Hongkong
China
China’s labour framework leans heavily toward the employee, and a single missed contract deadline can cost a company double wages. Here is how to hire the right way in mainland China.
Who is allowed to hire
Only an entity with employer status can put mainland Chinese staff on its own payroll — typically a Wholly Foreign-Owned Enterprise (WFOE) registered with the local labour authority under the MOHRSS system. A representative office (RO) has no such right: apart from its own chief representatives, it must engage all personnel through a licensed HR or labour-dispatch agency. In short, a WFOE hires directly; an RO hires only through an intermediary.
The labour contract: types and terms
A contract is mandatory for any employment relationship, and it comes in several forms.
Three contract types
Mainland China recognises the fixed-term contract, the open-ended (indefinite) contract, and the project-based contract tied to a specific task. A trap hides here: once an employer signs two consecutive fixed-term contracts with the same worker, the third must by law be open-ended. An open-ended relationship also arises after ten years of continuous service with one employer.
Mandatory and optional clauses
A contract must state:
- the parties and the company’s legal representative;
- the term, job title and place of work;
- the salary amount and payment schedule;
- working hours and social-insurance arrangements.
Optional clauses cover probation, training, confidentiality of trade secrets, and non-compete (which requires post-termination compensation to be enforceable). Important: where an English and a Chinese version both exist, the Chinese version normally prevails — that is the text to have vetted.
⚠️ Key rule: the written contract must be signed within one month of the first working day. Miss the deadline, and you owe the worker double wages until the end of the first year; after a full year with no contract, the employee is automatically deemed hired on an open-ended basis. The only exception is part-time work, where an oral arrangement is allowed. In parallel, the employer must keep an employee register.
Probation period
Probation length is rigidly tied to the contract term.
| Contract term | Maximum probation |
| 3 months – 1 year | 1 month |
| 1 – 3 years | 2 months |
| 3 years and over / open-ended | 6 months |
| Under 3 months | Not permitted |
Exceed the limit, and the employer must compensate the worker for the excess probation period served.
Planning to hire staff in China?
- Contract compliant with PRC law
- Mandatory contributions calculated
- Employer duties covered
Employer obligations
The core exposure is contributions and timely payment.
Insurance and the housing fund
Employer and employee jointly contribute to five social insurances — pension, medical, unemployment, work-related injury and maternity — together with the housing provident fund (in Beijing, for instance, at 12% from each side). Part is withheld from the employee’s salary and part is paid by the company on top of the wage; the exact rates are set locally and vary sharply from city to city.
Pay, hours and leave
Wages may not fall below the regional minimum wage at the place of work. The standard is an 8-hour day and no more than 44 hours a week, with overtime paid at a premium. The employer adopts internal work rules and grants paid leave.
Termination and severance
An employer can end a contract on its own initiative only on a closed list of grounds: failure of probation, gross breach of discipline, serious damage, or a criminal conviction. Severance is payable in particular when the worker leaves through the company’s fault — unpaid wages, unpaid contributions or unsafe conditions. The employee must give 30 days’ notice, but may leave immediately in cases of forced labour or a threat to health. Disputes are handled through mediation and labour arbitration.
Hiring through a service company
Where direct hiring is impossible or impractical, labour dispatch is used: the dispatch agency signs the contract with the individual, and the company remits the funds for salary and contributions. The agreement with the agency fixes positions and headcount, equal pay for equal work, social contributions, and the allocation of liability. For a representative office, this is the only lawful way to take on rank-and-file staff.
Common mistakes by foreign employers
- delaying the written contract past one month — risk of double wages;
- setting a probation period longer than allowed;
- incomplete or late payment of social contributions;
- relying on the English text alone with no controlling Chinese version.
“Foreign companies lose labour disputes in China not out of bad faith but out of ignorance of the detail. The presumption sits with the employee here: no contract in time, and you pay twice over. Paperwork first, first working day second.”
— Sergey Konon, China labour-law consultant
Hiring in China rests on four pillars: a written contract within one month, a correct probation period, full contributions, and termination strictly on lawful grounds. Break any one and the law will side with the worker. Prepare the Chinese-language contract and your HR records in advance, and the employment relationship need not become a source of losses.
Note on jurisdiction: these rules apply to mainland China. Hong Kong and Macau are separate legal systems — Hong Kong employment is governed by the Employment Ordinance, with a different structure of statutory contributions (MPF rather than the mainland’s five-insurances-and-one-fund). Structure hiring terms around whichever jurisdiction the staff actually work in.
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FAQ
Sign it in writing within one month of the employee’s first working day. Record the job title, pay, term, working hours and grounds for termination. Missing the written contract exposes the employer to penalties and back-pay owed to the worker.
The company must conclude the contract, pay at least the local minimum wage, remit social contributions, withhold individual income tax and observe working-hour limits. Breaches lead to fines and disputes.
Yes. Social insurance and the housing fund are an unavoidable part of the cost of an employee, and the amount depends on the city. For foreign employees the participation rules can differ, so confirm them for the specific province.
Not directly — official employment requires a registered structure such as a WFOE. As a workaround, local providers take the worker onto their own payroll and second them to your project (labour dispatch / EOR).
No, they are different legal systems. Mainland legislation regulates contracts and social contributions in detail, whereas Hong Kong’s rules are more flexible with a different structure of mandatory contributions. Build hiring terms around the jurisdiction where the staff work.
