Hiring employees in China as a foreign-invested enterprise involves specific legal requirements: labor contracts, mandatory social insurance, housing fund contributions, and strict termination rules. This guide covers the complete process from hiring to termination.
Prerequisites: You Need a Chinese Entity
Before hiring, you must have a registered Chinese entity (WFOE, JV, or Rep Office) with:
- Business License (θ₯δΈζ§η §)
- Unified Social Credit Code
- RMB Basic Account (for payroll)
- Social Insurance Account (registered with local bureau)
- Housing Provident Fund Account
No entity yet? Use a PEO/EOR service (Professional Employer Organization / Employer of Record) to hire staff through a third party's local entity while you set up your own. Cost: Β₯1,500-5,000/employee/month on top of salary.
Step 1: Recruitment
- Job platforms: Zhaopin (ζΊθζθ), 51job (εη¨ζ εΏ§), Liepin (ηθ) for professionals; BOSS Zhipin for tech; LinkedIn for bilingual/senior roles.
- Recruitment agencies: For senior roles, expect 20-30% of annual salary as placement fee.
- Background checks: Legal in China with candidate consent. Verify education, employment history, and legal records.
Step 2: Sign the Labor Contract
China's Labor Contract Law requires a written contract within 1 month of the employee starting work. If you don't sign within 1 month, you owe double salary; after 1 year without a contract, it becomes an open-ended contract automatically.
Required contract elements:
- Position and job duties
- Contract term (fixed-term, open-ended, or task-based)
- Probation period (if any)
- Salary and payment schedule (monthly, by 15th of following month)
- Working hours and location
- Social insurance and housing fund contributions
- Confidentiality and non-compete clauses (if applicable)
Step 3: Register Social Insurance & Housing Fund
| Insurance | Employer Rate | Employee Rate | Notes |
|---|---|---|---|
| Pension | 16% | 8% | Capped at city-specific max base |
| Medical | 6-10% | 2% | Varies by city |
| Unemployment | 0.5% | 0.5% | Standard nationwide |
| Work Injury | 0.2-0.5% | 0 | Employer only; rate by industry risk |
| Maternity | 0.5-1% | 0 | Employer only (merged with medical in some cities) |
| Housing Fund | 5-12% | 5-12% | Matched employer/employee; city-dependent |
| Total employer burden | ~28-40% | ~15-27% | On top of gross salary |
Step 4: Onboarding
- Sign labor contract (within 1 month of start date)
- Register employee with social insurance bureau (within 30 days)
- Register with housing fund management center
- Set up payroll (monthly, paid by 15th of following month)
- Open individual income tax (IIT) filing account
- Conduct safety training (legally required)
Probation Periods
| Contract Duration | Max Probation | Min Probation Salary |
|---|---|---|
| β€1 year or task-based | 1 month | β₯80% of contract salary |
| 1-3 years | 2 months | β₯80% of contract salary |
| 3+ years or open-ended | 6 months | β₯80% of contract salary |
Termination Rules (Important)
China has strict employee protection. Termination is only legal on specific grounds:
- Mutual agreement: Both parties agree (negotiate severance).
- Serious misconduct: Violating company rules, criminal conduct, gross negligence (no severance required, but burden of proof is high).
- Inability to perform: After training or reassignment, still cannot perform (30 days notice + 1 month severance per year of service).
- Economic redundancy: Company financial difficulties, restructuring (30 days notice to union + severance).
- Wrongful termination: Can result in reinstatement or double severance payment.
Severance = 1 month salary per year of service (rounded up for 6+ months, rounded down for <6 months).