Employer of Record China: A Comprehensive Guide on Employer of Record 2025

If you are planning to branch out your business overseas, managing the diverse and often complex regulatory environment in China can be a significant challenge. With strict local employment laws, evolving tax regulations, and unique administrative practices, navigating compliance in China requires deep local knowledge. To maintain operational efficiency and avoid the risk of penalties, partnering with a third-party platform becomes not just helpful but essential. Engaging with an Employer of Record (EOR) service provider in China can streamline your expansion process significantly. This way, you can focus on your core business functions while ensuring full compliance with local labor laws. Continue reading this blog to understand how Employer of Record Services in China can support your global hiring strategy and help you reduce operational burdens as you scale your business into one of the world’s largest and most dynamic markets.

Table of Content

• Overview about China
• What is an Employer of Record in China
• Employer of Record vs Legal Entity
• What are the Use Cases for Availing of Services Under Employer of Record China?
• Laws and Compliance Best Practices to Hire Employees in China
• Best EOR Companies in China
• What are EOR Services in China?
• How to Hire Employees Through an EOR China Partner
• Taxes in China
• CTC Calculator for Hiring Employees in China
• Key Considerations While Hiring Employees Through EOR in China
• Employee Benefits in China
• Terminations in China
• How to Choose the Right EOR China Services?
• Benefits of Working With an Employer of Record Service Provider in China
• Visa Types in China
• Risks or Drawbacks of EOR China
• How Does Employer of Record China (EOR) Differ From HR Software?
• How Much Does It Cost to Avail Services Under EOR China?
• Conclusion: EOR China
• FAQs

Overview about China

China, the world’s second-largest economy, offers a vast market potential and an increasingly skilled workforce, making it a strategic destination for international business expansion. With its growing innovation ecosystem, advanced manufacturing capabilities, and government-driven economic reforms, China presents immense opportunities. However, navigating its complex regulatory framework—including labor laws, payroll standards, and regional compliance requirements—can be challenging. This is where Employer of Record (EOR) services become essential, enabling businesses to manage compliant employment in China without establishing a legal entity.

What is an Employer of Record in China

An Employer of Record (EOR) in China is a third-party organization that legally employs workers on behalf of a foreign company. The EOR assumes responsibility for employment contracts, onboarding, payroll processing, and compliance with China’s local labor laws and social insurance obligations. By partnering with an EOR in China, companies can efficiently hire and manage employees without the administrative burden of setting up a local subsidiary or navigating legal hurdles independently.

Employer of Record vs Legal Entity

Criteria	Legal Entity	Employer of Record (EOR)
Definition	A legal entity in China is a locally registered company that can directly employ workers and operate independently.	An EOR acts as the legal employer for foreign companies, managing hiring, contracts, payroll, and compliance.
Ownership	Owned by the foreign business or its investors.	The EOR is the legal employer, but the foreign client maintains daily operational control.
Employment Contracts	Contracts are directly signed between the company and employees.	The EOR signs labor contracts on behalf of the client company with employees, ensuring legal compliance.
Compliance Responsibility	The entity is fully accountable for following China’s labor laws, tax codes, and social insurance requirements.	The EOR ensures all employee compliance including local taxes, pension contributions, and labor contract regulations.
Payroll & Benefits Management	Handled internally by the legal entity, including taxes, housing fund contributions, and social security.	The EOR manages payroll, tax deductions, housing fund, and social insurance on behalf of the client.
Tax Liabilities	The legal entity bears all employee-related tax liabilities and reporting obligations.	The EOR manages employee tax liabilities and files taxes with local authorities per Chinese regulations.
Time to Set Up	Setting up a Wholly Foreign-Owned Enterprise (WFOE) may take 2–6 months with extensive paperwork and approvals.	An EOR can onboard employees within days since the operational infrastructure already exists.
Employee Onboarding	Involves setting up local HR, payroll, and legal teams.	The EOR handles everything from contract generation to government registrations and onboarding.
Employment Law Expertise	Requires internal legal expertise or Chinese legal consultants to stay compliant.	The EOR brings in-depth understanding of national and regional labor laws, reducing legal risk.
Risk & Liability	All employment-related risks, including disputes or fines, are borne by the legal entity.	The EOR assumes legal and compliance liabilities, insulating the client from employment risks.
Control Over Workforce	Full control, including recruitment and HR policies.	The client manages the employee’s day-to-day work; the EOR handles compliance and HR admin.
Flexibility	Less flexible due to fixed local operations and legal setup.	Highly flexible, enabling fast hiring and scaling without committing to permanent establishment.
Cost & Investment	High upfront investment, including capital registration, legal fees, and HR costs.	Lower cost, as the EOR model eliminates the need for local entity setup and full HR staffing.
Global Expansion	Requires setting up a new entity in China, which can be time-consuming and costly.	EOR facilitates quick and compliant market entry into China without forming a company.

Suggested Read: EOR- A Detailed Guide on Employer of Record 2024

Choose Between an EOR China Partner and a Legal Entity

Legal Entity in China

Establishing a legal entity in China—such as a Wholly Foreign-Owned Enterprise (WFOE)—requires extensive documentation, government approvals, and strict compliance with regional and national laws. This process can take several months and involves significant financial investment in legal setup, HR infrastructure, and understanding China’s intricate labor, tax, and social insurance frameworks. While this route offers full operational control, it also brings with it higher risks and ongoing regulatory obligations.

On the other hand, partnering with an EOR China provider enables companies to enter the Chinese market swiftly and compliantly without the need to set up a local entity. An EOR takes care of employment contracts, payroll administration, tax filings, and compliance requirements, allowing businesses to focus on growth while minimizing legal and administrative burdens.

