Hiring In China with an Employer of Record
See how a China employer of record handles labor contracts, the five insurances and one fund, payroll, and Z-visa compliance with PamGro.
Employer of Record in China
An employer of record (EOR) in China is a licensed local company that becomes the legal employer of your China-based staff — signing the mandatory written labor contract, running payroll, and administering the 'five insurances and one fund' social security and housing contributions under Chinese labor law while you direct the employee's daily work. China does not allow a foreign company to employ staff directly without a local entity. Employer of record services in China solve this: the EOR's registered entity hires on your behalf, so you can hire employees in China without setting up a WFOE. Onboarding typically takes 1–3 weeks, versus 4–6 months to establish a WFOE.
What is an Employer of Record Service for China?
China is the second-largest economy in the world and one of the deepest talent markets in Asia but also one of the hardest to enter as an employer. You cannot legally put a Chinese employee on payroll without a registered local entity, social insurance runs through city-specific systems, and every hire needs a written labor contract from day one. An employer of record removes that barrier by acting as the compliant local employer on your behalf.
The EOR is a licensed Chinese company that becomes the legal employer of your hire signing the labor contract, running payroll, registering the employee for the five insurances and the housing fund, withholding individual income tax (IIT), and carrying employer liability while your company directs the employee's actual work.
How Does an Employer of Record in China Help US Companies Hire Employees?
For a US company, an EOR is the fastest compliant way into the Chinese market. You select the candidate and set their role and salary; the EOR’s local entity signs the labor contract, handles social insurance and IIT, and manages compliance under the Labor Contract Law; the employee works for you day-to-day. This avoids the cost and multi-month delay of a WFOE, since setting up an entity in China or your own legal entity can cost more than 100,000 RMB, and removes the risk of an illegal, non-compliant hiring arrangement which in China carries real penalties.
Is it Legal to Use an Employer of Record in China?
Yes, when structured correctly. China does not permit a foreign company to directly employ local staff without a registered entity. A compliant EOR arrangement works through the provider’s licensed local entity, which signs the labor contract and takes on the formal employer obligations. This is the established route for hiring in China without your own entity. Because enforcement is strict, the EOR must hold the correct local licensing, verify this before signing.
What Is the Difference Between an EOR and a WFOE in China?
A WFOE (Wholly Foreign-Owned Enterprise) is your own registered Chinese company full control, but it takes 4–6 months to establish, requires registered capital, and carries ongoing tax, audit, and labor-filing obligations.
An EOR uses an existing licensed entity, so you can hire in 1–3 weeks with no setup cost. The WFOE suits large, permanent, revenue-generating operations; the EOR suits market entry, testing, and small teams.
How Does an EOR Work for International Expansion into the Chinese Market?
What Are the Steps to Hire an Employee in China Through an EOR?
Choose a China EOR provider with a correctly licensed local entity and social-insurance capability in the employee’s city.
Sign the client service agreement: Defining scope, fees, headcount, and liability allocation.
Share the offer details: Gross salary in RMB, job title, start date, work city (which sets the social-insurance base and minimum wage), and benefits.
The EOR issues a compliant written labor contract under the Labor Contract Law mandatory from day one of employment.
The employee is onboarded: Registered for the five insurances and the housing fund, with IIT set up; a foreign national needs a Z visa and Foreigner’s Work Permit.
The EOR runs monthly payroll: withholding IIT, deducting the employee’s social contributions, paying the employer’s ~30–34% share, and issuing compliant payslips.
Ongoing HR and compliance: Payslips, leave, contract renewals, and compliant offboarding (economic compensation where due).
What Documents Are Required to Use an Employer of Record in China?
For a local hire, the EOR typically needs the employee’s ID (or hukou details where relevant), bank account, education and prior-employment records, and a signed offer.
For a foreign national, add a valid passport, the Z visa and Foreigner’s Work Permit documentation, qualifications, and a health check. On your side, the EOR needs the signed service agreement and the role and compensation details.
How to Set Up an Employer of Record Agreement for China Hires?
The agreement is straightforward: you sign a service contract with the EOR covering scope, per-employee fees, invoicing, notice periods, and liability. The EOR then signs a separate, compliant labor contract directly with each employee. You retain full control of the employee’s work and performance; the EOR holds the legal employment relationship. A well-run provider completes both within a few days of receiving the offer details.
