Hiring employees in China is a multifaceted process involving intricate laws and cultural customs. The procedure requires a comprehensive understanding of Chinese culture, labor law, and business ethics.
The legal framework for hiring in China is primarily governed by the Labor Contract Law, which provides substantial employee protections. This law specifies strict regulations regarding recruitment, termination, working hours, overtime, and holidays. The Social Insurance Law is another significant regulation requiring employers to contribute to social insurance funds. These laws lay a robust foundation for employee rights and ensure a fair employment process.
Recruitment in China is challenging, considering the vast diversity of the market. Various channels are utilized for job postings, including online job portals, university career services, recruitment agencies, and networking events. Employers strive to source talent through these avenues, ensuring they attract suitable candidates. The interviewing and selection phase is quite formal in China, strongly emphasizing local customs and practices. For example, exchanging business cards involves both hands and sensitive topics are avoided during the conversation. Chinese discrimination laws are stringent, and employers must take care not to discriminate based on gender, age, religion, or any other protected characteristic when recruiting and hiring.
Once a candidate is chosen, the employer sends an offer letter outlining the terms of employment. After the candidate accepts the offer, an official employment contract is drafted and signed. This contract, mandated by Chinese law to be in writing, should clearly define the job description, salary, benefits, working hours, and termination conditions.
The employer is tasked with obtaining a work permit to hire foreign employees. This multi-tiered process involves a physical examination, a criminal record check, and the submission of relevant qualifications and experience documents.
The onboarding process is another crucial aspect of hiring in China. It typically includes a comprehensive introduction to the company culture, role-specific training, and administrative procedures like setting up payroll and Chinese social security accounts. Under the Social Insurance and Housing Fund regulations, employers must contribute to five types of social insurance (pension, medical, unemployment, work-related injury, and maternity) and a housing fund. The contribution rates for these funds can vary regionally.
Payroll and taxation are also crucial considerations. China operates a progressive tax system for individuals, and employers are responsible for withholding individual income tax and social insurance contributions from the employee’s salary each month.
Given the complexity of the cultural and regulatory environment, hiring employees in China often necessitates collaboration with legal and HR experts familiar with the Chinese market. This expertise can help ensure a smooth and compliant hiring process. Historically, companies seeking to hire in China have set up a local legal entity/subsidiary through which to hire. Still, a China Professional Employer Organization (China PEO) has become a standard solution in recent years.