.
Time-bound agreement. Contractors are typically engaged for a project or specific period of time.
Indefinite engagement. Employees are typically hired for an indefinite period of time or for long-term engagements.
Work permits for China employees
Another step you need to take early in the hiring process is ensuring your prospective employees are legally authorized to work in China. Foreign nationals without permanent residency who live in China must obtain work permits in order to work there, with a few exceptions; for example, international students can take part-time jobs on their student visas as long as they obtain permission from their Chinese host university and the Chinese immigration authorities.
Some of the work visa types you may encounter include:
- Z work visa, the most common type of work visa, for those planning to stay and work in the country for more than six months.
- X1 or X2 visas, for students planning to stay more than 180 days (X1) or under 180 days (X2).
- J1 or J2 visas, for foreign journalists.
- M visas, for business owners staying in China for 30 to 60 days.
- F visas, for exchange students, study tours, or visitors who will be in China for 30 to 60 days.
- R visas, for high-level foreign talent who need to work in China.
Anyone applying for a work visa in China must meet certain qualifications, including age and health criteria.For full details, including how to apply, see our guide to work permits in China.
New hire onboarding checklist
Once you've classified your new employee and determined they're legally able to work in China, you're all set to continue their onboarding. The onboarding process is your chance to set the tone for a fulfilling employment relationship.
That's why a successful onboarding experience goes well beyond the first day. Below, you'll find some suggestions for things to include at each stage of the process, for the first 90 days:
Before their first day
- Complete a background screening.
- Send a legally compliant offer letter (more on that in the next section).
- Prepare tax documents.
- Enroll them in benefits.
- Add them to the payroll.
- Order and configure their apps and devices.
- Schedule their first-day orientation.
On Day 1
- Prepare their workspace.
- Send a welcome email.
- Give them an agenda for their first week.
- Schedule a meeting with their onboarding mentor and guanxi, or social network in business.
- Give them a tour of the office.
During their first 90 days
- Schedule general and role-specific training.
- Assign tasks and help them set goals.
- Schedule regular check-ins to measure progress.
- Seek their feedback on how to improve the experience.
For a full, step-by-step breakdown of onboarding a new employee in China, see our guide.
What to include in an offer letter in China
The offer letter is an integral part of your new employee's onboarding. It sets expectations for both the employee and the employer. Here's what to include in your offer letter (also known as an employment agreement) for an employee in China:
- Position and job description
- Job duties
- Start date and working hours
- Probation period
- Definition of workplace
- Compensation and benefits, including salary and any other remuneration
- Your sick leave policy
- Your termination policy
- Contact information and phone number
- Non-disclosure/non-use/non-circumvention agreements (NNN)
Note that the job offer is contingent on their ability to legally work in China. Learn more about sending a legally compliant offer letter in China in our full guide.
NDAs and confidentiality agreements in China
In many countries, it's standard to send a non-disclosure agreement (NDA) as part of the employment agreement. In China, however, it can be difficult to enforce a US-style NDA. Instead, it's common for Chinese employers to include a non-disclosure/non-use/non-circumvention agreement (NNN) as an all-encompassing document to protect trade secrets, proprietary information, and confidential information.
The main difference between the two is that while NDAs primarily focus on confidentiality, NNNs are more broad, including non-use and non-circumvention. That's why they're often used in international business relationships.
For an NNN to be enforceable, it needs to include:
- Clear indication of the parties involved
- Definition of the nature of confidential information
- Security measures that must be taken to protect technical or trade secrets
- Exclusions from confidentiality
- Terms of the agreements
- What happens if the agreement is breached
The NNN should also be translated into Chinese, governed by Chinese law, and signed and executed by all parties. Learn more about the differences between NDAs and NNNs and how to draft a legally compliant NNN for an employee in China in our guide.
Running background checks on China employees
Before your new employee gets started, there's one important step you should never skip: the background check.
In China, employers are allowed to request basic information from job applicants, as long as it's relevant to the position. These are some common types of background checks employers conduct in China:
Common background checks
Less common background checks
Criminal record (performed by the potential employee)
Public social media profiles and general online presence
Work authorization or proof of citizenship
Educational background and qualifications
Note that employers can't request an applicant's criminal records—only the applicant themselves can request a Certificate of Non-Criminal Conviction (CNCC certificate) from their local security bureau.
Learn more about the different types of background checks you can run in China—and how to avoid running afoul of anti-discrimination laws—in our guide.
Paying employees in China
Whether you choose to establish your own entity or use an EOR, you'll need a way to pay your employees in China. One of the fastest and easiest ways is with global payroll software like Rippling.
Once you've chosen a payroll solution, the next steps are to:
- Ensure your employees are correctly classified.