What are the Use Cases for Availing of Services Under Employer of Record China?

1. Business Expansion Without a Legal Entity

For global businesses, entering the Chinese market can be a formidable task due to intricate regulations, localized labor laws, and licensing requirements. An Employer of Record (EOR) enables companies to launch operations in China without establishing a local legal entity. Acting as the official employer, the EOR takes on responsibilities such as payroll processing, tax remittance, and compliance adherence, allowing businesses to concentrate on their core operations.

This is particularly valuable for:

• Startups exploring Chinese consumer or enterprise markets.
  
• Global enterprises conducting temporary projects or pilot initiatives in China.
  
• Companies seeking quick, cost-effective market entry with minimal legal risk.
  

2. Offering Full-time Employment to Contractors or Freelancers

Many companies engage Chinese professionals as freelancers or independent contractors in the early stages of market exploration. However, transitioning such workers to full-time employment requires compliance with Chinese labor laws, which prohibit misclassification. EORs offer a simple solution by issuing compliant labor contracts, managing statutory benefits like social insurance and housing fund contributions, and ensuring full legal alignment.

3. Recruiting Talent Globally

China is home to an increasingly sophisticated workforce with expertise in fields such as manufacturing, fintech, artificial intelligence, and R&D. When foreign companies recruit Chinese talent, an EOR facilitates smooth onboarding and workforce management while ensuring compliance with local hiring standards. This enables companies to build distributed global teams efficiently and legally, without having to set up a brick-and-mortar office.

Laws and Compliance Best Practices to Hire Employees in China

China’s legal and regulatory environment is detailed and strictly enforced. Missteps can result in fines, revoked licenses, or legal disputes. Here are critical compliance areas to focus on:

• Understanding Chinese Labor Law: Companies must align with the PRC Labor Contract Law and other local ordinances, which regulate probation, work hours, overtime, and termination procedures.
  
• Taxation in China: Employers must withhold and report individual income tax (IIT), and contribute to mandatory programs like the social insurance fund and housing provident fund. EORs manage these obligations on behalf of foreign businesses.
  
• Employee Benefits in China: Employees are entitled to statutory benefits, including pension, medical insurance, unemployment insurance, maternity leave, and paid annual leave.
  
• Contract Structuring: Employment contracts must be in Chinese and include clear clauses around job role, compensation, termination, and benefits. EORs help standardize and localize contracts to avoid legal pitfalls.
  

Best practices include conducting routine audits, adapting to policy updates across municipalities, and partnering with a seasoned EOR provider with a local presence.

Best EOR Companies in China

Choosing a competent EOR provider in China is key to ensuring smooth operations. A reliable EOR takes care of everything—from employee onboarding to compliance reporting. Explore the Top EOR Companies in China to find providers that meet your compliance, scale, and cost expectations.

What are EOR Services in China?

Payroll Management

In China, payroll involves more than salary calculation. It includes statutory deductions, social contributions, tax reporting, and working hour compliance. EORs manage gross-to-net calculations, submit employer and employee contributions, and file monthly tax reports to local authorities, ensuring compliance across all provinces and cities.

Employee Onboarding

EORs manage the complete onboarding cycle—from drafting bilingual labor contracts to registering new hires with social insurance bureaus. This ensures legal validity, cultural alignment, and a smooth start for new employees in China’s regulated labor environment.

HR Administration

China’s labor laws require extensive HR documentation and data maintenance. EORs handle routine HR tasks like attendance tracking, document verification, and leave management. Advanced EORs also provide digital HR tools such as employee portals, enabling seamless communication and transparency.

Equipment Procurement and Management

Whether employees work remotely or from a client’s location, EORs assist with providing laptops, mobile devices, and specialized tools. They manage logistics, track inventory, and support maintenance or returns—particularly useful for companies building remote-first teams in China.

Compliance and Legal Support

EOR providers help businesses comply with city-specific laws, such as Shanghai’s additional leave entitlements or Beijing’s housing fund requirements. They also assist in labor arbitration, audits, and aligning with new government mandates.

Taxation and Statutory Compliance

EORs handle individual income tax (IIT), value-added tax (VAT), and ensure mandatory contributions to the five insurance types and one fund (social insurance and housing fund). Timely filings and accurate deductions help businesses remain compliant and employee-friendly.

Employee Insurance and Benefits Administration

In China, competitive benefits can attract high-quality talent. EORs manage statutory benefits and optional programs like private medical insurance or annual wellness checks. They also help employers customize perks to meet both legal and market expectations.

Risk Management and Insurance

EORs offer protection against wrongful termination lawsuits, benefit disputes, and workplace safety liabilities. Their legal teams keep businesses informed about employment risks while minimizing exposure to financial penalties or litigation.

Self-Serve Employee Portal

Most EORs in China provide bilingual (Chinese-English) employee portals that allow staff to check payslips, update tax information, submit leave requests, and track reimbursements. This enhances employee engagement and operational efficiency.

Employee Tax Optimization

EORs guide employees on structuring compensation packages—such as housing allowances or tax-free benefits—that are fully compliant yet optimized for take-home pay, making the employment offer more attractive.

Employee Retirement

Chinese law mandates contributions to pension schemes and provides specific rules for retirement age and entitlements. EORs manage these contributions and ensure compliance with retirement-related regulations across different provinces.

Offboarding & Recovery

EORs in China manage exit procedures, including final payroll calculations, benefit terminations, and return of company equipment. They ensure all processes align with labor law, helping companies avoid disputes and maintain their employer brand.

How to Hire Employees Through an EOR China Partner

Hiring employees through an EOR China Partner offers global businesses a simplified and compliant method to build a workforce in China without the need to register a local legal entity. By working with an EOR, companies can avoid the bureaucratic challenges posed by Chinese labor laws, tax systems, and social insurance obligations.

