As industries become even more competitive, businesses of all sizes will look at hiring top talent from foreign countries such as China due to their lower labor costs and highly-skilled workforce.

However, US businesses must understand and navigate China’s complex labour laws if they want to remain compliant and avoid the risk of penalties when hiring talented locals. In addition, respecting and following local labour laws will create a positive workplace for your Chinese employees.

This article will explore some of China’s labour laws and how to navigate them so you can hire global talent in 2025 and beyond. 

China’s labour laws

Probation period and pay 

Full-time contracts and temporary contracts that last more than three months can include a probation period. The duration of the probation period is based on the contract length, for example:

• If the contract is less than one year, the maximum probation period is one month.
• If the contract lasts between one and three years, the maximum probation period is two months.
• If the contract lasts three years or more, the maximum probation period is six months.

An employee’s salary during their probation period may not be less than 80% of the agreed wage, less than the lowest salary standard of the same position in this company, or less than the minimum wage in the area.

Working hours

Employees should not work over eight hours each day or 40 hours per week. They are also limited to one hour of overtime per day. 

However, employers can request more than one hour’s worth of overtime if there are exceptional circumstances, but these extra hours cannot exceed three hours a day or 36 hours a month.

Minimum wage

Each local government in China sets their own minimum wage standards, which consist of hourly and monthly minimum wages for both part-time and full-time employees.

The minimum wage is often changed annually or biannually, considering the cost of living, average wage levels, and economic developments. 

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Benefits and contributions

In addition to annual salaries, employers are required to contribute a certain percentage towards an employee’s medical insurance, pension fund, and work-related injury insurance, unemployment insurance, and maternity pay.

Image source: China Briefing

Maternity leave

Female employees are entitled to the national standard of 98 days paid maternity leave. However, most local governments will add extra days, giving new mothers more time off.

For example, those in Beijing and Shanghai get 158 days, those in Qinghai get 188 days, and those in Jiangsu get 128 days.

Maternity leave can start 15 days before the baby’s due date.

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Termination 

Employees can choose to leave a company at any point, but they must give their employer a written 30-day notice unless they are leaving due to unsafe working conditions or missed salary payments.

Alternatively, an employer can terminate an employee’s contract under certain circumstances, including misconduct, breach of contract, incompetence, economic reasons, and an employee’s incapacity to work for an extended period. However, they must also provide a written notice and, in some cases, pay severance.

How to navigate China’s labour laws

You can access most of the information you need about China’s labour laws on their government website or speak to employment lawyers.

However, the best way to navigate China’s complex labour laws is to hire an Employer of Record (EoR) provider. 

EoR providers act as the legal employer of your international employees, handling payroll, benefits, and local taxes. This ensures your company is safe from the compliance risks of international hiring.

Here are some of the benefits of using an EoR provider to hire employees from China:

• You can start hiring quickly. EoR providers have everything in place to hire and onboard international employees as soon as you request their services.
• You have more time to focus on business operations. EoR providers handle legal and administrative tasks, so you have more time to focus on business operations such as sales, marketing, or customer support.
• You will remain compliant. EoR providers ensure your business complies with China’s complex labor laws and tax regulations. This ensures your business is safe from the compliance risks of hiring Chinese employees. 

It’s important to note that EoR services have set-up fees, monthly membership fees, and a deposit for each employee. So, consider your budget when using an EoR provider to navigate China’s complex labour laws.

Wrapping up

The Chinese workforce is full of top talent for US businesses. With the help of an EoR provider, you can tap into this skilled workforce without setting up a legal entity in China, all whilst getting access to localised support.

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The post Payroll, taxes, and compliance: How to navigate China’s complex labour laws appeared first on e27.