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China HR services

Employers in China face distinct obligations: written labour contracts in Chinese, five social insurance programmes plus housing fund, IIT withholding, and termination rules that differ materially from Western practice. Non-compliance creates back-pay, penalty, and arbitration exposure.

Payroll, contracts, immigration, and tax increasingly intersect: Golden Tax cross-checks payroll against social insurance and VAT data, so HR decisions made in isolation often surface as compliance gaps months later.

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HR and payroll capabilities

HR management consulting

HR consulting covers incentive design, performance management, organizational change, talent strategy, and labour dispute support, aligned to PRC Labour Contract Law and local practice.

We help foreign-invested companies structure compensation, probation and KPI frameworks, and HR policies that withstand audit and arbitration scrutiny.

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Best for

  • Companies redesigning compensation or performance systems in China
  • Employers navigating restructuring, headcount reduction, or union consultation
  • HR teams needing local expertise on IIT planning and retention strategy

Key considerations

  • Material policy changes may require employee consultation under Article 4
  • Incentive plans should align with social insurance contribution bases

China payroll services

Payroll in China is not a simple salary transfer. It requires social insurance and housing fund calculations by city, IIT withholding, overtime rules, and statutory leave accruals.

Acadia runs monthly payroll for WFOEs and ROs, manages third-party or EOR payroll where applicable, and ensures filings reconcile with tax and social insurance bureaus.

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Best for

  • WFOEs and JVs with local employees across one or multiple cities
  • Representative offices using licensed HR agencies for local hires
  • Companies outsourcing payroll to reduce calculation and filing errors

Key considerations

  • Contribution caps and rates vary significantly by municipality
  • Annual IIT settlement and bonus tax planning require advance coordination

Employee handbooks

An employee handbook is the primary reference for discipline, leave, performance, and termination, and must be drafted and rolled out in compliance with consultation requirements.

We prepare bilingual handbooks cross-referenced to labour contracts, covering probation, working hours, confidentiality, and severance formulas enforceable in local arbitration.

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Best for

  • New WFOEs establishing HR policy infrastructure for the first time
  • Companies updating handbooks after labour law or local rule changes
  • Employers strengthening documentation ahead of disputes or audits

Key considerations

  • Handbooks cannot override mandatory Labour Contract Law protections
  • Material revisions require documented employee consultation

Employment contracts

Written labour contracts are mandatory and must include legally required clauses, including job description, remuneration, working hours, social insurance, and termination conditions, in Chinese.

We draft fixed-term, open-ended, and project-based contracts for local and foreign employees, aligned with handbooks and work permit requirements.

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Best for

  • First hires after WFOE registration or RO setup
  • Renewals converting fixed-term to open-ended contracts
  • Foreign employees requiring contract terms that match work permit categories

Key considerations

  • Failure to sign a written contract within one month creates statutory penalties
  • Bilingual contracts govern disputes under the Chinese version

China FESCO services

Foreign Enterprise Service Companies (FESCOs) provide licensed dispatch and HR outsourcing, often used by representative offices and companies without direct employment capacity.

Acadia coordinates FESCO arrangements covering payroll, social insurance, contract administration, and visa support while you retain operational control of day-to-day work.

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Best for

  • Representative offices hiring local staff through licensed agencies
  • Companies testing headcount before WFOE establishment
  • Projects needing flexible staffing without direct employer liability

Key considerations

  • Dispatch and outsourcing rules continue to tighten. Structure must stay current
  • Misclassification between contractor, dispatch, and direct hire carries penalty risk

Related HR services

Hire without a local entity or manage foreign employee immigration alongside payroll.

EOR vs WFOE Direct-Hire: Which Is Right for You?

Employer of Record (EOR) and WFOE direct-hire are both compliant ways to employ people in China. The right choice depends on headcount, timeline, and your long-term plans.

ConsiderationEOR (Employer of Record)WFOE Direct-Hire
Legal entity required✗ No, Acadia is the legal employer✓ Yes, WFOE must be incorporated first
Time to first hire2–4 weeks3–5 months (entity setup + HR setup)
Setup costLow, no incorporation feesHigher, legal, notarisation, bank setup costs
Ongoing cost modelPer-head service fee (typically 8–15% of salary cost)Internal HR + payroll overhead; scales with headcount
Issue VAT fapiao✗ EOR issues fapiao; client cannot✓ Yes, WFOE invoices directly
Full control over HR policiesShared, EOR handles contracts and social insurance✓ Complete control over HR, contracts, benefits design
Hire foreign staff✓ Yes, EOR sponsors work permits✓ Yes, WFOE sponsors work permits
Break-even headcountBetter value at <8–12 employeesBetter value at >8–12 employees (entity costs amortise)
Exit flexibilityHigh, terminate EOR agreement with noticeLower, WFOE liquidation takes 6–18 months
Best forMarket testing, small teams, fast entry, seasonal projectsEstablished operations, invoicing, IP-sensitive roles, large teams

Break-even headcount is illustrative and depends on city, salary levels, and service scope. Acadia can model both scenarios for your situation.

Frequently Asked Questions

Can a foreign company hire employees directly in China without a local entity?
A foreign company without a registered entity in China cannot legally hire staff directly. The two main alternatives are: (1) engage an Employer of Record (EOR), a licensed third-party that employs staff on your behalf; or (2) establish a Wholly Foreign-Owned Enterprise (WFOE) or Representative Office and hire employees through that entity. EOR is suitable for testing the market quickly or for small headcounts.
What social insurance contributions are mandatory for employees in China?
Employees in China must be enrolled in five social insurance programmes: pension, medical insurance, unemployment insurance, work injury insurance, and maternity insurance, plus a mandatory housing provident fund. Combined employer and employee contribution rates vary by city. In Shanghai, total employer contributions are approximately 30–33% of salary (capped at 3x the city average monthly wage), and employee contributions are around 18%.
What is the required notice period for terminating an employee in China?
Under PRC Labour Contract Law, an employer can terminate a fixed-term contract during the probation period with 3 days' notice. After probation, 30 days' written notice (or one month's salary in lieu) is required for most terminations without cause. Terminations without cause also require severance equal to one month's salary per year of service. Certain employees (e.g., within two years of retirement age) have additional protections.
What is an Employer of Record (EOR) in China?
An Employer of Record (EOR) in China is a licensed company that formally employs workers on behalf of a foreign client. The EOR handles employment contracts, social insurance registration, IIT withholding, payroll, and HR administration. The client company manages the day-to-day work of the employees. EOR is commonly used by companies wanting to operate in China before establishing their own legal entity.
Are labour contracts in China required to be in Chinese?
Labour contracts in China must be in Chinese to be legally enforceable in local labour arbitration and courts. Bilingual contracts (Chinese and English) are common for foreign-invested enterprises, but in the event of a dispute, the Chinese version governs. Contracts must include legally required clauses covering job description, working hours, remuneration, social insurance, and termination conditions.

Client experience

What our clients say

Acadia's knowledge about local labor law and excellent support within HR administration has helped Mentice's growth and success in the Chinese market. We are impressed and grateful regarding the HR team for the professional support they have given our employees and the global HR department at Mentice.

Mentice logo

Maria Thilmann

Vice President of Human Resources, Mentice

We are proud members of

  • AmCham China logo
  • CanCham China logo
  • China-Britain Business Council logo
  • Hong Kong Chamber of Commerce in China logo
  • Canada China Business Council logo

Discuss your China HR or EOR requirements

Whether you need an EOR to hire quickly, or full payroll and HR management for an established entity, we build a solution to your headcount and compliance needs.

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