EOR China Partner

An EOR China Partner is a specialized third-party provider that acts as the official employer of record for your workforce in China. The EOR takes full responsibility for labor contracts, payroll administration, tax withholdings, statutory contributions, benefits, and employment compliance. This enables foreign companies to focus on business development, talent strategy, and productivity while ensuring that all employee-related obligations meet Chinese regulatory standards. A reliable EOR partner also mitigates the risk of legal penalties and employment disputes through consistent compliance and expert local guidance.

Select the Best EOR Service Provider in China for Your Business

Selecting the right EOR service provider is a key decision in executing a successful hiring strategy in China. The ideal EOR partner will possess in-depth understanding of national and municipal labor laws, extensive local market expertise, and a strong service delivery history. When assessing potential EOR providers, evaluate their capabilities in payroll compliance, contract management, HR support, tax administration, and benefit handling. Choose a partner that offers flexible solutions tailored to your company’s workforce structure and operational scale in China.

Hire & Onboard Your New Employees

After finalizing your EOR China partner, the recruitment and onboarding process begins. Your EOR partner assists with job postings, candidate vetting, and employment contract formalization. Once a candidate is selected, the EOR handles onboarding in compliance with Chinese employment standards, which include signing labor contracts in Mandarin, enrolling employees in local social insurance, and coordinating with tax authorities. This ensures a smooth integration for both the new employee and the foreign employer.

Remote EOR Employee Onboarding Checklist for China

Onboarding Step	Responsibility	Details
Before Offer Letter
Collect Employee Details	Company	Collect personal details, ID numbers, residency info, and resume.
After Offer Letter
Draft Employment Contract	EOR	Draft bilingual, legally compliant labor contracts.
Background Verification	EOR	Run background checks and verify employment history with candidate consent.
Welcome Email	Company & EOR	Company sends greeting; EOR schedules onboarding session.
On Joining Day
Employment Documentation	EOR	Ensure contracts, tax forms, and insurance registrations are completed.
Payroll Setup	EOR	Collect bank details, assign payroll IDs, configure deductions.
Policy Briefing	Company	Introduce company policies, vacation rules, and code of conduct.
Account Setup	EOR	Assist with bank account opening for salary payment.
Introduction to Systems	EOR	Walkthrough of payroll, attendance, and benefits systems.
IT Setup	Company/EOR	Provide IT assets and access to internal platforms.
Mentor Assignment	Company	Assign a mentor to guide the new hire and share company culture.
Post-Onboarding
Payroll Explanation (First Paycheck)	EOR	Break down the payslip, deductions, and allowances.
Ongoing Support	Company	Schedule regular feedback sessions and performance reviews.
HR Operations	EOR	Manage benefits, tax filings, and ongoing employee administration.

Processing Payroll

China’s payroll system is multilayered and requires strict compliance with national and regional tax rules, mandatory social contributions, and reporting obligations. A qualified EOR partner handles this complex process on your behalf, ensuring employees are paid correctly and on schedule.

Key components of payroll in China include:

• Salary and Allowances: This includes base salary, performance bonuses, transportation allowances, and other benefits agreed upon in the contract.
  
• Social Insurance Contributions: Employers and employees must contribute to pension, medical, unemployment, maternity, and work injury insurance, as well as the housing provident fund. The rates vary by city.
  
• Individual Income Tax (IIT): The employer (EOR) withholds and submits IIT based on income levels and social contributions.
  
• Additional Benefits: Health insurance, annual leave, and statutory holiday pay are administered based on employment classification and local requirements.
  

Typical Payroll Process Stages in China

1. Payroll Calculation
   The EOR calculates gross salary, allowances, mandatory social contributions, and applicable deductions based on local laws and employee agreements.
   
2. Tax Compliance
   The EOR deducts and files IIT and social insurance contributions with the relevant government bodies, ensuring compliance across municipal jurisdictions.
   
3. Salary Disbursement
   After taxes and contributions are accounted for, the EOR disburses the net salary into the employee’s bank account and issues payslips with full transparency.
   

Partnering with an EOR China provider streamlines the hiring process, reduces administrative overhead, and ensures your business complies with local employment laws—allowing you to scale efficiently in one of the world’s most regulated and dynamic labor markets.

Suggested Read: Hire Employees in India Through EOR

Taxes in China

Taxes are a fundamental component of China’s financial and regulatory system. Employees in China are subject to various taxes, with the most significant being Individual Income Tax (IIT). Understanding the tax framework, contribution thresholds, and compliance responsibilities is crucial for both employers and employees to ensure proper financial planning and regulatory adherence.

Individual Income Tax (IIT) in China

The Chinese Individual Income Tax (IIT) system operates on a progressive scale, applying different rates based on monthly taxable income after allowable deductions. The employer is responsible for calculating, withholding, and remitting IIT on behalf of the employee each month.

Monthly Taxable Income (CNY)	Tax Rate	Quick Deduction (CNY)
Up to 3,000	3%	0
3,001 – 12,000	10%	210
12,001 – 25,000	20%	1,410
25,001 – 35,000	25%	2,660
35,001 – 55,000	30%	4,410
55,001 – 80,000	35%	7,160
Above 80,000	45%	15,160

Tax Due Dates in China

Employers must file and remit IIT on a monthly basis by the 15th of the following month. Annual tax reconciliations for employees are typically due by the end of June in the subsequent year. Timely submission of taxes and social contributions is critical to avoid interest, penalties, and audit risks.

Tax Thresholds in China

China’s IIT system includes a monthly standard deduction of CNY 5,000 for resident employees. Income beyond this threshold is subject to taxation based on the progressive scale. Foreign employees working in China may also be eligible for additional special deductions or tax-exempt allowances (such as housing or education), subject to policy updates and residency status.

