Hiring and managing talent in China requires a deep understanding of local laws, recruitment practices, and the cultural nuances of the job market. This comprehensive guide provides an overview of the China recruitment, Hiring Practices in China, and on-boarding processes for businesses looking to hire in China, along with essential insights into statutory benefits, employee rights, and termination practices.

Contents:

1. Steps in the Onboarding Process for Hiring in China
2. How to source candidates in China?
3. Is It Necessary to Conduct a Background Check in China?
4. How Common Is Remote Work in China?
5. How to Hire Employees in China Without a Local Entity: Using an Employer of Record (China EOR)
6. Hiring Foreign Employees in China: Expats and Work Visas
7. Difference Between Full-Time Employee and Independent Contractor in China
8. Can I Set a Probation Period in China?
9. Essential Tips for Signing a China Employment Contract
10. What Statutory Benefits Are Employers Required to Provide in China?
11. What Is the Salary Payment Schedule in China?
12. Additional Benefits to Help Retain Staff in China
13. Cost and Process of Terminating an Employee in China

Hiring Practices in China 1.Steps in the Onboarding Process for Hiring in China

• Sourcing Candidates: Use China job portals, agencies, or referrals to find candidates.
• Interviews & Offer: Conduct interviews and finalize the job offer.
• Background & Medical Check: Perform background and medical checks.
• Sign Employment Contract: Have the employee sign the contract with job terms.
• Social Security Enrollment: Register the employee in China’s social security system.
• Payroll & Tax: Release salary and handle tax declarations.

Hiring Practices in China 2. How to source candidates in China?

China Job Portals (via a Local Entity or Partner). China Job Portals are one of the most effective ways to source candidates in China local market, with several platforms dominating the China recruitment space. Popular Chinese job portals include 51Job, Zhaopin, Liepin and BOSS which cater to diverse industries and roles, ranging from entry-level to executive positions. These platforms offer robust features such as resume databases, targeted job postings, and employer branding tools, making them indispensable for local recruitment efforts. However, companies without a legal entity in China face a significant limitation: they are unable to directly post job openings on these Chinese job portals due to regulatory restrictions. In such cases, businesses may need to collaborate with local entities or China recruitment agencies to navigate this challenge and access to the talents in these Chinese job portals.

China Recruitment Firms/Headhunting Firms are a reliable option for sourcing talent in China, particularly for specialized or senior-level roles or the foreign company who has no legal entity established in China yet. China recruitment firms have a deep understanding of the China local market, access to extensive Chinese candidate networks, and expertise in matching talent to specific job requirements in China. However, it is crucial to ensure that the chosen China recruitment firms holds a valid license to operate in China, as this is a regulatory requirement. While these China recruitment firms offer valuable services, the costs can be significant, with service fees typically ranging from 20-30% of the candidate’s annual salary. Despite the expense, China recruitment firms can be an efficient solution for companies seeking high-quality candidates or navigating the complexities of the Chinese job market.

Global Job Portals like LinkedIn and Indeed are often used to source talent internationally. However, their effectiveness in China is limited due to lower adoption rates among Chinese candidates and restrictions imposed by China’s internet regulations. Additionally, LinkedIn has officially closed its local business operations in China, further reducing its utility for sourcing Chinese talent in the region. Consequently, global platforms may not be as comprehensive or reliable as domestic job portals for sourcing Chinese candidates.

Hiring Practices in China 3. Is It Necessary to Conduct a Background Check in China?

Conducting a background check in China is strongly recommended to ensure the accuracy of a candidate’s credentials and work history. This process typically includes verifying educational qualifications, checking for any criminal or dismissal records, and confirming previous work experience. Due to strict local regulations, background checks must be conducted through a licensed agency and can only proceed with the formal approval and authorization from the employee in China.

One key reason to prioritize thorough background checks in China is that terminating an employment relationship in China is not straightforward. China Labor laws heavily favor employee protection, and improper termination can lead to significant legal and financial consequences for the employer in China. Ensuring a candidate’s qualifications and background through a compliant process minimizes risks and helps employers make informed hiring decisions while adhering to Chinese legal requirements.

Hiring Practices in China 4. How Common Is Remote Work in China?

Remote work has become more common in China, especially since the COVID-19 pandemic, which accelerated the adoption of flexible work arrangements. It is particularly prevalent among foreign companies without a legal entity in China, as employees typically work from home or other remote locations. For these companies, remote work is both a practical necessity and an attractive benefit, allowing them to access talent without requiring a physical presence. This flexibility has become a key advantage in attracting Chinese employees.

Hiring Practices in China 5. How to Hire Employees in China Without a Local Entity: Using an Employer of Record (China EOR)

Hiring employees in China without a legal entity is possible through a China Employer of Record (China EOR). The China EOR acts as the legal employer in China, handling all local employment responsibilities such as China payroll, taxes, social security, benefits, and compliance with Chinese labor laws. The foreign company manages the employee’s day-to-day tasks, while China EOR ensures legal compliance. This approach allows businesses to hire and onboard employees quickly without setting up a local entity in China, offering a cost-effective and risk-free solution for accessing China’s talent pool.

For more details, please visit:

Pay Employees in China through China Employer of Record

How to Hire Employees In China Without Legal Entity?

Hiring Practices in China 6. Hiring Foreign Employees in China: Expats and Work Visas

Employers should be aware that hiring foreign employees to work in China requires obtaining a China work permit and a residence permit for the employee. These permits are mandatory, and foreign employees can only legally begin working in China once the required permits have been successfully issued.