- Collect employee information, including their name, date of birth, date of hire, email, physical mailing address in China, identity certificate number (tax identification number (TIN) for those using a Chinese ID card), and bank account information.
- Input the payment amount in people’s renminbi or RMB (including any bonuses). China’s currency is also known as the Chinese Yuan or CNY. Get explicit, written permission if you plan to pay them in another currency.
- Make sure you’re following any statutory requirements for calculating payroll deductions.
- Run payroll.
Keep in mind that employers are responsible for calculating and withholding payroll deductions and social security contributions. In China, these vary from region to region. Below are a few examples for some of China's largest cities:
Recruiting & Applicant Tracking
0.2% to 1.9%
Time & Attendance
26.5% to 28.2%
Employers must also calculate and withhold individual income tax (IIT), which follows a progressive tax rate structure ranging from 3-45%.
Learn more in our step-by-step guide to running payroll for employees in China.
Mandatory employee benefits in China
In China, certain employee benefits are mandated by law. China's labor laws are strict, and violating them by failing to offer the correct statutory benefits risks not only fines and penalties but bans on operating in China.
Mandatory benefits include:
- Social security. Both employers and employees contribute to China's social insurance system, which funds residents' pensions, medical insurance, maternity insurance, unemployment, and workers' compensation.
- Housing fund. Both employers and employees also contribute to the housing fund, which helps employees purchase, build, or renovate homes.
- Paid vacation. Full-time employees receive vacation entitlements based on the length of their employment at your company, as well as their time in the workforce at large.
- Sick leave. Sick leave is also based on the employee's length of employment and covers illnesses and injuries not obtained during the course of work.
- Statutory holidays. There are seven public holidays in China. Some last more than one day, resulting in a total of 11 paid days off each year.
- Additional leave. Employees are entitled to additional leave for bereavement and marriage. Lengths of leave vary depending on the region.
Many companies in China offer additional benefits to help them attract top talent. These can include life insurance, additional medical benefits, additional paid time off, and more.
To learn more about how to meet China's statutory requirements for employee benefits—and go above and beyond for your employees—read our full guide.
Managing remote employees’ computers and apps
One of the toughest things about navigating the global future of work is setting distributed employees up with all the apps, tools, and integrations they need—and still being able to manage them. Remote work has created challenges around app and device management, but Rippling can help with all the logistics, from shipping devices to your employees to setting them up and updating them from afar.
With Rippling you can:
- Quickly set up and secure employees' accounts and permissions.
- Set up, manage, and disable employee accounts and apps, all from one place.
Check out our guide to learn more about setting up and managing remote employee devices.
Protecting company IP in China
Protecting your company's sensitive information is a must whenever you hire new employees—including any IP created by the employee during their tenure.
In China, NNNs protect confidential information and prevent other parties from using disclosed information to compete against your company, or from circumventing the relationship. This is a useful tool, but it needs to be used alongside other legal protections in China for different types of IP, including:
- Patent protection
- Trademark protection
Learn about the basics of IP protection and ownership in China in our guide.
Complying with China labor laws
One of the most difficult things about being a global company is ensuring you're compliant with all the labor and employment laws in the countries where your employees live. In China, failure to follow the country's strict labor laws can result in millions in fines, legal action, and a ban from operating.
Read more about the most important Chinese labor laws, including:
- Labor laws vary by province. If you hire multiple employees in China who live in different areas, they may have different minimum wage requirements.
- Written employment contracts are mandatory for all employees, part-time and full-time. Contracts should be supplied in English (or your local language) and Chinese, and outline all the terms of employment.
- At-will employment doesn't exist in China. Chinese employees can't be fired without cause—more on this in the next section.
Terminating employees in China
At-will employment is not recognized in China. Employees can only be terminated involuntarily in very limited cases:
- The employee can’t work due to being ill or injured (but is outside the treatment and observation period).
- The employee is incompetent, even after switching roles or being given additional training.
- Their labor contract can’t be fulfilled due to unforeseen changes.
Employees can be terminated for cause if:
- They seriously violate company rules or are violent in the workplace.
- They are convicted of a crime while in your employment.
- They cause you to suffer serious losses.
- They signed their contract under false assumptions or coercion.
- They take another job which could be harmful to you.
For termination without cause or in cases of layoffs, employees are entitled to a 30-day notice period and severance pay, which is calculated by multiplying the monthly salary by the employee’s years of service. For example:
- Service up to one year: one month of pay
- Service up to two years: two months of pay
- Service up to five years: five months of pay
- Service up to 10 years of pay: 10 months of pay
Severance is negotiable in China and employees may negotiate higher payouts as part of their labor contract negotiations.
Learn more about Chinese termination requirements in our comprehensive guide.
Disclaimer: 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.