Employer of Record (EOR) in China

An EOR in China allows businesses to enter the market quickly and help maintain compliance with local laws, all while reducing the overhead costs of establishing a local entity. Atlas HXM offers a seamless EOR service that handles all aspects of employment including work permit sponsorship for foreign employees, from payroll processing to compliant administration.

Partner with Atlas HXM for a cost-effective, compliant solution to hire and manage your workforce in China.

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Quick Overview of EOR in China

Expanding into China does not require setting up a local entity or managing complex administrative processes internally. With an Employer of Record (EOR), you can bypass the complexities of local regulations and quickly hire employees, all while maintaining compliance with China's labor laws. From payroll processing and tax compliance to benefits management, an EOR takes care of the legal nitty-gritty like social insurance contributions, so you can focus on growing your business without the need to set up a costly local entity.

The EOR model offers a low-risk, cost-effective alternative to setting up a subsidiary. Establishing a local entity in China can cost anywhere from USD 38,500 to USD 77,000 (CNY 280,000 to CNY 560,000) plus the cost of maintaining human resources (HR), legal assistance, accountants and more. It can also become highly administrative. By partnering with an EOR, you can avoid these setup costs and enter the market faster. This is especially beneficial for startups, SMEs, and businesses testing new markets, who need to act quickly and comply with complex local regulations.

Disclaimer: The contents of this article is not legal advice and should be used for reference only. If in doubt, please seek independent legal advice from a lawyer in the relevant jurisdiction.

What You'll Learn

  • Looking to hire in China without the hassle and administrative burden of setting up a local entity? An EOR helps you onboard employees while maintaining compliance with payroll and local labor laws.

  • With a Direct EOR, you gain control, faster onboarding, and stronger compliance. It is ideal for businesses aiming to scale quickly.

  • On the other hand, an Indirect EOR may be more cost-effective but comes with slower processes and added complexity.

  • EOR service fees typically range from USD 200 to USD 800 (CNY 1,400 to CNY 5,600) per employee per month.

  • Atlas HXM offers a Direct EOR solution, providing smooth market entry, compliance, and seamless employee management: all in one platform.

How an EOR Works

At Atlas HXM, we provide EOR services that ensure your business remains compliant with China's labor laws while you focus on growing your operations, free from administrative and legal burdens.

Candidate Selection

Atlas HXM does not recruit candidates but will check the employment setup for compliance around new hires like validating right-to-work, reviewing contract terms against Chinese rules, and configuring payroll and statutory obligations correctly. EOR providers in China, including Atlas HXM, can assist with work permit sponsorship and visa processing for foreign employees who meet eligibility requirements.

Employment Contracts

Atlas HXM drafts and administers employment contracts in compliance with Chinese Labor Contract Law. In our employment contracts, it clearly outlines mandatory employment terms to reduce risk of future disputes, such as:

  • Probationary period

  • Salary, benefits, and working hours

  • Leave entitlements and notice periods

Payroll & Benefits Management

Payroll is processed in Chinese yuan (CNY), including:

  • Accurate tax withholdings and social insurance contributions

  • Statutory benefits such as social insurances and housing provident fund

The EOR also helps maintain compliance with mandatory benefits, so employees are protected under China's laws.

Work Permit Compliance

In China, EOR providers can apply for, and sponsor work permits for foreign employees. Atlas HXM manages compliant employment, payroll, social insurance, and statutory obligations in alignment with local labor bureau regulations.

Ongoing HR Support

Provides HR support, including leave management and performance tracking, employee relations, and regulatory updates throughout the employee's tenure. This allows businesses to focus on core operations, while Atlas HXM handles ongoing compliance.

Costs & Pricing

EOR services in China are typically billed as a platform/service fee in the range of USD 200–800 (EUR 180–720 / CNY 1,400–5,600) per employee per month. This fee covers administration such as compliant contracts, payroll processing, statutory filings, and HR administration for workers who already hold valid work authorization or for whom work permits can be obtained.

This service fee is separate from the employee's salary, benefits, taxes, and permit-related costs, which vary by role and jurisdiction.

By using an EOR, companies avoid the cost and overhead of setting up a Chinese entity, which can require USD 38,500–77,000 (CNY 280,000–560,000) upfront before any operational spend.

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What to choose: EOR vs PEO

EOR

Employer of Record

An EOR becomes the legal employer for your hires in a country where you do not have an entity. The EOR carries employer liability and handles compliant contracts, payroll, statutory benefits, tax filings, and labour-law adherence. You still direct the employee's work. This model suits companies expanding into China without wanting to form a local entity or take on compliance risk.

PEO

Professional Employer Organization

A PEO provides outsourced HR services like payroll, benefits, HR admin, but only when you already have a local entity. You remain the legal employer, and the PEO shares administrative tasks without taking on employer liability. Suitable when you are already established in the country and are only looking to offload HR administration.

What’s Best for You?

  • Choose an EOR when you want to hire in China without setting up an entity and want a partner who absorbs employer risk.

  • Choose a PEO when you already operate locally and just want HR support.

Work Life in China

China's employment framework is designed to balance operational needs with employee protections. Here's what you need to know:

Employment Types:

  • Permanent: Ongoing employment with no fixed termination date.

  • Fixed-Term: Hired for a specific duration with a fixed termination date.

  • Employment based on assignment: Employment contracts which expire upon completion of agreed assignments.

Probation Periods: Probation periods range from 1 to 6 months depending on contract length and must be outlined in the employment contract. These periods allow employers to assess employee suitability before offering permanent employment. Notice periods during probation are typically 3 days for employees, and employers can terminate immediately for cause.

