An Employer of Record arrangement does not mean the client company hands over every responsibility connected with its employees.
The EOR becomes the legal employer under the agreed local structure and administers employment processes such as contracts, payroll, statutory contributions and employment records.
The client company—sometimes called the hiring company—still selects the employee, defines the role, directs daily work and makes the underlying business decisions.
A successful EOR arrangement therefore depends on a clearly documented responsibility split. The parties must know who approves each action, who communicates with the employee and what information must be retained.
Who are the parties in an EOR arrangement?
A typical EOR arrangement involves three parties.
The Employer of Record
The EOR’s local entity generally signs the employment contract as the named legal employer.
Depending on the service agreement, the EOR may administer:
- Employment documentation
- Employee onboarding
- Monthly payroll
- Individual income tax withholding
- Social insurance and housing fund contributions
- Leave and personnel records
- Routine employee support
- Contract changes
- Formal offboarding
The client company
The client is the business that needs the employee and receives the benefit of the person’s work.
The client normally:
- Selects the candidate
- Defines the employee’s duties
- Sets objectives
- Provides daily supervision
- Approves compensation
- Manages performance
- Supplies equipment and system access
- Controls commercial decisions
- Funds payroll and service costs
The employee
The employee signs a local employment contract with the EOR but normally performs day-to-day work for the client company.
The employee should understand:
- Who the legal employer is
- Who manages daily work
- Where HR questions should be directed
- How leave is requested
- How expenses are submitted
- When payroll inputs close
- Who handles complaints
- How employment changes are communicated
These relationships should be explained during onboarding rather than left for the employee to discover later.
EOR responsibility split at a glance
| Area | EOR | Client company |
|---|---|---|
| Candidate selection | Reviews whether proposed terms can be implemented | Selects and evaluates the candidate |
| Job description | Reviews for employment consistency | Defines duties, location and reporting line |
| Employment contract | Prepares and signs as legal employer | Supplies accurate role and compensation information |
| Daily management | Supports employment administration | Directs tasks, objectives and priorities |
| Payroll | Calculates payroll and maintains records | Submits inputs, reviews calculations and funds payroll |
| Tax withholding | Administers withholding under the agreed structure | Provides accurate compensation and employee information |
| Statutory benefits | Administers applicable registrations and contributions | Funds costs and reports relevant employee changes |
| Attendance | Applies the agreed employment process | Tracks working time and provides accurate records |
| Leave | Maintains formal records | Reviews operational feasibility and approves through the agreed process |
| Performance | Advises on documentation and procedure | Sets expectations and documents performance |
| Termination | Reviews and carries out the formal employer process | Supplies the reason, evidence and business decision |
| Employee data | Protects data processed for employment administration | Limits collection, access and international sharing |
| Business activities | Does not manage the client’s commercial operation | Controls customers, suppliers, products and commercial decisions |
The service agreement, employment contract, employee handbook and operating procedures should reflect the same division of responsibility.
What does the client company control?
Candidate selection
The client decides what skills and experience the role requires and normally conducts the candidate interviews.
Before making an offer, the client should provide the EOR with:
- The proposed title
- Job description
- Work location
- Reporting line
- Compensation
- Benefits
- Working arrangement
- Required travel
- Proposed start date
- Candidate nationality
The EOR should review whether those terms can be implemented through its local employment structure before the client makes a binding promise.
Daily work
The client company directs the employee’s operational activities.
This can include:
- Setting assignments
- Establishing objectives
- Reviewing work
- Managing priorities
- Approving business travel
- Providing tools and system access
- Conducting team meetings
- Delivering professional training
The client should not independently change the employee’s contractual terms merely because it manages daily work.
Material changes to salary, duties, location or working arrangements should be coordinated with the EOR.
Performance management
The client is best placed to assess whether the employee is meeting business expectations.
It should maintain records such as:
- Written objectives
- Deliverable deadlines
- Feedback
- Performance-review notes
- Training provided
- Examples of errors or missed targets
- Improvement plans
- Employee responses
The EOR cannot safely support a performance-based employment decision if the client provides only a general statement that the employee is “not a good fit.”
Commercial authority
The client must determine what the employee can do on its behalf.
Written controls should establish whether the employee may:
- Negotiate prices
- Approve suppliers
- Make customer commitments
- Sign agreements
- Change payment terms
- Approve expenses
- Represent the company before third parties
- Access sensitive financial information
An EOR arrangement does not automatically remove corporate, licensing or tax risks created by an employee’s activities.
What does the EOR control?
Local employment documentation
The EOR prepares and signs the employment contract as the local employer under the agreed structure.
China’s Labor Contract Law contains requirements relating to written contracts, probation, remuneration, contract changes and termination.
The EOR should ensure the employment documents are consistent with the approved role. The client must provide accurate information for those documents.
Payroll administration
The EOR normally calculates the employee’s monthly pay using client-approved inputs.
The calculation may include:
- Base salary
- Bonuses
- Commissions
- Allowances
- Leave adjustments
- Overtime
- Expense reimbursements
- Employee statutory contributions
- Individual income tax
- Other authorized deductions
The client must submit payroll changes before the agreed cutoff. HROne’s China payroll guide explains the calculation and employer-input process in greater detail.
Statutory administration
Depending on the supported city and employee circumstances, the EOR may administer social insurance, housing fund and related registrations.
The client remains responsible for funding the applicable employer costs and notifying the EOR about:
- Salary changes
- Relocation
- Leave
- Employee-status changes
- Foreign-national status
- Contract renewal
- Proposed termination
Formal employee communications
The EOR should issue or coordinate formal communications that affect the employment relationship.
