Hire Employees in China: 2026 EOR, Payroll and Employment Guide

A WFOE takes three to six months through registration, bank accounts, tax and social insurance enrolment, and a legal representative who carries personal liability.

The historic alternatives are closed: a representative office cannot employ staff directly, and the dispatch route is now capped and restricted. For a foreign company without an entity, an EOR is effectively the only compliant path.

EOR to enter or to hire a small team. WFOE once China is settled and local invoicing is needed.

Contractors barely exist as a category. China has no real independent-contractor status for individuals — payments are treated as labour income, and an ongoing arrangement is treated as employment with all that follows.

Nothing here is national. Rates, the contribution base floor and the ceiling are all set by city. Total employer cost runs about 27% in Shanghai and 27–30% in Beijing, and lower in Guangzhou and Shenzhen. Budgeting on a single national figure will be wrong somewhere.

The Housing Provident Fund is the largest source of variation: 7% in Shanghai, 12% in Beijing, 5% in Guangzhou, with the employer normally matching the employee. On a Beijing salary that difference alone is five points of payroll cost.

The contribution base runs from about 60% to 300% of the prior year’s local average wage. In Shanghai that is RMB 7,460 to RMB 37,302, in force since 1 July 2025. Because the ceiling binds, cost falls as a proportion for senior staff.

One timing point that catches annual budgets: most cities reset the base on 1 July, not 1 January, so a calendar-year forecast spans two different bases.

Foreign employees have been inside the social insurance system since 2011. Housing fund treatment for foreigners varies by city, and in Shanghai it may be waived by agreement.

Four representative profiles on the Shanghai basis in force since 1 July 2025. Salaries are illustrative market midpoints, not GX operating data. The same salary in Beijing costs more because the housing fund is 12% rather than 7%; in Guangzhou it costs less at 5%. Always budget on the employee’s work city. A 13th month around Chinese New Year is customary and is not included here. For real market data on your roles, ask for a costing.

Individual income tax uses cumulative withholding: tax is computed on year-to-date income against year-to-date allowances, so an employee’s monthly deduction rises through the year as they cross bands. It confuses employees used to flat monthly withholding, and it is worth explaining at offer stage.

Social insurance and housing fund are filed in the city of registration, on that city’s schedule.

Individual income tax runs 3% to 45% across seven bands, but the mechanism is unusual: cumulative withholding computes tax on year-to-date income against year-to-date allowances.

The practical effect is that an employee’s monthly deduction rises through the year as they cross bands — take-home pay falls month by month on an unchanged salary. Explain it at offer stage or expect questions in autumn.

A written contract is required within 30 days of the employee starting. Missing it triggers double-wage liability for each month without one, up to eleven months, and after a year the contract is deemed open-ended.

Probation length is tied to contract length: one month for a contract under a year, two months for one to three years, and up to six months for three years or more. Probation pay may not fall below 80% of the agreed salary.

Eight hours a day and 40 a week under the standard system. Overtime is capped at 36 hours a month and paid at 150% on a working day, 200% on a rest day and 300% on a public holiday.

Two alternative systems — comprehensive and non-fixed hours — exist for roles that do not fit, but both require government approval in advance. Applying them without approval is a common and expensive error.

Statutory annual leave is modest and tenure-based: five days after one year of total work service, ten days after ten years, and fifteen after twenty. Service counts across all employers, not just the current one.

Most employers offer more than the statutory minimum, particularly for professional roles, because five days is not market-competitive.

Eleven public holiday days a year, but the arrangement is unusual: holidays are extended into longer blocks by adjusted working weekends, announced by the State Council each December for the following year.

That means employees work some Saturdays and Sundays to create week-long breaks around Chinese New Year and National Day. Payroll and shift planning must follow the published calendar, not the standard week.

Maternity: 98 days nationally, extended substantially by provincial rules — many provinces now provide 158 days or more. Pay comes from maternity insurance at the employer’s average contribution base, with the employer topping up where salary is higher.

Paternity: set provincially, commonly 15 to 30 days.

Sick leave: a statutory medical treatment period from three to 24 months depending on service, during which the employee may not be dismissed and must be paid at least 80% of the local minimum wage.

Termination requires statutory grounds. Dismissal for poor performance requires documented training or reassignment first, and then still attracts severance — there is no simple performance exit.

Severance is one month of pay per year of service, with the monthly figure capped at three times the local average wage and the count capped at twelve years at that cap. Unlawful dismissal doubles it.

Critically, severance is usually due even when a fixed-term contract simply expires and the employer chooses not to renew. Foreign employers frequently assume expiry is cost-free. It is not.

Foreign nationals need a work permit and Z visa before entry, then a residence permit within 30 days of arrival. The permit is graded A, B or C on a points system covering salary, qualifications, age and Chinese language.

Category A carries the fewest restrictions. Allow two to three months, and note that the permit is tied to both the employer and the city.

The recurring exposures are budgeting on national averages when everything is set by city, missing the 30-day written contract deadline, and under-declaring the contribution base — now cross-checked against tax filings since collection moved to the tax bureau.

The most expensive assumption is that a fixed-term contract can simply lapse. Severance is generally due on non-renewal, which foreign employers routinely fail to budget.

A written contract is required within 30 days. Missing it triggers double-wage liability for every month without one, up to eleven months, and after a year the contract becomes open-ended by operation of law.

Confirm before the offer: the employee’s work city, since it sets every rate and both ends of the contribution base; the housing fund percentage there; and whether social insurance registration is complete.