China PEO & Employer Of Record
Infotree Global provides employer of record solutions to companies who want to set up payroll and hire employees in China without setting a subsidiary or branch office. Backed up with our in-house recruitment team, we carry out tasks like sourcing, hiring, and onboarding your employees in China. Staff hired by us are in accordance with the employee regulations in China. With us, you have full control over your employees.
Table of Contents
• Hiring Considerations in China
• Employment & Labor Laws In China
• Challenges When Expanding Into China
• Employment Contracts in China
• Payroll & Tax in China
• Public Holidays in China
• China Compensation And Benefits
• Why Infotree Global Solutions?
Hiring Consideration in China
While you are going to start a business in China, there are few considerations to pay attention to before hiring employees. It is important to put everything in writing to avoid confusion and tussle between both parties. Further, it is also a legal mandate to offer your employees a written employment contract in the first month of their joining. If you are unable to do so then the employee is eligible to get twice their salary.
Understanding Chinese culture is important if you wish to take your business there and our China employer of record can help. The ‘Face’ indicates respect and reputation of its nationals and hence, if you have anything to discuss with your staff, do it privately. Else, it would be considered as insulting an individual in front of colleagues. Standard Bonus here is known as the “13th-month salary”. It is a common practice in China and employees should have clarity of the same in their initial contract phase.
Employment & Labor Laws in China
Talking about employment law in China indicates all the associated factors. This may involve issues on remuneration, employment contracts, workplace safety, working hours, and labor disputes. Besides, it also includes training, protection from discrimination, social insurance, wage regulations, and other legal responsibilities the employer should legally abide by.
China employment law has the following obligations that include a strict termination system, the existence of local rules and policies, and varying court interpretations of the same legal troubles.
The two China employment laws must for all international investors before starting a business includes:
• 1995 Labor Law of the People’s Republic of China
• 2008 Labor Contract Law
These are the two main sources of China’s employment law. However, there are other China employment laws that supplement policies entitled to any business in China including:
• Employment Promotion Law of the People’s Republic of China
• Labor Union Law of the People’s Republic of China
• Law of the People’s Republic of China on Labor Dispute Mediation and Arbitration
• Law of the People’s Republic of China on Safety Practices at Work
Clearly, the China employment laws are way too complex and intimidating for investors having the potential legal risks. Therefore, taking the assistance of a professional employer of record China can help in great ways.
Challenges When Expanding into China
Before you start establishing your business in China, you need to be familiar with Chinese employment law. It may appear complex and daunting when looking from a different country. Though in some ways, these are similar to the employment laws of other countries. Other factors that make it more complicated include the variation of laws between regions and a conflicting approach to law adherence in various cities. For instance, there is a discrepancy between minimum wages and welfare contributions in many cities. In such a scenario, professional services of employer of record China are highly sought after while employing in China to guide you in the broadest sense.
Employment Contracts in China
If you plan to establish a subsidiary in China, there are few factors to consider. Most important are the Business factors that make you aware of the employment contracts that should meet the local standards besides having professionally drafted. It should mention the industry and business type, nationality, and presence of trade agreements or business relationships. Different cities and regions may vary when it comes to rules, availability, and costs. That is why advice from China employer of record is always recommended.
Though Mandarin is the national language in China there are different languages used in various locations. Cantonese is the prime language in the southwest part of China and the major centers are Shenzhen, Hong Kong, and Guangzhou lying in the Guangdong Province. Similarly, few areas like Beijing, Shanghai, Tianjin, and Chongqing have slightly different languages.
Types of Employment Contracts in China
There are three types of employment available in China for employees.
• Project-based – There is no probation period required. You can simply notify about the project completion. It lasts from 1 month to a year.
• Fixed Term – It requires 1-6 months’ probation period. The employer is obligated to give a reason and proof for termination of the contract. Starting from 2 months, it may go up to an entire year.
• Indefinite – The probation period is the same as in fixed-term and employers need to give a reason for termination. The severance period could be a minimum of 12 months’ salary.
Payroll & Tax in China
When it comes to calculating payroll and taxation, China has specific rules. However, it depends on the hiring factors whether the company employs international citizens or local employees. The main concern for an international company is that it needs to be in compliance with tax laws in China including:
• Individual income tax (IIT) for employees
• Social security costs
• Payroll tax
• Sales tax
• Withholding tax
• Business tax
• Permanent establishment factors
China has few unique rules associated with employment, for instance, foreign citizens must pay local Taxes and Health Insurance besides having their own Health Insurance. In addition to the employers of Chinese people must register and contribute, varying by region to the social insurance system of China. It is known as the five insurances comprising of medical insurance, pension fund, unemployment insurance, industry injury, and maternity insurance. In China Individual income tax (“IIT”) – progressive rates range from 3% to 45%, Corporate tax in China is 25%, Sales Tax is 17%, whereas withholding tax is 10% for non-resident companies. By partnering with our China PEO & Employer of Record, Infotree Global team of in-country experts will take care of all your payroll and taxes.
Public Holidays in China
There are 7 annual days that fall in the category of public holidays in China. These encompass:
• New Year’s Day
• Chinese New Year
• Dragon Boat Festival
• Qingming Festival
• Labor Day
• Mid-Autumn Festival
• National Day
It is customary to offer staff the flexibility to travel during Chinese New Year which means they are free to avoid traveling during peak days. The benefit of providing the day off before or after public holidays is extremely applauded by local staff. It is important to note that the statutory minimum is also obligated to be paid for public holidays.
China Compensation and Benefits
When you hire Infotree Global as your employer of record China to manage your employees overseas, you need not worry about the complex legal compliance. With our in-country experts and professional knowledge, you can have all the details of employee entitlements in China and draft your employee contract accordingly.
Employees in China are entitled to medical leaves. He can take up to 12 months of sick leave with full pay in case of work-related sickness or injury. In other cases, sick leave may vary from three to 24 months based on the employment period. At least five days of annual leave is entitled to employees which may be extended up to 15 days for long-term employees. There are specific rules for granting Maternity Leave in China. Female employees can avail of 98 days of maternity leave, starting 15 days prior to the birth.
Why Infotree Global Solutions?
Infotree Global is dedicated to providing professional assistance to help you set up business in China. We provide the support of our in-country team of professionals to undertake all the legal formalities associated with employment in China and help you stay compliant with country labor laws. Owing to our rich industry experience, we help you hire the most talented individuals for your company and embrace all the payroll-related jobs. Thus, we help you save time without worrying about legal hassles so that you can stay focused on your expansion endeavors. With our global payroll and employer of record solutions, you can experience professional assistance at every step and expand your business without worrying about legal complexities.
Make the most of our professional services and overcome the challenges associated with international hiring. If you want to hire our China Employer of Record and need assistance, connect with us!