Angela Pan – Business Consultant
Hiring staff in China is an aspect that every company interested in expanding to China has to deal with sooner or later.
But opportunities come together with challenges, and the challenges, in this case, are related to the labor law.
The labor law in China can be a complicated aspect for many companies coming from other countries. And when hiring staff in the country you have to consider important factors to be 100% compliant with the Chinese law.
In this article, we provide you with info about the most important factors to consider when hiring staff in China.
Important factors to consider when hiring staff in China
First of all, we have to specify that to hire staff in China, only companies based in China can be employers.
But that is not a problem, because as we will see in the next sections, there are solutions that will allow you to legally hire staff in China to work for a project or as your employees.
Said that, below you can find a list of laws and regulations to consider if you want to be compliant with China’s labor law:
- Employment contract
- Mandatory benefits
When you have to hire staff in China, the first thing to consider is the employment contract.
There are three types of employment contract:
- Fixed term: the date of expiration is decided between the employer and employee
- Non-fixed term: there is no certain date of expiration
- Project-based: the time period of the contract is based on the completion of the project
In every contract is also included a probation period for the employee. This depends on the type and duration of the contract:
- If a labor contract has a term of less than 1 year but no less than 3 months, the probation period may not exceed 1 month;
- If a labor contract has a term of no less than 1 year and less than three years, the probation period may not exceed 2 months;
- If a labor contract has a term of no less than three years or it is a non-fixed contract, the probation period may not exceed 6 months.
Another important aspect to consider when hiring staff in China is the one related to the mandatory benefits.
China’s social security system law was promulgated by the central government, but it is administered on a local level.
The Chinese social security system include 5 mandatory insurance schemes and the housing fund:
- Pension fund
- Medical insurance
- Unemployment insurance
- Work injury insurance
- Maternity insurance
These mandatory benefits have to be included into consideration when you are deciding to operate in China and hiring employees.
The costs of these benefits are divided between employee and employer and they vary from city to city.
To know how much is the cost related to hiring staff in China, you can visit our calculator that will give you more details about each cost.
There is a standard leave system in China that every employer has to abide by when having working staff in China.
We want to list the types of leaves that employees can avail and that employers have to consider:
- Annual leave
- Wedding leave
- Sick leave
- Maternity leave
- Funeral leave
- Family visit leave
Regarding sick leave, maternity leave, marriage leave, every city in China has different rules.
About the annual leave, there are some rules according to article 3 of the Regulation on Paid Annual Leave of Employees:
- In the event that an employee has worked for one full year but less than 10 years cumulatively, he is entitled to five days of annual leave;
- In the event that an employee has worked for more than 10 years but less than 20 years cumulatively, he is entitled to ten days of annual leave;
- In the event that an employee has worked for more than 20 years cumulatively, he is entitled to fifteen days of annual leave;
- National statutory holidays and weekends are not considered as annual leave.
Solutions to hire staff in China
At HROne we have solutions that can help you to hire staff in China in a compliant and legal way.
If you want to test the market, one available solution is the PEO service. This will allow you to hire staff without having a legal entity in China.
You can propose your candidate, and then we will be able to bring him/her on board and arrange the monthly payroll service smoothly.
If you are satisfied with the results of your activity in China and if you think that opening a company is the best way to continue your expansion to China, we could help to register your own legal entity in China and still arrange your employees’ payroll by our agency service.
Contact us if you want to more about our services and how we can help you!