What Are the Benefits of Using an EOR for Remote Hiring in China?
- Hire compliant, full-time China staff in 1–3 weeks, no WFOE, no registered capital, no multi-month setup.
- Full compliance with the Labor Contract Law, city-specific social insurance, and the housing fund, handled by the local entity.
- Access to China's engineering, manufacturing, and commercial talent without building an in-house China HR and payroll function.
- A clean exit: End the service agreement rather than deregistering a WFOE, which in China is slow and heavily scrutinised.
How to Choose the Best Employer of Record Service for China?
Evaluate China EOR providers on four things:
- whether they hold the correct local entity and licensing (non-negotiable ask directly)
- whether they administer the five insurances and housing fund in each city you hire in
- their ability to sponsor Z visas and Work Permits if you hire foreign nationals
- their track record on compliant termination, which is where China arrangements most often go wrong.
What Is the Cost Range for Employer of Record Services in China?
What Pricing Structures Do China EOR Provide
Pricing Model | Typical Range | Best For |
|---|---|---|
Flat monthly fee per employee | USD 500–1,000 / employee / month | Predictable budgeting; higher salaries |
Percentage of gross salary | 10–18% of gross salary | Lower-salary roles |
The EOR fee is separate from the cost of employment itself. On top of gross salary, a Chinese employer pays the “five insurances and one fund” in Shanghai as one example, social insurance contributions / social security contributions can range roughly from 27% to 44% of gross salary depending on the city (pension, medical, unemployment, work injury, maternity, and the housing provident fund).
Rates are set by each city, so the exact load varies by location, and in some locations total employer load can approach 30% to 45% of salary. The EOR fee covers the administration of all of it, including payroll taxes as part of the monthly employment cost.
What's Included in a China EOR Fee?
- Compliant written labor contract drafting under the Labor Contract Law
- Monthly payroll and compliant payslips in RMB
- payroll processing, IIT withholding, and the five insurances + housing fund registration and contributions
- Statutory leave and employee benefits administration, including mandatory employee benefits such as retirement benefits and maternity benefits
- Z visa and Work Permit support for foreign nationals (where offered)
- Onboarding and compliant offboarding, including economic compensation calculation
Legal Compliance Challenges When Employing Staff in China via an EOR
What Legal Compliance Does an EOR Handle for Chinese Employees?
An EOR supports employment compliance across every stage and helps maintain compliance with Chinese labor requirements: the mandatory written labor contract, correct social-insurance and housing-fund registration in the employee’s city, monthly IIT withholding, working-hours and overtime rules, lawful termination with the right economic compensation, and core employer duties tied to workplace safety and employee safety. It also tracks employment regulations and labor laws city by city China’s contribution bases and city minimum wages are revised regularly, and mandatory rates and employee benefits change under local rules, so compliance with Chinese and alignment with Chinese labor requirements must be managed at city level.
What Are the Risks of Not Using an Employer of Record When Hiring in China?
Hiring in China without a compliant structure is high-risk. The most common exposures:
Illegal employment: paying a China-based worker without a local entity or licensed EOR breaches Chinese law and can trigger penalties and back-payments.
Misclassification: treating a genuine employee as a contractor to avoid social insurance is aggressively challenged and can result in reclassification, arrears, and fines; labor dispatch misuse and other misstructured arrangements also increase dispute risk in China.
Permanent establishment: an unmanaged arrangement can create a taxable presence for your company in China.
Termination disputes: China’s labor arbitration strongly favours employees; getting severance wrong is costly, and employees may also be entitled to sick leave ranging from 3 to 24 months depending on local rules and service length.
Disputes often arise when employment processes do not align with employment in China requirements, leading to labor disputes over leave, pay, or termination.
An EOR removes each of these by being the compliant legal employer of record.
China Employment Law & Compliance Guide (2026)
Chinese employment is governed by the Labor Law and the Labor Contract Law, with social insurance and minimum wage set at city level. The figures below are verified for 2026 (Shanghai used as the reference city where rates are city-set).
What Must a Chinese Employment Contract Include?
A written labor contract is mandatory and should cover day-one employment, and employment contracts must be signed within one month after hiring failure to issue the written contract within that period can expose the employer to double-salary penalties. It states the job and duties, work location, term (fixed-term, open-ended, or project-based), salary, working hours, social insurance, and probation. After two consecutive fixed-term contracts, an employee is generally entitled to an open-ended contract. Full time employees should always have a compliant written contract under the Labor Contract Law. (Source: Labor Contract Law.)
