Published by ChinaMNC ยท Longhui
Hiring Staff and Social Insurance for a Longhui Company
A practical guide for foreign founders on hiring employees and handling social insurance at a Longhui-registered company in China, covering contracts, registration steps, contribution basics, and compliance points.
Hiring Staff and Social Insurance for a Longhui Company
If you have registered your China entity with Longhui, the next operational milestone is usually hiring. Employment law and social insurance in China are administered at the local level, so the practical rules that apply to your company depend on the city and district where it is registered. This article explains the general framework foreign founders should understand before making their first hires. It is general information only and is not legal, tax, or HR advice; confirm details with local authorities and qualified professionals.
Before You Hire: The Compliance Baseline
A company in China cannot simply pay a salary and treat the relationship as informal. Several registrations and documents need to be in place first.
Key prerequisites
- Valid business licence: Your Longhui-registered entity should have its business licence and unified social credit code. These identifiers are used for employment and social insurance filings.
- Corporate bank account: Salaries are normally paid through the company account, and payroll records should match bank transfers.
- Company seals: Employment contracts and HR filings typically require the company seal (and sometimes the legal representative's seal).
- Social insurance and housing fund accounts: The company must open employer accounts with the local social insurance authority and housing provident fund centre before registering employees.
- Tax registration for withholding: Individual income tax (IIT) on salaries is withheld monthly by the employer through the tax system.
Written Employment Contracts
Chinese labour law requires a written employment contract. In practice, the contract should be signed within one month of the employee starting work. If a written contract is not concluded within that period, the employer may face obligations such as double wages for the period without a contract, so treat the one-month window as a hard deadline.
What a contract should cover
- Parties and term: Company details, employee details, and whether the contract is fixed-term, open-ended, or for a specific project.
- Job and location: Position, duties, and workplace. Broad but clear descriptions help avoid disputes later.
- Working hours: Standard hours, or a lawful alternative schedule if the role requires it.
- Remuneration: Salary amount, payment date, and components. Keep the structure simple and consistent with payroll.
- Social insurance: A statement that the employer and employee will participate in social insurance as required by law.
- Probation: If used, probation length must follow statutory limits tied to contract length, and probation wages have legal minimums.
- Termination: Reference to statutory and contractual notice and termination conditions.
Contracts are usually prepared in Chinese; a bilingual version can help foreign staff but the Chinese text generally governs in local filings. Have a local professional review templates before use.
Social Insurance: The Core Obligation
China's social insurance system is funded by employer and employee contributions and administered locally. For a standard employee, the main components are:
- Pension insurance
- Medical insurance
- Unemployment insurance
- Work injury insurance (employer-only)
- Maternity insurance (often merged with medical insurance administration)
In many cities the housing provident fund is handled alongside social insurance, though it is a separate scheme. Contribution rates and the salary base are set by local rules and are subject to annual adjustment. Because rates vary by city and can change, do not rely on generic figures; obtain the current local schedule from the social insurance authority or your payroll provider.
How registration typically works
- Open the employer account: Register the company with the local social insurance agency and housing fund centre, usually online or at a service window.
- Add each employee: Employee registration is generally required within a set period after the employment start date. Missing this window can create retroactive contribution obligations.
- Declare monthly: The employer declares the contribution base and pays both employer and employee portions, deducting the employee share from wages.
- Keep records: Maintain contracts, payroll, contribution receipts, and registration confirmations.
Foreign Employees
Foreign nationals working in China need a valid work permit and residence permit. Social insurance participation for foreign employees is generally required, though some cities apply rules differently and certain bilateral agreements may affect pension contributions for specific nationalities. Check the rules in your registration city and the employee's nationality before onboarding.
Practical Tips for Founders
- Budget the full cost: Employer social insurance contributions are an additional cost on top of gross salary. Model this before agreeing to a salary figure.
- Keep salary and filings consistent: The declared contribution base should align with actual wages; inconsistencies can trigger audits.
- Use local payroll support: A local accountant or payroll provider familiar with your district reduces administrative risk.
- Document changes: Raises, role changes, and terminations should be recorded in writing and reflected in filings.
- Plan for probation and termination rules: These are strictly regulated; seek advice before ending an employment relationship.
Disclaimer
This article provides general information for foreign founders and does not constitute legal, tax, or human resources advice. Employment and social insurance rules in China are local and change over time. Verify current requirements with the relevant local authorities and consult qualified professional advisers before making decisions for your company.