Examples include:
- Employment contracts
- Contract amendments
- Salary confirmations
- Formal warnings
- Policy acknowledgments
- Renewal notices
- Termination documents
- Final payroll statements
Managers should avoid sending formal employment notices without first involving the EOR.
Responsibilities the client cannot outsource completely
Accurate payroll information
An EOR cannot calculate payroll correctly if the client fails to report attendance, leave, bonuses, commissions or salary changes.
The client should designate:
- A payroll-input owner
- An approver
- A funding contact
- An escalation contact
- A backup for each role
Safe working conditions
The client controls the employee’s actual daily environment and activities in many EOR arrangements.
It should identify and address:
- Workplace hazards
- Required safety equipment
- Business-travel risks
- Factory or warehouse access
- Remote-working conditions
- Ergonomic requirements
- Incident-reporting procedures
The EOR should be notified promptly if an employee is injured or involved in a workplace incident.
Lawful and respectful management
Client managers must avoid harassment, discrimination, retaliation and inconsistent treatment.
The employee should have a clear route to report concerns to both the client and the EOR.
Data protection
Both parties may process employee information.
China’s Personal Information Protection Law establishes rules for personal-information processing. Additional requirements may apply when employee data is transferred outside China.
The client should:
- Collect only necessary information
- Restrict internal access
- Use approved transfer channels
- Avoid sending payroll data through informal messaging
- Maintain clear retention periods
- Remove access during offboarding
- Coordinate cross-border data handling with the EOR
Employment decisions
The client determines the business reason for a salary change, promotion, relocation, disciplinary action or termination.
The EOR determines how the decision should be implemented through the local employment relationship.
Neither party should act alone.
The client company’s monthly responsibilities
A practical monthly cycle may look like this. For the EOR’s statutory filing calendar and client input responsibilities, see the China EOR regulatory reporting guide:
- The client closes attendance and leave records.
- Managers submit bonuses, commissions and approved expenses.
- HR reports new hires, departures and employment changes.
- The EOR prepares a preliminary payroll.
- The client reviews calculations and exceptions.
- The client approves and funds the payroll invoice.
- The EOR processes salary and statutory items.
- The EOR maintains payroll and employment records.
- Both parties resolve employee questions.
- Outstanding changes are recorded for the following cycle.
A written payroll calendar should identify exact deadlines and contacts.
Onboarding responsibilities
Before the employee starts, the client and EOR should complete separate but coordinated onboarding tasks.
The EOR should confirm:
- Employment documentation
- Identity and payroll information
- Statutory registration requirements
- Employee-facing policies
- Payroll timing
- Leave procedures
- HR contact details
The client should confirm:
- Role expectations
- Reporting line
- Equipment
- System access
- Security training
- Operational policies
- Expense procedures
- Performance objectives
- Workplace arrangements
HROne’s China employee onboarding guide provides a complete onboarding sequence.
Employment changes and termination
A manager should never announce a termination before the EOR has reviewed the proposed process.
The client should first provide:
- The business reason
- Relevant contract terms
- Performance or misconduct evidence
- Prior communications
- Desired timing
- Proposed handover plan
- Company-property details
- System-access requirements
The EOR can then assess the available route, documentation, timing and estimated final costs.
The EOR does not make a weak business case strong. If the client has not documented performance or followed an appropriate process, termination may carry additional risk or require another approach.
Common client-company mistakes
Treating the EOR as the employee’s manager
The EOR handles employment administration. It generally does not know whether the employee completed a client project or met a sales target.
Making promises before consulting the EOR
Managers may promise a start date, bonus, promotion, relocation or termination outcome that cannot be implemented as expected.
Submitting payroll inputs late
Late information can cause incorrect salary, delayed reimbursements or tax adjustments.
Ignoring working-time records
Remote and senior employees still require a defined working arrangement and reliable attendance information.
Treating termination as immediate
Employment cannot necessarily be ended simply by disabling system access or stopping payroll.
Assuming all liability moves to the EOR
The client retains responsibility for its instructions, management practices, workplace conditions, commercial decisions and information accuracy.
Companies should review the broader risks of using an EOR in China before signing an agreement.
What to include in the client-EOR operating procedure
The operating procedure should identify:
- Named contacts for both parties
- Approval levels
- Payroll cutoff dates
- Funding deadlines
- Employee inquiry channels
- Leave and attendance workflows
- Expense procedures
- Performance documentation
- Workplace-incident reporting
- Data-transfer methods
- Contract-change procedures
- Termination escalation
- Emergency contacts
- Service-review meetings
This document should be updated as the team grows or responsibilities change.
When an EOR is not enough
An EOR provides an employment structure. It does not create a complete operating company for the client.
Separate review may be necessary if employees will:
- Sign customer contracts
- Issue local invoices
- Collect China revenue
- Operate a licensed business
- Import or export goods
- Hold inventory
- Maintain a substantial fixed workplace
- Exercise broad authority to bind the foreign company
- Create potential permanent-establishment exposure
The China EOR complete guide explains where EOR employment ends and broader market-entry requirements begin.
Conclusion
The client company is not a passive party in an EOR arrangement.
The EOR administers the local employment relationship, while the client selects the employee, directs daily work, provides accurate payroll information and documents business decisions.
The most effective arrangement is one in which neither party assumes that the other is handling a task.
Responsibilities should be written, assigned to named contacts and reviewed throughout the employee lifecycle.
Companies considering EOR employment can explore HROne’s China EOR service or contact HROne to discuss the proposed role, location and responsibility split.
