The People’s Republic of China, the new global economic superpower has long been the destination of choice for western businesses’ expansion plans. With almost unlimited market opportunities, the country offers growth potential within almost every industry. Our PEO in China solution enables the hiring of local staff without having to go through the complicated and costly procedure of registering an entity.
Becoming the official Employer of Record in China of our client’s employees, we take care of the local labor contract signing and take over the local employment admin liabilities that come along with scaling a global workforce.
When doing business in China, companies tend to choose between seeting up a Representative Office (RO), a Wholly Foreign-Owned Enterprise (WFOE) oor a Joint Venture (JV). In case a company is only required to employ local staff without any invoicing activities in Mainland, there is no necessity to incorporate an entity:
The local employment administration will be handleded solely by Universal Hires, as the Employer of Record in China, on our foreign client’s behalf:
Having a local presence in Mainland China can be a key market advantage when scaling global business operations.
Understanding the Chinese Labor Law is crucial when looking to hire a team in the Mainland. Universal Hires’ team brings along a long-standing market experience with helping foreign client’s scale their local operations.
Since January 1st 2019, China has adjusted tax brackets and changed residency rules in order to reduce tax burden on low income earners, with new special additional deductions available for resident tax payers.
The Individual Income Tax (IIT) is now calculated on an annual basis. Universal Hires is to withhold tax in advance on a monthly basis on the accumulated income and deductions. Individuals may have additional tax or tax returns to claim through the annual settlement process.
There are several labor contract types that can be chosen when hiring through an Employer of Record / PEO in China. In practice, they include:
The Working Hours Law of the People’s Republic of China states that a standard working week can be five working days with a eight working hours per day, maximum 44 hours of work per week.
A new employee’s annual leave entitlement of that year should be calculated on a prorated basis to the amount of time worked, from his/her actual commencement date until the end of the year; if it is less than half a day, it will be calculated as half a day; if it is more than half a day but less than one day, it will be calculated as one (1) day; The employee, who is still in the probationary period, is eligible for annual leave days on a prorated basis to the amount of time worked.
Employees during his/her probationary period shall also be entitled to annual leave.
According to the relevant regulations, under any of the following circumstances, an employee shall not eligible for the annual leave of that year:
Employees are entitled by law to a percentage of the salary paid according to the injury (work-related or not), medical treatment period (below six months or not), and completed years of services in the company. Ranges for percentage of the salary paid is 40-100% according the situation.
However, companies are allowed to offer individual sick leave benefits to the employee (e.g., min. 12 days fully reimbursed per calendar year upon medical certificate proof). Our HR team will adapt the language according to the practice that you want to follow with Jeremy.
The Chinese household registry, also referred to as the Hukou system, plays an important role when onboarding local staff.
Taiwanese, Hong Kong and Macau Nationals have a particular status in Mainland China and are considered somewhat in between a foreigner and Chinese. They can chose to contribute or not to the social insurances system, but do not benefit from the Mainland housing fund scheme.
In order for them to compliantly work in Mainland China, they will only need to apply for a special residence permit (Juzhuzheng 居住证) since those Nationals do not require a Work Permit.
No, there is no minimum commitment period. The service agreement signed with Universal Hires can actually be terminated at any point of time respecting the 60 days’ notice period. This period allows us to coordinate a compliant termination procedure with the employee’s approval. There are no termination charges applied by Universal Hires.
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Wan Chai, Hong Kong
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