Hiring Practices in China 7. Difference Between Full-Time Employee and Independent Contractor in China

Full-Time Employee: A permanent employee working under an employment contract, entitled to company benefits and protections.

Independent Contractor: A freelancer or self-employed individual hired for specific tasks, without the same benefits or protections as full-time employees.

Benefits:

Full-Time Employee: Eligible for China social insurance, paid leave, and other statutory benefits.

Independent Contractor: Not entitled to employee benefits in China such as social insurance or paid leave.

Control Over Work:

Full-Time Employee: The employer has more control over working hours, job duties, and location.

Independent Contractor: Works independently with more flexibility regarding working hours and methods, typically based on deliverables or projects.

Termination:

Full-Time Employee: Requires legal processes, including notice periods and severance pay.

Independent Contractor: Termination is based on the contract terms, usually with less legal formalities.

Complete Guide on Hire Independent Contractor in China 2024

Hiring Practices in China 8. Can I Set a Probation Period in China?

Yes, employers can set a probation period in China, but it must follow specific rules:

• Duration: The probation period cannot exceed six months. For employment contracts of more than one year but less than three years, the probation period is two months. For employment contracts of three years or more, it can be up to six months.
• Salary: During probation, employees must receive at least 80% of the agreed salary in China.
• Notice Period: Both the employer and the employee can terminate the employment with a three-day notice period during the probation period.

Hiring Practices in China 9. Essential Tips for Signing a China Employment Contract

• Eligibility: The employment contract in China must be signed with a legal entity in China, and the employee must be a Chinese national or a foreigner with a valid work permit. For the foreign company who has no registered entity in China, they shall engage a China EOR to sign the employment contract with employees in China.
• Key Information: China employment contract should include job duties, salary, benefits, working hours, leave, social insurance, and termination clauses.
• Contract Term: After three contract renewals, the contract becomes permanent.
• Digital Signatures: Digital signatures are allowed if done through a licensed platform.
• Signing Deadline: The contract must be signed within 30 days of the employee’s first day of work.

Hiring Practices in China 10. What Statutory Benefits Are Employers Required to Provide in China?

Employers in China are required to provide mandatory China social security benefits for all full-time employees. Key points include:

• China Social Security Contributions: Employers and employees must both contribute to China social insurance funds, which typically include pension, medical insurance, unemployment insurance, work injury insurance, and maternity insurance.
• Local Variations: Contribution bases and percentages vary by city, and employers must comply with the regulations specific to the location where the employee is registered.
• Employee Contributions: The employee’s portion is withheld from their salary and submitted by the employer along with the employer’s contributions.
• Monthly Contributions: Contributions are made on a monthly basis, with adjustments to the contribution base occurring annually.

Hiring Practices in China 11. What Is the Salary Payment Schedule in China?

In China, the payroll cycle is typically monthly. The most common payday is the last working day of each month, although some companies choose to pay employees on the 15th of the following month.

Understand more about How to Calculate Employee Salary in China? [China Payroll Guide]

Hiring Practices in China 12. Additional Benefits to Help Retain Staff in China

• Commercial Insurance (Supplementary Health Insurance): While social insurance is mandatory in China, many employers in China offer commercial insurance as an additional benefit. This may include enhanced health coverage, accident insurance, or life insurance, providing employees in China with better financial security and medical care options beyond what is covered by the standard social insurance system.
• Medical Check-Ups: Providing annual medical check-ups is a popular benefit among employers in China. It demonstrates care for employees’ health and well-being, helping to build loyalty and trust. Many companies partner with private healthcare providers to offer comprehensive health screenings.
• Additional Leave: Beyond the statutory leave (e.g., annual leave, maternity leave, and sick leave), offering extra paid leave or flexible time off can greatly improve employee satisfaction. Examples include personal days, mental health days, or extended holiday periods during Chinese festivals.

Hiring Practices in China 13. Cost and Process of Terminating an Employee in China

• Grounds for Termination: Employers can terminate an employee only under specific conditions, such as serious misconduct, failure to meet performance standards during probation, or mutual agreement. Unilateral termination without a valid reason is not allowed.
• Notice Period: If the termination is lawful, employers must provide a 30-day notice or pay one month’s salary in lieu of notice. During probation period, notice period is 3 days.
• Severance Payment: Severance is required if the employer initiates the termination in China, except in cases of gross misconduct. The amount is calculated as one month’s salary for each full year of service. For any period of employment less than six months, the severance is half a month’s salary.
• Calculation of Salary: Severance is based on the employee’s average monthly salary over the previous 12 months, capped at three times the local average monthly salary. Any salary above this cap is calculated at the capped rte.
• Special Circumstances: Terminating employees in China during protected periods, such as maternity leave, medical treatment leave, or for statutory reasons like discrimination, is prohibited. Companies that fail to comply with these regulations may face penalties and additional compensation to employees.

About JSC – China PEO & Employment Expert.

JSC is a professional service company that assists foreign-invested companies in doing businesses in China.

Our core services China PEO and employment solution enables foreign investors to hire employees in China without setting up any company which allow them to expand into China market in days, not months. Our in-country local experts are also experienced in assisting businesses to compliantly establish their own legal entity in China.

Please contact us if you require any other information on China PEO/China EOR.

Info@jscgroups.com