What Are Chinese Statutory Leave Entitlements?
Leave Type | Entitlement (2026) | Notes |
|---|---|---|
Annual leave | 5 days (1–10 yrs), 10 days (10–20 yrs), 15 days (20+ yrs) | By total years of service across all employers |
Public holidays | 11 statutory public holiday days | Nationally set each year, including New Year’s Day |
Sick leave | Paid medical leave period based on service | Employees are entitled to paid sick leave under local rules / contract |
Maternity leave | 98 days base, plus local extensions | Funded via the medical/maternity insurance, with maternity benefits as part of statutory protection where applicable |
How Does Payroll work with an Employer of Record in China?
Each month the EOR calculates gross-to-net pay, withholds individual income tax (IIT) on a progressive scale, deducts the employee’s share of the five insurances and housing fund, pays the employer’s ~30–34% contribution, and remits everything to the local tax and social-insurance authorities. The employee receives net pay and a compliant payslip; you receive a single consolidated invoice. Because contribution bases are city-specific, the EOR applies the correct local rate for each employee.
What Statutory Benefits Are Required in China? (Five Insurances + One Fund)
China’s mandatory social security and statutory employee benefits are the ‘five insurances and one fund.’ Rates below are the Shanghai employer/employee split; they are set by each city, so the exact figures vary by location.
Component | Employer | Employee |
|---|---|---|
Pension | 16% | 8% |
Medical (incl. maternity) | ~9% | 2% |
Unemployment | 0.5% | 0.5% |
Work injury | 0.2–1.9% (by risk class) | 0% |
Housing provident fund | 5–7% | 5–7% |
Total employer load (Shanghai) | ~30.7–34.4% | — |
Unemployment insurance is one of the mandatory components. Employees are entitled to these statutory benefits subject to local contribution rules. Retirement benefits are funded primarily through the pension element, and these employee benefits are locally administered.
How Do Employer of Record Providers Manage Work Visas in China? (Z Visa)
Chinese nationals need no permit. A foreign national needs a Z visa plus a Foreigner’s Work Permit before starting work the EOR, as the licensed local employer, can sponsor these where it offers the service. The process runs through the work-permit notification, Z visa issuance abroad, entry, and conversion to a residence permit. Confirm the provider’s sponsorship capability and the specific city process before hiring a foreign candidate.
What Is the Minimum Wage in China in 2026?
China has no single national minimum wage, each province and city sets its own.
For 2026, Shanghai has the highest monthly minimum wage at RMB 2,740, with rates across the country ranging down to roughly RMB 1,650 in the lowest regions. Employers must pay at least the minimum wage for the employee’s specific city, and most professional and tech salaries sit well above these floors.
(Source: local Human Resources and Social Security bureaus.)
What Are Standard Working Hours in China?
- The standard system is 8 hours per day and 40 hours per week, with at least one rest day.
- Alternative systems (comprehensive or flexible working hours) exist for certain roles but require government approval.
How Does Overtime Work in China?
- Overtime on a normal workday is paid at 150% of the regular wage.
- Overtime on a rest day is paid at 200% (or compensated with time off in lieu).
- Work on a statutory public holiday is paid at 300%.
- Overtime is subject to statutory daily and monthly limits under the Labor Law.
What Is a Standard Probation Period in China?
Probation is tied to contract length and capped by law:
- up to 1 month for a contract under 1 year;
- up to 2 months for a 1–3 year contract; and
- up to 6 months for a fixed-term contract of 3+ years or an open-ended contract.
During probation, the employee must still receive at least 80% of the agreed wage and be enrolled in social insurance.
How Does Termination of Employment Work in China? (N, N+1, 2N)
China has no at-will employment. Ending a contract requires a lawful ground and, in most cases, statutory economic compensation calculated as N, N+1, or 2N:
N: one month’s salary per year of service, capped at 12 years, with monthly pay for the calculation capped at three times the local average wage.
N+1: N plus one additional month in lieu of statutory notice, used in specific termination scenarios; the general statutory notice period can be 30 days in many termination scenarios.
2N: double the standard compensation, payable where a dismissal is found to be unlawful.
