From company to PEO / employer of record
Transition from a WFOE or Representative Office to a PEO
As part of your expansion in China, there are different reasons why you can choose to set up a local entity, including having a recognizable brand in the country, ease of employment, simplifying your tax position.
However, in many cases, a local PEO is a more cost-effective solution. With a local PEO, you still have the guarantee that your employees are hired in compliance with the law, but saving company administrative costs. Besides this, a PEO can help to run and manage payroll.
How a PEO in China works?
A Professional Employment Organization (PEO) is a company that provides services under which an employer can delegate employee management tasks such as payroll, employee benefits, and workers’ compensation.
With this solution, the PEO service provider becomes the employer of record in China, bypassing the tedious process tied with setting up a legal entity in China and making expansion into the market much simpler.
In general, a PEO offers these kind of services:
- HR administration
- Payroll management
- Benefits and tax administration
- Visa processing
Procedure for hiring staff in Shanghai
How we get started
Shanghai Employment Solution
How we legally onboard your team
1. Employees Onboarding
New employee signs private information authorization letter. HROne collects required material. First payment (including deposit) invoiced & paid. HROne and new employee sign a labor contract.
New employee is loaded into the payroll system. Social insurance account, housing fund account & bank accounts are imported into system.
2. Monthly Processing
Payroll information and salary changes (if any). Monthly invoice generated & settled. HROne transfers employee salaries & updates online payroll portal.
Social insurances, housing fund and income tax paid. Employee pay-slip and notification sent out.
3. Year End Processing
Work calendar for the coming year confirmed. Annual salary report prepared, confirmed and reported to the government HR authorities.
Employer of Record solutions in China
How Employer of Record in China works
Switch your local Chinese entity to a PEO in a blink of an eye
HR in China, made easy.
Frequently Asked Questions
Payroll & mandatory benefits are included in our China Employer of Record and our PEO services.
In many countries, PEO and EOR are the same thing and can be interchanged. However in countries such as China and the USA, PEO and EOR refer to different services:
With Employer of Record (EOR), the service provider takes on the responsibility & liability of the employer since the client does not have a legal entity in the country of interest.
With Professional Employment Organization (PEO), the service provider manages hiring, employment and payroll, but does not take on the responsibility or liability of the employer since the client has a legal entity in the country of interest.
The 13th month bonus in China refers to a bonus equal to one month’s salary that is usually paid at the onset of Chinese New Year.
This 13th month bonus is not mandatory unless explicitly stated in the labor contract upon signing. A 13th month bonus depends on the company’s performance as well as the employee’s performance.
It is possible for employees to receive an even higher bonus (14th or even 15th month bonus) depending on these factors.
Employees in China are entitled to annual leave days based on their work experience.
After working for their employer for 1 year. Employees who have worked less than 10 years are entitled to 5 days paid annual leave.
Employees who have between 10 and 20 years of experience are entitled to 10 days paid annual leave.
Employees with over 20 years of experience are entitled to 15 days of paid annal leave.
Using an Employer of Record/PEO service is often regarded as the modern approach to expanding into China. As long as you do not need to invoice in China, this is a perfect solution for foreign SMEs that want to start their business here. With an employer of record, you can legally hire and manager your team in China, avoiding the time and money required to set up a company.
HROne, the Employer of Record, is legally responsible for your staff during their term of employment in China.
We can hire a local Chinese employee in as little as one day!
Your staff members can be employed and located anywhere in China. Their employment status will be recorded by the local bureau according to their location.
Not necessarily. Staff members can work remotely from home or another location. However, we offer office space rentals upon request.
Yes, our Employer of Record solution can be used to hire both local and foreign staff.
Individual income taxes In China are based on a progressive tax brackets rate:
|Bracket||Annual Taxable Income (RMB)||Tax Rate (%)||Quick Deduction|
|1||No more than 36,000||3||0|
|2||Between 36,000 and 144,000||10||2,520|
|3||Between 144,000 and 300,000||20||16,920|
|4||Between 300,000 and 420,000||25||31,920|
|5||Between 420,000 and 660,000||30||52,920|
|6||Between 660,000 and 960,000||35||85,920|
|7||More than 960,000||45||181,920|
Social benefits in China are divided into two categories:
- Five mandatory social insurances – These include pension insurance, medical insurance, unemployment insurance, work-related injury insurance, and maternity insurance.
- Housing fund – The purpose of this is to allow employees to save money to buy a house in China.