Businesses must also comply with corporate tax obligations. China’s corporate income tax rate is generally 25%, but small enterprises and high-tech companies may qualify for preferential rates.

Tax Withholding System

China uses a “withholding at source” mechanism, where the employer calculates and deducts taxes before disbursing salaries. This includes:

• Individual Income Tax (IIT) on monthly salaries
  
• Social Insurance and Housing Fund contributions
  
• Additional deductions (if declared)
  

Employers must report and pay these withholdings monthly through China’s electronic tax filing platforms.

Social Insurance Contributions

China mandates that employers contribute to five types of social insurance, plus the housing fund, commonly referred to as “Five Insurances and One Fund.”

Type	Employer Contribution	Employee Contribution
Pension Insurance	~16%	8%
Medical Insurance	~10% (includes maternity)	2% + CNY 3
Unemployment Insurance	~0.5% – 1%	~0.5%
Work Injury Insurance	0.2% – 1.9% (industry-specific)	0%
Maternity Insurance	Usually merged with medical	0%
Housing Provident Fund	5% – 12% (varies by city)	5% – 12%

Rates may vary by city. For instance, Shanghai and Beijing have different contribution ceilings and minimums. EOR providers ensure compliance with all regional requirements.

Deductions and Exemptions

China’s IIT system offers several special deductions, which can reduce taxable income. These include:

• Housing Rent Deduction: Applicable for employees renting accommodations.
  
• Child Education: Deduction for children’s tuition fees.
  
• Continuing Education: Deduction for adult education and certifications.
  
• Elderly Care: Deduction for supporting parents aged 60 and above.
  
• Mortgage Interest: For those with personal housing loans.
  

Foreigners working in China may also receive tax-exempt benefits such as meal subsidies, housing allowances, and language training. However, these exemptions are subject to evolving regulations.

Employers and EORs help employees maximize these deductions by guiding them through declaration procedures during onboarding and payroll setup.

Provident Fund (Housing Fund)

The Housing Provident Fund is a mandatory savings scheme that supports employees in buying or renting a home. Both the employer and employee contribute a set percentage of the employee’s salary into the fund, typically between 5% and 12%, depending on the city’s policies. Contributions are tax-deductible and provide low-interest housing loans or withdrawal options for housing expenses.

Employee Medical & Social Security (Social Insurance)

China’s social insurance system covers basic medical care, maternity leave, pensions, unemployment, and injury compensation. These are funded through monthly payroll contributions and provide a safety net for employees and their families.

Foreigners who hold a work permit and reside in China for extended periods are typically required to enroll unless exempt under bilateral agreements. EORs ensure accurate contribution amounts, benefit access, and compliance across all regions.

Asanify’s Support for Employee Tax Optimization in China

Asanify, as a leading EOR service provider, extends its expertise beyond India and offers customized employee tax optimization solutions for companies hiring in China. The platform assists in:

• Accurate IIT and social insurance calculations
  
• Timely payroll processing and government filings
  
• Strategic use of special deductions and foreign employee exemptions
  
• Transparent payslip generation and tax reconciliation reporting
  

By partnering with Asanify, companies gain peace of mind, knowing that their employees’ tax liabilities are minimized and all filings are fully compliant with Chinese law.

CTC Calculator for Hiring Employees in China

When hiring employees in China, understanding the Total Compensation Cost—akin to Cost to Company (CTC)—is essential for effective budgeting and payroll planning. In China, total compensation includes the gross salary, employer social insurance contributions, housing fund contributions, allowances, and any performance bonuses or statutory benefits. This overall package defines how much a company actually spends on employing a worker annually.

To simplify this, businesses can use a CTC Calculator tailored for China, which breaks down:

• Gross salary
  
• Employer’s portion of social insurance and housing fund
  
• Income tax deductions
  
• Net (take-home) salary
  
• Optional benefits like health insurance or travel allowance
  

Such a tool helps employers ensure transparency and compliance while enabling employees to clearly understand their take-home pay and benefits. It’s particularly useful for cross-border HR teams or global startups hiring Chinese talent through an EOR partner. For a detailed breakdown of salary structures and how to compute total compensation in China, check out our dedicated guide!

Key Considerations While Hiring Employees Through EOR in China

Employee Agreements in China

Employee agreements are essential for legally compliant hiring in China. An EOR China partner ensures that all labor contracts follow the PRC Labor Contract Law, including mandatory clauses such as job description, compensation, work location, confidentiality, non-compete terms, and termination conditions. Chinese labor contracts must be written in Mandarin and signed within one month of employment commencement. Failure to do so can result in fines or the employee being deemed permanently hired. EORs help draft, translate, and formalize these contracts to ensure clarity and legal security for both employer and employee.

Work Hours and Probation

In China, standard working hours are 8 hours per day and 40 hours per week, typically from Monday to Friday. The law allows flexibility, but overtime compensation and work-hour regulations must be followed strictly.

Probation periods in China range from 1 to 6 months, depending on the contract length. During probation, notice periods and severance differ from regular employment. An EOR ensures that probation clauses and related entitlements (like full benefits) are properly defined in the labor contract and managed within compliance.

Leave Policies

Chinese labor laws require employers to provide statutory leave entitlements, which vary by tenure and situation. EOR providers structure leave policies to align with national mandates and local customs.

