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Whether you are looking to onboard a remote workforce of 2 or 200, Horizons can help your company compliantly grow in China.
In-house: Open your own entityJOINT VENTUREREP OFFICEWFOE
EOR/PEO: With Horizon’s owned entity
Who: Employees, Contractors
Employer cost:37%-40%
Very Easy
Mandarin Chinese
Chinese yuan(¥, CNY)
Monthly
It can be more challenging to recruit employees because it’s right before the bonus distribution period, and also during the Spring Festival (Lunar New Year). Understandably, many employees prefer to secure bonuses and celebrate the holiday before considering new opportunities.
Higher inclination for individuals to change jobs. This typically follows the distribution of annual bonuses, which usually occurs in March-April.
But there are some solutions available if you can’t wait until May. Global expansion partners such as Horizons in China are accustomed to handling these situations regularly and can provide the most appropriate solutions for each specific case.
At any time of the year, there is a big competition between companies to recruit the best talent in the market.
Chinese employees are provided with statutory benefits through the “five insurances” practice in China.
1. Health insurance
2. Pension
3. Worker’s compensation
4. Maternity benefits, and
5. Unemployment insurance.
However, additional benefits, such as housing, are predicated by the income tax bracket of the individual employee.
These benefits are paid out of social contributions paid by both the employee and employer.
Different rules are applied to social security contributions from foreigners and Chinese nationals.
Foreign employees in Shanghai are not yet required to pay the Chinese social security for foreign nationals. In other cities in China, foreigners must pay the full amount of Chinese social insurance.
A PEO in China will ensure that all employees are paying the correct contributions.
Effective as of January 1st 2019, China has adjusted tax brackets and changed residency rules in order to reduce the tax burden on low income earners, with new special additional deductions available for resident tax payers.
The Individual Income Tax is calculated on an annual basis. The China EOR will automatically withhold taxes in advance on a monthly basis on the accumulated income and deductions. Individuals may have additional taxes or tax returns to claim through the annual settlement process.
Standard health and pension insurance is provided through the national system, although supplementary health insurance can be provided to the employees.
Entitled to 3 to 24 months paid leaveSick pay Above 80% of local minimum wage
Workers compensation for injuries or illnesses incurred while working cover employees with legal entitlements of up to one year’s leave at full pay to receive medical treatment.
Take a look at the chart below to learn more about the specifics of sick leave standards in China:
Over 6 months of sick leave
In order for employees to receive the full wages due to them, workers must present a valid medical certificate from a certified doctor to their employer.
China provides all female employees with 98 days paid maternity leave.
They have the option to begin this leave within 15 days prior to child birth.
Depending on the city, women over the age of 24 are generally provided with an additional 30 days for their “late maternity leave.”
Women are traditionally granted full pay during their leave, which is either paid through social security or by their employers.
China has laws in place that legally protect women from being terminated while pregnant or breastfeeding a newborn child.
An EOR in China will ensure that all maternity leave obligations are fully complied with.
| Project-based: | Fixed-term: | Indefinite: | |
|---|---|---|---|
| Probationary Period | None | Directly related to contact duration: 1-year contract: 1 month probation 2-year contract: 2 month probation 3+ year contract: 6 month probation | |
| Termination | When the project ends | 30-days notice | 30-days notice |
| Severance | 1 month for every year of employment | In mutual termination: 2 months salary for every year of service 1 month for every year of employment In cases of justified termination: 1 month’s salary per year of service | In cases of dismissal on serious grounds: None |
Application from home country
Before being able to apply for a China Work Visa (“Z-Visa”) at a Chinese embassy abroad, applicants shall first get the Notification Letter for Foreigner’s Work Permit (“Notification Letter”), which is the official Letter from the Chinese authorities stating that an applicant has been approved to work in China. To be granted the Notification Letter, the employer has to apply first by providing the required documentation to a local Labor Bureau. It took approximately 3-4 weeks to obtain the Notification Letter. Then, applicants may apply for a Work Visa at the Chinese embassy in their home country. After getting the Z-Visa, applicants may enter in China. They would have to undertake a medical examination and to register their residence at the local police station. Then, the 2 last steps would be to replace the Z-visa with a working-purpose Residence Permit and to apply for Work Permit.
