One of the most often asked topics among international investors who are new to the China market is how to hire employees in China. This article will provide information to foreign investors on the various methods available to them for quickly and legally hiring personnel in China.
The People’s Republic of China’s labor law is complicated. There are three possibilities for international enterprises looking to hire employees in China legally.
Option1: Hiring staff in China through a foreign entity is not compliant
Many foreign companies choose to hire their staff directly through their overseas entity, which is extremely risky and illegal in China and can be regarded as dodging tax and necessary social security obligations. Neither the employee nor the employer is protected in China without a signed labor contract with a China-registered company. Employing in China through a China PEO and employment agency is one way to avoid hiring through an overseas organization.
Option 2: Hire Employee in China through China WFOE
For foreign companies that already have their WFOE (Wholly Foreign Owned Enterprise) established, hiring personnel through their China WFOE is the most typical alternative in China for international companies. In this situation, China WFOE will sign a China local labor contract directly with their employees and ensure that China payroll and mandatory benefits are executed on time. Because of the intricacies of China’s local legislation, multinational companies are strongly advised to use a China HR outsourcing firm to handle their employees’ payroll and benefits to assure compliance.
Before you decide to hire employees through your China WFOE, make sure you check the following items:
- Understand and learn about China’s payment structure and average salary.
- Ensure that the company registration and bank account are completely done.
- Verify the employer has already set up a corporate account for social security and housing money.
- You can only make social security contributions in the city where your WFOE is registered. If your employee lives in another city in China, you must hire a China payroll service provider to manage the social security.
- Ensure that you have a detailed China labor contract in place to sign with your Chinese staff. For a China labor contract template, please contact ChinaPayroll.
Option 3: Hire employees through China PEO & Employment agency without a legal entity in China
Hiring employees in China through a China PEO or employment agency is the best alternative for foreign investors who are just starting started in the China market and want to hire some people before registering a company there. Under the China PEO and employment solution, the PEO in China or the employment outsourcing agency in China will sign the local employment contract with the employees you select, handle the monthly salary calculation and disbursement, contribute the statutory benefits such as social insurance and housing fund, and ensure tax compliance in China.
What type of business should hire employees in China using a China PEO & Employment solution?
- Companies that have no intense to establish a legal entity in China but want to enter the Chinese market.
- Businesses are in the process of establishing a presence in China but wish to hire employees first.
- A corporation that does not wish to set up physical stores in China and instead prefers to hire in Chinese just for services.
The advantages of hiring employees through a China PEO or employment agency:
No legal entity and company required.
- Efficiency. Able to onboard employees within two weeks in China.
- Ensure payroll and employment compliance in China.
ChinaPayroll is a professional service company that assists foreign-invested companies in doing business in China.
Our primary services China PEO and employment solutions enable international investors to hire staff in China without establishing a company, allowing them to enter the Chinese market in days rather than months. Our in-country local specialists have also assisted firms in legally establishing their own legal company in China.
If you require any other information about China PEO, please contact us for free consultation.