Leave Type	Description	Duration
Annual Leave	Paid leave based on years of service	5 to 15 days per year
Sick Leave	Paid leave for medical conditions	Varies by tenure and city regulations
Maternity Leave	Paid leave for childbirth	98 days minimum (can extend to 128+ days)
Paternity Leave	Paid leave for new fathers (varies by province)	7–30 days (provincial regulations apply)
Marriage Leave	Paid leave for employees getting married	3 days (more in some provinces)
Bereavement Leave	Paid leave for loss of close family members	1–3 days

These leaves must be clearly outlined in the labor contract. Some employers also provide optional wellness or unpaid sabbaticals as part of competitive benefit packages.

Types of Leaves in China

• Annual Leave: Granted after one year of service; starts at 5 days and increases with seniority.
  
• Sick Leave: Typically paid at 60%–100% of salary, depending on duration and tenure.
  
• Maternity Leave: Female employees are entitled to fully paid leave, with additional time granted for complications or multiple births.
  
• Paternity Leave: Increasingly common, though not uniformly mandated. Varies by province (e.g., 15 days in Beijing).
  
• Marriage & Bereavement Leave: Standard practice in employment contracts; typically honored with full pay.
  
• Sabbatical Leave: Rare but may be offered by multinationals or academic institutions for long-term employees.
  

List of General Public Holidays in China – 2025 (Tentative)

Date	Occasion	Category
1 January	New Year’s Day	National Holiday
29 January–4 February	Chinese New Year	National Holiday
5 April	Qingming Festival	National Holiday
1 May	Labor Day	National Holiday
4 June	Dragon Boat Festival	National Holiday
15 September	Mid-Autumn Festival	National Holiday
1–7 October	National Day Holiday Week	National Holiday

Note: China follows an adjusted weekend workday policy around holidays. EORs manage these schedule changes and ensure compliance with national calendars.

Gratuity and Severance Payments

China does not have a “gratuity” system like India, but statutory severance pay is mandated under the PRC Labor Contract Law. When a contract is terminated under eligible circumstances, the employee is entitled to:

• One month’s salary for every completed year of service
  
• Prorated compensation for partial years beyond six months
  

An EOR handles severance calculation and documentation to ensure legal termination and fair compensation.

Termination Policies

Termination in China must follow strict legal procedures. Employees can only be dismissed for valid reasons (e.g., gross misconduct, redundancy) and under lawful notice terms. If terminated unlawfully, employees may sue for reinstatement or claim double severance.

Typical guidelines include:

• Notice Period: 30 days’ written notice or one month’s salary in lieu
  
• Severance: Based on tenure, as outlined above
  
• Documentation: Formal record of dismissal, reason, and compensation
  

An EOR helps mitigate legal risks by managing terminations in accordance with all local laws and issuing compliant documentation.

Bonus Payments in China

Bonuses in China are not mandatory under law but are a common practice. The most widely recognized is the 13th-month salary, usually paid during Lunar New Year.

• Performance-based bonuses are also offered in many sectors.
  
• Bonuses are taxable and must be included in monthly IIT filings.
  

EOR providers ensure that bonus structures are clearly defined in contracts and that all taxes are calculated and filed properly.

Health Insurance in China

China has a national healthcare system backed by mandatory social insurance contributions. Employers are required to enroll employees in basic medical insurance, which covers outpatient, inpatient, and catastrophic illness treatments.

In addition, many companies—especially foreign-invested enterprises—offer commercial health insurance to supplement basic public coverage, often including:

• Private hospital access
  
• Dental and vision coverage
  
• Annual health check-ups
  

EOR partners manage enrollments, claims, and premium payments for both public and private insurance plans, ensuring employees are fully protected.

Suggested Read: PEO vs EOR Differences- All That You Need to Know 

Employee Benefits in China

Employee benefits are a fundamental part of compensation in China. These benefits not only help attract and retain skilled professionals but also support employee well-being and long-term financial security. In China, employee benefits are broadly divided into statutory benefits mandated by law and supplementary benefits provided voluntarily by employers.

Statutory Benefits in China

Statutory benefits are regulated by Chinese labor laws and municipal policies. These benefits ensure legal protection for employees while creating a framework for social security and welfare. Employers are required to comply strictly with the following key statutory benefit programs:

• Social Insurance (五险): Employers and employees contribute to five key programs—pension, medical, unemployment, work-related injury, and maternity insurance. Contribution rates vary by city, but employer contributions typically total 30% or more of an employee’s gross salary.
  
• Housing Provident Fund (公积金): This is a mandatory housing savings scheme. Both employers and employees contribute a set percentage (usually 5–12%) of the salary. The fund supports housing purchases, rentals, and mortgage repayments.
  
• Paid Annual Leave: Based on tenure, employees are entitled to 5–15 days of paid leave per year, as defined by the Labor Law.
  
• Maternity and Paternity Leave: Women are entitled to at least 98 days of paid maternity leave, with possible regional extensions. Paternity leave varies by province, typically 7–15 days.
  

Supplementary Benefits in China

To remain competitive in China’s dynamic talent market, employers often offer additional benefits beyond the legal minimum. These supplementary perks are designed to enhance quality of life and improve retention.

• Commercial Health Insurance: Many employers offer private insurance to cover services not included under the public plan, such as dental care or private hospitals.
  
• Performance-Based Bonuses: Bonuses, including the 13th-month salary and annual performance incentives, are commonly used to reward achievements.
  
• Wellness Programs and Allowances: Subsidies for fitness, mental health support, or transportation are becoming popular.
  
• Stock Options or Equity Plans: Tech and multinational firms often offer equity incentives to attract high-value employees.
  

Asanify’s Flexible Benefits Plan for EOR Employees in China

Asanify offers a Flexible Benefits Plan (FBP) tailored to employees working in China, allowing them to optimize compensation structures and improve tax efficiency. The plan includes pre-tax reimbursements for transportation, meals, and communication, all aligned with local tax policies.

