Contract Management

China’s Contract Management: Hiring Employees in China with Compliance and Efficiency

China’s dynamic economy offers immense opportunities for foreign investors, but hiring employees requires careful navigation of local labor laws to ensure compliance and protect both the company and its workforce. Effective contract management is central to achieving operational efficiency and legal security.

1. Legal Framework and Employment Contracts

Employment in China is regulated by:

• Labor Law (1994, amended 2018)
• Labor Contract Law (2008, amended 2012)
• Social Insurance Law (2010, amended 2018)

All employees must be engaged through a written labor contract specifying:

• Work location
• Job responsibilities
• Working hours
• Compensation and benefits

Tip: Clear, well-managed contracts reduce legal risks and ensure smooth HR operations.

2. Working Hours and Overtime Management

• Standard working day: up to 8 hours
• Overtime pay: 150% of salary on workdays, 200% on rest days, and 300% on statutory holidays
• Maximum overtime: 3 hours per day, not exceeding 36 hours per month

Flexible working schedules may be approved by local labor authorities, allowing adaptability while maintaining compliance.

3. Probation, Confidentiality, and Non-Compete Clauses

Probation periods:

• 1–6 months depending on contract duration

Confidentiality & non-compete:

• Protect corporate IP and sensitive data
• Typically applies to senior managers or technical staff
• Non-compete duration: up to 2 years
• Compensation: 20–50% of prior salary

4. Employee Handbook and Policy Documentation

A detailed employee handbook should include:

• Company policies and procedures
• Benefits and compensation structure
• Disciplinary measures

Provides legal protection and supports consistent enforcement of contracts.

5. Payroll, Taxes, and Social Insurance Compliance

Employers must:

• Pay salaries monthly without delay
• Withhold and remit individual income tax
• Contribute to social insurance and housing funds

Proper contract management ensures compliance with all local obligations.

6. Contractors and Freelancers

Independent contractors operate under Contract Law, not labor law. Contracts should clearly define:

• Scope of work and project timelines
• Payment structure
• IP ownership and confidentiality
• Termination conditions

Avoid misclassification risks by clearly differentiating contractors from employees.

7. Employer of Record (EOR) Solutions

For foreign companies without a legal entity in China, an EOR offers a compliant and efficient solution:

• Acts as the official employer
• Manages labor contracts, payroll, and benefits
• Provides visa sponsorship
• Protects corporate reputation and intellectual property

Conclusion

Effective contract management is essential for hiring employees in China. Compliance with labor laws, working hours, social insurance, and non-compete obligations ensures sustainable growth. Partnering with professional service providers like Tannet streamlines HR operations, minimizes legal risks, and allows foreign businesses to focus on market expansion.

Tannet Services Include:

• Automating lease and employment contract processes
• Centralizing global contract management
• Implementing enterprise software for HR and contract management
• Ensuring compliance with Chinese labor and tax regulations

Contact US

Tannet Group Limited is in its sixth five-year development plan stage, and setting the upcoming two five-year plans. Tannet has been always devoted to providing with business solutions for investors all across the world. Should you have further inquiry, pls feel free to contact Tannet at 86-755-82143181, email to anitayao@citilinkia.com, visit our website https://tannet-group.net/.