For applicants who are already in China and wishing to get a Work Permit in tier-1 city, it is possible to apply directly for the Work Permit by submitting all the required documentation to the local Labor Bureau. When the Work Permit would be issued, applicants will then have to apply for a working-purpose Residence Permit (in tier-1 cities, it is possible to convert a Tourist Visa, a Business Visa China and a Study Visa into a residence Permit – applicants can hence avoid having to go back to their home countries to apply for a Work Visa and then come back again in China).
Required documents
The exact list of documents to submit to the Chinese authorities depends on each case.
In addition to the required documents to be submitted to the Chinese authorities to apply for a China work permit, 2 documents now also need to be translated and authenticated before being submitted: the Diploma and the Police Clearance Certificate. This authentication process is different for each country. Some Embassies/Consulates in China are also able to legalize documents for the Work Permit application (as for example the following Consulates: Australian, French, Greek, Indian, Spanish, British…).
Verification from home country After obtaining the Police Clearance Certificate in their home countries, applicants need to make it authenticated by the Chinese Embassy of their home country.
Besides the authentication of Diplomas abroad, or through a Consulate in China, the Chinese Ministry of Education has launched an online system able to verify foreign Diplomas: https://renzheng.cscse.edu.cn/. The verification process through this system takes approximately 1 month.
This authentication process is different for each country, however, everywhere, the authentication process ends with the same last step: legalization by the Chinese Embassy in the applicant’s home country.
“For foreign employers that are looking to hire either mid-level or senior executives, more vacation days are generally offered. In fact, it is common for such offers to come with up to four weeks of vacation time per year.”
The Juzhuzheng is a vital residence card for Chinese nationals working in cities different from their family’s origin.
The JiFen system is integral to employment in China, tracking an individual’s seniority at their work location.
The Hukou system is a fundamental aspect of China’s administrative framework, influencing urban residency and societal management.
Hukou’s importance extends to various aspects of urban life in China.
These systems play a critical role in managing residency, employment, and social benefits within China’s urban landscape. Consulting with specialists like the Horizons China team is highly recommended for a successful navigation of these processes.
In China, where intellectual property rights and confidentiality are paramount, understanding the intricacies and implications of NDAs is vital for businesses and individuals operating within the Chinese market.
A Non-Disclosure Agreement, or a confidentiality agreement or secrecy agreement, is a legally binding contract establishing confidentiality obligations between parties involved in a business relationship. Its primary purpose is to protect sensitive information from being disclosed to unauthorized individuals or entities, ensuring the preservation of trade secrets, proprietary knowledge, and intellectual property.
In China, the legal framework for NDAs primarily relies on statutory law, including the Contract Law of the People’s Republic of China and the Anti-Unfair Competition Law. According to these laws, an NDA is considered a valid and enforceable contract when certain conditions are met, such as:
In China, there are two main types of NDAs:
While NDAs are generally enforceable in China, challenges may arise during the enforcement process. Factors that can impact the enforceability of an NDA in China include:
Non-disclosure agreements are crucial for protecting confidential information and trade secrets in China’s competitive business landscape. Understanding their meaning, legal framework, enforceability, and potential challenges is essential for businesses and individuals seeking to establish secure business relationships in the country. By considering China’s unique cultural, linguistic, and regulatory aspects, stakeholders can ensure the effectiveness and enforceability of NDAs.
In order to terminate an employee in China, there must be strong cause for dismissal and clearly documented grievances leading up to the termination.
Navigating employee terminations and handling severance packages can be complicated for companies expanding overseas for the first time.
“The laws for paternity leave differ greatly by location within China, but paternity leave typically does not exceed 14 days. Men in Shanghai usually receive 3 days of paternity leave, while men in Shenzhen are typically granted 10 days.”
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71 Robinson Road #13-153
068895, Singapore
+65 3105 1170
Skalitzer Str. 85/86
10997, Berlin
+49 30 3119 9653
1700 S. Lamar Blvd Suite 338
Austin, Texas 78704
+1 (737) 265-6065
See more locations
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