Employees can save significantly on annual taxes by leveraging approved allowance categories. Asanify’s digital payroll platform automates benefit tracking, tax calculations, and documentation—ensuring compliance and employee satisfaction.

For employers, Asanify’s FBP creates a customizable, high-impact compensation strategy that enhances retention while maintaining control over CTC.

Terminations in China

Employee terminations in China are governed by the Labor Contract Law, which requires strict adherence to notice periods, severance terms, and procedural fairness. Termination processes differ for probationary and formal employees, and due cause or economic justifications are required in most cases.

Notice Periods in China

Under Chinese law, the standard notice period is:

• 30 days’ written notice or
  
• One month’s salary in lieu of notice
  

For probationary employees, notice periods may be shorter (e.g., 3 days). Contracts must clearly state these terms. EOR partners ensure proper notice protocols are followed to minimize legal risks.

Severance Pay in China

Severance pay is a legal obligation in China for most employer-initiated terminations. Employees who are terminated without fault and have completed at least one year of service are entitled to severance.

• Formula: One month’s salary × years of service
  
• For partial years over 6 months, a full month’s severance applies
  
• Capped at 3x local average monthly salary in some cities
  

This system supports employee transitions and ensures legal compliance during layoffs or restructures.

Key Points:

• Legal Compliance: Employers must comply with labor laws governing valid reasons for termination, written documentation, and severance procedures.
  
• Documentation: Formal written termination notices and severance agreements are required.
  
• Labor Contracts: Must specify termination conditions, compensation, and dispute resolution mechanisms.
  
• Employee Rights: Employees are entitled to full payment of wages, severance, and social fund contributions upon exit.
  

Types of Termination

Termination for Cause

Employers may terminate employees for misconduct, fraud, or breach of company policy. Evidence must be documented, and the employee has the right to defend themselves. No severance is required if due cause is proven.

Termination Without Cause

Often used during reorganizations, redundancy, or business closures. Employers must provide severance and notice. Advance consultation with trade unions or employee representatives may be required in certain cases.

Collective Termination

Occurs when multiple employees are laid off at once. For companies with 20+ affected employees or 10% of the workforce, prior notice to the labor bureau and consultation with unions are mandatory. Severance must be paid to all eligible employees.

Voluntary Termination (Resignation)

Employees may resign with 30-day notice (or 3 days during probation). Employers must complete exit formalities, pay outstanding wages, and issue a release certificate. Severance is not required unless agreed otherwise.

What Are the Key Steps Involved in Terminating Employees in China?

1. Serve Notice Period
Employers must provide written notice or payment in lieu, unless termination is due to employee misconduct.

2. Termination for Cause
Must be backed by solid evidence and communicated formally. The employee has the right to defend their case, and documentation must be retained.

3. Full and Final Settlement
Includes:

• Last salary
  
• Accrued but unused leave
  
• Severance (if applicable)
  
• Housing fund and insurance settlements
  All amounts must be paid within the final payroll cycle.
  

4. Documentation
Essential for legal protection. Includes:

• Signed termination letter
  
• Severance payment confirmation
  
• Employment release certificate
  
• Exit interview records (if conducted)

How to Choose the Right EOR China Services?

Expertise and Local Knowledge

Choose an EOR with strong understanding of PRC Labor Law, local taxation, and regional regulations. They should be equipped to navigate policy changes and ensure full compliance across cities.

Comprehensive Service Offerings

The best EOR providers in China offer:

• Contract management
  
• Social insurance and housing fund handling
  
• Payroll processing and tax filing
  
• Legal guidance on onboarding and termination
  

This ensures seamless employment lifecycle management.

Scalability and Flexibility

Your EOR should support growing teams across multiple locations, offering flexible plans for full-time, part-time, and project-based roles. This is essential for startups and MNCs expanding operations.

Technology and Data Security

Opt for an EOR with a secure HR tech platform that includes:

• Employee self-service portals
  
• Payroll transparency
  
• Real-time compliance alerts
  
• Encrypted data storage and secure user access
  

Adherence to data privacy laws and local cybersecurity guidelines is critical in China.

Compliance and Risk Management

A major advantage of partnering with an EOR China provider is reducing the risk of non-compliance with Chinese labor laws and regional regulations. China enforces strict labor protections, tax rules, and benefits policies that differ by municipality. A trusted EOR partner ensures accurate statutory filings, social insurance contributions, and tax submissions, helping your business stay compliant while avoiding costly penalties or disputes.

Reputation and Client References

Evaluating the EOR’s market reputation is key. Look for client testimonials, case studies, and online reviews from other global companies operating in China. A reputable EOR partner will have a strong history of delivering quality, compliant services. Their portfolio should reflect experience across industries and cities in China, and they should be able to demonstrate successful partnerships through verifiable references.

Expertise in Chinese Employment Regulations

An EOR provider must have deep expertise in China’s employment laws, including the Labor Contract Law, social insurance regulations, housing fund obligations, and Individual Income Tax (IIT) requirements. This ensures proper handling of hiring, onboarding, payroll, and terminations while maintaining full compliance with both national and city-specific legislation.

Service Offerings and Scalability

Ensure that the EOR China provider delivers a complete range of services, including contract drafting, social insurance management, housing fund administration, payroll processing, benefits administration, and offboarding support. The provider should also be scalable—capable of supporting your business as it grows or pivots, offering flexible HR infrastructure without the need for a local legal entity.

Reputation and Client References

Reiterating the importance of credibility, seek feedback from current or former clients in China. A good EOR will be transparent, responsive, and experienced in adapting to legal changes. Strong reviews and established case studies demonstrate their ability to support global businesses entering or scaling in China’s unique and evolving labor market.