China’s labor arbitration system strongly favours employees, so getting the ground and calculation right is critical. An EOR manages the process and pays the correct compensation through a lawful process under employment regulations to reduce dispute risk. (Source: Labor Contract Law.)
Can I Terminate Employees Through an Employer of Record in China?
Yes, and doing it through an EOR is the safest way, because China’s termination rules are strict and arbitration favours employees. The EOR manages the full process compliantly:
- Client notifies the EOR of the intent to end the engagement and the reason.
The EOR assesses whether there is a lawful ground and advises on risk, notice, and documentation.
The EOR runs the formal process, including any consultation required.
Economic compensation is calculated — N, N+1, or 2N as applicable with monthly pay capped at three times the local average wage.
Final payroll is processed and social-insurance and housing-fund registrations are closed out.
The EOR issues the required documentation to the departing employee.
Can I Terminate Employees Through an Employer of Record in China?
Yes, and doing it through an EOR is the safest way, because China’s termination rules are strict and arbitration favours employees. The EOR manages the full process compliantly:
- Client notifies the EOR of the intent to end the engagement and the reason.
The EOR assesses whether there is a lawful ground and advises on risk, notice, and documentation.
The EOR runs the formal process, including any consultation required.
Economic compensation is calculated — N, N+1, or 2N as applicable with monthly pay capped at three times the local average wage.
Final payroll is processed and social-insurance and housing-fund registrations are closed out.
The EOR issues the required documentation to the departing employee.
How Fast Can an Employer of Record Onboard Employees in China?
PamGro onboards a China hire in 1–3 weeks from a signed offer. The steps:
Step | What Happens | Owner |
|---|---|---|
| Client signs the EOR agreement and shares salary, role, and work city | Client + PamGro |
| PamGro’s local entity issues a compliant written labor contract | PamGro |
| Employee registered for the five insurances and housing fund; IIT set up | PamGro |
| For a foreign national, Z visa and Work Permit are arranged | PamGro |
| Employee added to payroll; first cycle scheduled | PamGro |
| Employee begins work; first compliant payslip issued on the pay run | PamGro + Employee |
Why use PamGro for Employer of Record in China
We remove the China-specific traps: the mandatory written labor contract, city-specific social-insurance bases, the housing fund, Z-visa sponsorship, and correct economic compensation on exit.
Frequently Asked Questions
Who are the top providers of employer of record services in China?
Providers offering China EOR services include PamGro, Deel, Skuad, and specialists such as HROne.
In China specifically, the most important selection factor is whether the provider holds a correctly licensed local entity.
PamGro focuses on getting the five insurances, IIT, and N/N+1/2N severance right, which is where China arrangements most often fail.
Can I hire remote workers in China through an employer of record?
Yes. An EOR in China can be the fastest way to hire employees remotely without your own entity. The EOR’s licensed local company is the legal employer handling the labor contract, five insurances, housing fund, IIT, and employment in China compliance while your team manages the employee’s day-to-day work from anywhere.
Are there employer of record providers specializing in tech industry hires in China?
Yes. Much of the EOR demand in China is for technology roles software engineers, R&D, and product staff in hubs like Shenzhen, Shanghai, and Beijing. PamGro supports tech hiring in China with compliant contracts, Z-visa sponsorship for foreign specialists, and city-correct social-insurance administration.
Which employer of record services support startups expanding to China?
EOR is especially well-suited to startups entering China, because it removes the USD 15,000+ often exceeding RMB 100,000 and 4–6 months a WFOE requires. PamGro supports startups with per-employee pricing, 1–3 week onboarding, and a compliant local-employer model, so a small team can test the China market before committing to a legal entity.
What industries benefit most from employer of record services in China?
Technology and R&D, manufacturing and supply-chain, professional services, and consumer/e-commerce benefit most sectors where companies need China-based talent or a local presence quickly but are not ready to set up a WFOE. An EOR gives them compliant employees on the ground in weeks.
Can an employer of record handle payroll and compliance in China?
Yes. A China EOR can handle payroll processing and compliance with Chinese labor requirements. It withholds IIT, deducts and pays the five insurances, housing fund, and social security contributions, issues compliant payslips, and remits everything to the local tax and social-insurance authorities. It also manages the mandatory written labor contract and lawful termination. The client never registers with Chinese authorities directly. This supports employment compliance across contracts, payroll, and statutory benefits.
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