The labor law in China may be complicated for several companies investing from other countries.
When hiring staff within the country you have to contemplate important factors to be 100% compliant with the Chinese law.
In this article, we offer you the foremost important factors to contemplate when hiring staff in China.
First of all, we’ve to specify that to hire staff in China, only companies based in China can be employers. However, it wouldn’t be a controversy for those that doesn’t have legal entity in China.
As we’ll see within the next sections, there are solutions which will allow those that doesn’t have legal presence to hire staff in China.
Said that, below you’ll be able to find a collection of laws and regulations to think about if you wish to be compliant with China’s labor law:
- Employment contract
- Mandatory benefits
When you want to hire staff in China, the primary thing to think about is the contract.
There are three varieties of employment contract:
- Fixed term: the date of expiration is determined between the employer and employee
- Non-fixed term: there is no certain date of expiration
- Project-based: the duration of the contract is predicated on the completion of the project
In every contract is additionally included a probation period for the worker. This depends on the kind and duration of the contract:
- If a contract incorporates a term of 1 year but no less than 3 months, the probation period might not exceed 1 month;
- If the labor agreement encompasses a term of 1 year and fewer than three years, the probation period might not exceed 2 months;
- If the labor agreement includes a term of three years or it’s a non-fixed contract, the probation period might not exceed 6 months.
Another important aspect to contemplate when hiring staff in China is the one associated with the mandatory benefits.
China’s Social Security system law was promulgated by the central government, but it is administered on a neighborhood level.
The Chinese Social Security system include 5 mandatory insurance schemes and also the housing fund:
- Pension fund
- Medical insurance
- Unemployment insurance
- Work injury insurance
- Maternity insurance
These mandatory benefits must be included into consideration after you decide to work in China and hire employees.
The costs of those benefits are divided between employee and employer and they vary from city to city.
There is a regular leave system in China that each employer has got to abide by when having working staff in China.
We want to list the categories of leaves that employees can avail which employers must consider:
- Annual leave
- Wedding leave
- Sick leave
- Maternity leave
- Funeral leave
- Family visit leave
Regarding leave, maternity leave, marriage leave, every city in China has different rules.
About the annual leave, there are some rules per 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’s entitled to 5 days of annual leave;
- In the event that an employee has worked for over 10 years but less than 20 years cumulatively, he’s entitled to 10 days of annual leave;
- In the event that an employee has worked for over 20 years cumulatively, he’s 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 may facilitate your business in China to hire staff in an exceedingly compliant and legal way.
If you wish to check and test the market before opening your own company, one available solution is the PEO service. This may allow you to hire staff without having a legal entity in China.
You can propose your candidate, and so we’ll be able to bring him/her on board and arrange the monthly payroll service smoothly.
If you’re satisfied with the results of your activity in China and if you think that opening an organization 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.