Data Security and Privacy Compliance

With sensitive employee data involved, data privacy is critical. A compliant EOR China partner will implement cybersecurity protocols aligned with China’s Personal Information Protection Law (PIPL). This includes encryption, secure data storage, access control, and regular audits to safeguard personal, financial, and health-related employee information.

Transparent Pricing and Contractual Agreements

Prior to engagement, ensure that the EOR provider outlines a clear and competitive pricing model. Contractual agreements should detail the scope of services, payment terms, notice periods, and performance metrics. Transparent agreements eliminate hidden fees and help build trust while protecting both parties from future misunderstandings.

Local Network and Support

A high-quality EOR partner in China will have on-the-ground support and established relationships with local tax authorities, labor bureaus, and legal consultants. This ensures they can quickly respond to regulatory updates, labor disputes, or audit requirements without relying on third-party intermediaries.

Benefits of Working With an Employer of Record Service Provider in China

Compliance and Legal Expertise

Partnering with an EOR in China gives businesses access to local legal expertise, ensuring compliance with national and municipal labor policies. China’s employment environment is regulated by laws that frequently change, and each province may have its own nuances. EORs manage these complexities—handling contracts, benefits, taxes, and dispute resolution—so foreign businesses remain legally compliant at all times.

Time and Cost Efficiency

Working with an EOR eliminates the need to establish a Wholly Foreign-Owned Enterprise (WFOE) or register a local branch. This reduces startup time and administrative overhead. The EOR handles payroll, insurance, and labor bureau filings, allowing you to avoid incorporation costs and focus resources on operations and revenue growth.

Swift Market Entry

Instead of waiting months to register a local entity, an EOR allows you to start hiring and operating in China within days or weeks. This rapid setup is ideal for companies testing the Chinese market or running pilot programs. You can immediately onboard local talent while the EOR ensures full legal coverage.

Local HR Support

China’s employment culture is unique, and navigating employee relations requires local knowledge. An EOR provides bilingual HR professionals who understand local workplace etiquette, labor expectations, and employee benefits. They handle onboarding, contracts, issue resolution, and grievance management—ensuring seamless employee engagement.

Flexibility and Scalability

EORs in China offer agile workforce management—scaling hiring up or down depending on your business needs. Whether launching a regional office, supporting project-based roles, or conducting seasonal hiring, EOR partners manage contracts, taxes, and offboarding without requiring internal restructuring.

Risk Mitigation

Employment risks in China include disputes over termination, compensation, and contract misclassification. EORs bear legal responsibility as the official employer and ensure all statutory rights are honored. This protects your company from labor disputes, fines, or reputational damage, particularly when operating across cities with different local rules.

Cost Efficiency

Outsourcing HR and compliance functions to an EOR significantly reduces internal costs. There’s no need to maintain a full local HR team, legal department, or payroll staff. The EOR handles everything from social insurance payments to tax calculations—offering a comprehensive and cost-effective employment solution.

Mitigating Cultural and Language Barriers

China’s business culture is distinct, and language differences can lead to misunderstandings. A local EOR partner bridges these gaps by providing bilingual support, translating policies, and aligning company expectations with employee values. This improves retention, performance, and trust within your Chinese workforce.

Focus on Core Business Activities

By delegating administrative and compliance burdens to an EOR China provider, your business can concentrate on core functions like strategy, product development, and market growth. EORs provide backend stability and HR compliance, enabling you to optimize productivity and scale faster.

Visa Types in China

Asanify streamlines the process of hiring foreign nationals in China by offering end-to-end support for obtaining the required work permits and residence visas. Our experienced immigration team ensures full compliance with Chinese entry, labor, and residence regulations, taking care of document preparation, authority liaison, and local compliance so that you can focus on growing your business.

If you plan to manage the visa and work permit process independently, here’s a detailed guide to help you navigate the Chinese immigration system:

Visa Application Process:

To work in China, foreign nationals must follow a structured visa application process. This begins with securing a formal job offer from a licensed Chinese company. The employer must then apply for a Notification Letter of Foreigner’s Work Permit through the local Human Resources and Social Security Bureau. Once this approval is obtained, the foreign employee can apply for a Z Visa (Work Visa) at a Chinese Embassy or Consulate in their home country.

Required documents typically include:

• Valid passport
  
• Official invitation letter from the employer
  
• Job offer contract
  
• Work permit notification letter
  
• Proof of qualifications and professional experience
  
• Health check report
  

Once the Z Visa is approved, the employee can enter China to complete the remaining steps of the work permit and residence permit process.

Work Permit (Z Visa) Requirements:

The Z Visa is the only legal visa category for foreign nationals employed in China. It is intended for full-time roles and is mandatory prior to starting work. Here are the primary requirements:

• A valid passport with at least six months’ validity
  
• A job offer from a registered Chinese employer
  
• An employment contract detailing position, salary, and duration
  
• Relevant academic and professional qualifications matching the job
  
• A clean criminal background check
  
• A medical examination conducted by approved authorities
  

After arrival, the individual must convert their Z Visa into a Foreigner’s Work Permit and a Residence Permit within 30 days. These permits are generally issued for one year and can be extended depending on the employment contract and job classification.

Foreigner Registration:

Upon entering China with a Z Visa, foreign employees are required to complete temporary residence registration at the local police station within 24 hours of arrival. If they are staying in a hotel, this step is handled automatically by hotel staff. If staying in an apartment or non-commercial residence, the employee must report to the nearest Public Security Bureau (PSB) with their passport, visa, lease agreement, and landlord documentation.

Within 30 days, the employee must also finalize:

• Conversion of the Z Visa into a Residence Permit (for employment purposes)
  
• Issuance of the Foreigner’s Work Permit Card
  

Failure to comply with these deadlines can result in fines, visa cancellation, or deportation. Asanify ensures that all steps are completed on time, keeping your employees compliant and your operations uninterrupted.