Working Hours & Overtime: In China, the standard workweek is 40 hours, with a maximum of 8 hours per day. Employees must receive a break after working continuously. For eligible employees covered by the Labor Law, overtime is paid at 150% for extended hours, 200% or compensatory leave for rest days, and 300% for statutory holidays. The EOR ensures that all overtime is calculated correctly and that employee work hours comply with local regulations.

Leave Entitlements

Leave Type

Eligibility / Duration

Payment / Notes

Annual Leave

Starts at 5 days (1-10 years), increases to 15 days (20+ years)

Paid by employer; based on total work experience

Maternity Leave

98 days minimum (varies by province)

Paid by employer, but reimbursed by maternity insurance

Paternity Leave

7-30 days (varies by province)

Paid leave for working fathers

Sick Leave

3-24 months depending on tenure

varies by region

Public Holidays

All statutory holidays

Paid; handled by Atlas HXM

Payroll & Benefits: Wages are calculated based on local minimum wage requirements and market standards. Atlas HXM manages payroll in CNY, social insurance contributions (employer and employee), statutory benefits, bonuses, and supplemental health insurance. Supplemental benefits can include dental, vision, wellness programs, and professional development options.

Atlas HXM can help you manage these aspects and can help ensure that employees are supported and compliant with China's labor laws while businesses can focus on operations without administrative burdens.

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What to choose: Indirect vs Direct EOR

Direct EOR

The EOR owns the legal entities in the target country, coordinating all employment-related tasks directly. It offers faster onboarding, better compliance, and more control.

Best for: Businesses looking to scale quickly, expand long-term, or enter China with compliance.

Indirect EOR

The EOR provider acts as an intermediary between the business and a third-party local entity. While it can be cheaper, it may result in delays and compliance complexity.

Best for: Small teams or short-term hires with less urgent compliance needs.

What’s Best for You?

  • For Small Teams or Contractors: Indirect EOR could work, especially for temporary hires or testing a market.

  • For Scaling and Compliance: Direct EOR is the best choice. With Atlas HXM, you'll have control, faster entry, and streamlined compliance.

Taxes & Compliance

China operates on a calendar-year tax system, running from January 1 to December 31. Employers must submit monthly social insurance contributions by the 15th of the following month, individual income tax withholdings by the 15th of the following month, and provide annual tax reconciliation between March 1st and June 30th. Corporate tax returns are due by May 31st of the following year, with quarterly prepayments required throughout the year.

Category

Details

Employer Payroll Tax

Social insurance contributions: 30-40% (varies by location)

  • Housing fund contributions: 5-12% of salary

  • Work injury insurance: 0.2-1.9% (employer only)

  • Administrative fees for work permits and compliance

Employee Payroll Tax

Residents: progressive income tax 3%–45%

  • Non-residents: varies based on presence and income source

  • Employee social insurance contributions: varies by location and age

  • Tax exempt amount: CNY 60,000 annually

Pension System

Mandatory multi-pillar system for retirement, housing, and healthcare

  • Accounts: Basic old-age insurance, enterprise annuity, individual accounts

  • New retirement ages will be implemented gradually over 15 years, with male employees increased to 63 and female employees increased to 58 (management level) or 55 (non-management level) respectively.

  • Benefits based on contributions and local average wages

VAT & EOR Costs: China applies a 6% Value Added Tax on EOR services as modern service industries. EOR services are generally subject to VAT, either included in quoted fees or added separately. Businesses may claim input VAT credits if registered and meeting requirements.

Atlas HXM handles tax compliance, including progressive income tax calculations, social insurance contributions, annual reconciliation, and expatriate tax planning, ensuring businesses remain compliant with local laws while minimizing administrative burden.

Termination

Employees must give written notice for termination, with statutory notice periods of 30 days for regular employees (3 days during probation), subject to statutory termination grounds. Employers can terminate with 30 days’ notice or payment in lieu for certain prescribed reasons. Severance pay is required based on length of service: 1 month's salary per year of service, with caps for high earners. The EOR helps ensure proper handling of terminations, including notice periods, final wages, and required documentation.

5 Things to Look for in an EOR Provider

  1. Local expertise and knowledge of labor laws, social insurance contributions, and local labor bureau requirements.

  2. Advanced technology for payroll, reporting, and HR system integration.

  3. Experience in your industry and handling work permit management for foreign employees.

  4. Strong compliance track record and relationships with government agencies and legal advisors.

  5. Global presence to support multi-country expansion, with verified security and compliance standards (ISO 27001/27017/27018, GDPR).

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Atlas HXM provides direct EOR services, managing payroll, compliance and benefits efficiently. Our unified platform automates HR, payroll, and compliance tasks, while offering premium employee support, global benefits, and access to 9,000+ learning courses. Recognized by Everest Group PEAK Matrix 2025 and NelsonHall NEAT Assessment 2025, Atlas HXM combines compliance, technology, and global expertise.

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FAQs

Can an EOR in China help with work permits for foreign employees?

Yes. Atlas HXM can sponsor and process work permits for qualified foreign employees, including Z visas, employment licenses, and coordination with local labor bureaus.

What are the main social insurance requirements?

Employers must contribute to pension, medical, unemployment, work injury, and maternity insurance, plus housing fund contributions.

What is the typical probation period?

Usually 1-6 months depending on contract length and must be in the employment contract.

How much notice is required for termination?

Notice depends on circumstances: subject to the legal ground for termination, 30 days for regular termination, 3 days during probation, unless otherwise stated.

What are the social insurance contribution rates for employers?

Rates vary by location but typically total 30-40% of salary including all mandatory insurances and housing fund.

Can employees work overtime without limits in China?

Overtime is regulated with specific payment requirements at 150%-300% rates depending on timing, and cannot exceed 36 hours per month without special authorization.

         

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