Useful Websites:

• China Online Visa Application (COVA): https://cova.mfa.gov.cn/
• National Immigration Administration (NIA): https://en.nia.gov.cn/

Risks or Drawbacks of EOR China

1. Limited Control

A primary drawback of using an EOR in China is the limited direct control over day-to-day employee administration. As the EOR is the legal employer, it handles payroll, social insurance filings, contract compliance, and HR support. While operational control remains with your business, certain decisions (such as disciplinary action or terminations) must pass through the EOR, which may create delays or cultural disconnects in enforcing your internal policies.

2. Potential Cultural Differences

China’s workplace culture—including hierarchy, communication style, and labor expectations—may differ significantly from Western norms. Although an EOR partner offers local expertise to bridge cultural gaps, foreign businesses may still face integration challenges when managing Chinese employees. Misunderstandings around feedback, working hours, or expectations can impact performance and team cohesion.

3. Cost

While using an EOR in China eliminates the need to establish a legal entity (like a Wholly Foreign-Owned Enterprise), EOR services do come at a cost. Pricing is typically based on a per-employee-per-month model, and fees can be higher than managing employees directly—especially for small teams or long-term operations. Businesses must evaluate whether the convenience and compliance protection justify the investment.

4. Data Security and Confidentiality

Since an EOR handles sensitive information such as employee ID numbers, bank details, salary records, and tax filings, data privacy becomes a concern. Though leading EORs in China comply with the Personal Information Protection Law (PIPL), it’s crucial to verify that their data infrastructure and cybersecurity practices are robust and compliant with local standards.

5. Scalability Challenges

EORs are ideal for lean expansion or market testing, but may face scalability issues during rapid growth. Hiring large numbers of employees across multiple provinces with varying labor rules can stretch an EOR’s HR support and compliance bandwidth. Ensure your provider has the capacity and systems in place to support fast-paced hiring and multi-region deployment.

6. Communication Challenges

Time zone differences, language barriers, and differing expectations on responsiveness may result in slower resolution times for HR queries or compliance approvals. While bilingual account managers are standard, misunderstandings can still arise unless clear SLAs and communication protocols are agreed upon from the outset.

How Does Employer of Record China (EOR) Differ From HR Software?

1. Employer of Record (EOR)

An Employer of Record in China serves as the official legal employer on behalf of your company. The EOR manages employment contracts in Mandarin, ensures compliance with Chinese labor law, handles payroll and IIT (Individual Income Tax) filings, and administers statutory benefits like social insurance and housing funds.

Key responsibilities of a China EOR include:

• Payroll and tax management
  
• Social insurance and housing fund contributions
  
• Employee onboarding and contracts
  
• Risk mitigation for labor disputes
  
• Compliance with city-specific labor and tax policies
  

An EOR allows companies to operate legally in China without establishing a local subsidiary, making it ideal for quick market entry or limited-scale operations.

2. HR Software

HR software is a digital platform that helps manage internal human resources functions such as time tracking, onboarding workflows, and employee databases. It does not provide legal employment infrastructure, nor does it offer compliance services related to Chinese labor or tax regulations.

Key features include:

• Time and attendance management
  
• Employee data and document storage
  
• Recruitment and applicant tracking
  
• Internal communication tools
  

While HR software helps streamline internal operations, it cannot act as the legal employer or provide the full-service compliance and workforce management solutions that an EOR offers.

How Much Does It Cost to Avail Services Under EOR China?

Scope of Services

The total cost depends on the breadth of services required. Basic packages may include payroll and social insurance filings, while comprehensive plans can cover hiring, HR support, benefits management, and compliance auditing. Additional support for visa processing or expatriate management will further impact cost.

Employee Strength

EOR providers charge a per-employee-per-month fee, often decreasing slightly as headcount increases. Startups with a handful of employees may pay more per hire compared to larger teams. Some EORs also apply minimum billing thresholds.

Complexity of Employment Regulations

Cities like Shanghai, Beijing, and Shenzhen have distinct local regulations governing housing funds, social insurance caps, and leave policies. Managing these complexities across multiple locations may lead to higher administrative overhead, reflected in service fees.

Customization and Additional Services

Many EOR providers offer add-ons such as:

• Flexible benefits setup
  
• Expense management
  
• Compliance training
  
• Expat visa sponsorship
  

These optional features increase service costs but can offer strategic value for tailored workforce management.

Technology Infrastructure

Providers with enterprise-grade technology platforms for automated payroll, bilingual dashboards, and secure document sharing may charge premium fees. However, the investment often pays off through faster processing, better visibility, and higher employee satisfaction.

Pricing Models and Contract Terms

China EORs offer pricing models such as:

• Per-employee-per-month
  
• Fixed monthly packages
  
• Performance-based pricing
  

Contracts often include minimum durations (3–12 months), and long-term agreements may come with volume-based discounts. Setup fees, onboarding charges, or exit processing costs may apply, depending on the provider.

Conclusion: EOR China

The Employer of Record China model provides a powerful and flexible alternative to establishing a local entity. By outsourcing employment and compliance responsibilities to a trusted EOR partner, businesses can legally hire in China, manage payroll and social benefits, and reduce the risk of non-compliance.EOR services offer a cost-effective solution for swift market entry, workforce scaling, and long-term employment support in China. Whether you’re launching a regional pilot, onboarding remote Chinese talent, or expanding across Tier 1 and Tier 2 cities, partnering with a China-based EOR gives you legal security, operational efficiency, and strategic HR support.

FAQs

Not to be considered as tax, legal, financial or HR advice. Regulations change over time so please consult a lawyer, accountant  or Labour Law  expert for specific guidance.