As businesses expand globally, navigating employment regulations in different regions becomes a critical challenge. In China, particularly in metropolitan hubs like Shanghai, companies often turn to Employer of Record (EOR) services to ensure compliance with local labor laws. This article provides an overview of the EOR model and highlights essential risk protection measures for employees in Shanghai. Click here to see ChaadHR China Employer of Record EOR hiring guide.
Understanding the EOR Model
An Employer of Record (EOR) is a third-party organization that acts as the legal employer for a company’s workforce in a specific location. While the client company oversees day-to-day operations and employee management, the EOR handles administrative and legal responsibilities, including payroll, taxes, benefits, and compliance with labor laws.
In Shanghai, where labor regulations are intricate and strictly enforced, the EOR model offers a streamlined solution for international companies. By leveraging an EOR, businesses can mitigate risks related to non-compliance while focusing on their core activities. How-ever, employees under this arrangement must also be aware of their rights and protections.
Key Employee Risk Protection Measures in Shanghai
Shanghai’s labor market is governed by comprehensive laws designed to safeguard em-ployee rights. Whether employed directly or through an EOR, it is crucial for employees to understand the following risk protection measures:
1. Employment Contracts
Under Chinese labor law, all employees must have a written employment contract. This document outlines job responsibilities, salary, working hours, and other key terms. Em-ployees under an EOR should ensure their contract complies with local regulations and reflects the terms agreed upon with the client company.
2. Social Insurance Contributions
Shanghai mandates participation in the national social insurance system, which includes pensions, medical insurance, unemployment insurance, work injury insurance, and mater-nity insurance. The EOR is responsible for ensuring that these contributions are made ac-curately and on time. Employees should regularly verify their social insurance records to avoid discrepancies.
3. Workplace Safety and Health
Employers in China are required to provide a safe working environment. EORs must ensure that their client companies adhere to workplace safety standards in Shanghai. Employees should report any unsafe conditions or violations to both the client company and the EOR.
4. Termination and Severance
Termination of employment in China is subject to strict regulations. In cases of termination, employees are generally entitled to severance pay based on their years of service. The EOR must handle termination procedures in compliance with local laws to protect employee rights.
5. Dispute Resolution
In the event of employment disputes, Shanghai provides legal channels for resolution, such as arbitration or litigation. Employees should be aware of their rights and seek assistance from their EOR or legal professionals if necessary.
The Role of Communication and Transparency
For employees under an EOR arrangement in Shanghai, clear communication between all parties—the employee, the EOR, and the client company—is essential. Transparency re-garding employment terms, benefits, and legal obligations fosters trust and ensures that risks are effectively managed.
Conclusion
The EOR model offers significant advantages for navigating Shanghai’s complex labor landscape, but employees must remain informed about their rights and protections. By understanding key aspects such as employment contracts, social insurance, and workplace safety, employees can safeguard their interests while contributing effectively to their or-ganizations.
How Chinese Employer of Record (EOR) Works
As a local Employer of Record (EOR), we take on the legal responsibility of employing your new workforce in China. While you manage the day-to-day activities of your employees, we legally hire them through our agency. ChaadHR operates in over a hundred countries and utilizes local networks of experts to gain in-depth knowledge of local laws and regulations, as well as recruitment customs and trends. By partnering with us as an EOR, you gain access to this expert knowledge, which can be invaluable when expanding your business into China.
Our employment contract with your employees complies with Chinese labor laws and includes benefits such as insurance and pensions. We can hire, onboard, and manage your new employees in China in a matter of days, ensuring a fast and efficient process.
Hereis how we can assist you:
- We ensure that your new hires are compliant with Chinese laws and regulations.
- We take care of the employment contract, HR (Human Resources) matters, taxes, and payroll.
- We arrange the required visas or work permits for your employees.
- Our team keeps your employees informed about holiday arrangements, benefits, and any changes in labor laws.
- We keep you updated on changes in local laws and ensure that we comply with them.
-Your employees' declarations are forwarded to us on a monthly basis. Once we receive your payment, we deduct taxes and other contributions, and ensure that your employees receive their salaries promptly.
- You retain control over the daily activities and responsibilities of your employees.
🌎💼Compliantly Hire and Pay Talent in 160+ Countries With ChaadHR
With our comprehensive Global Employer of Record (EoR) solution and integrated Global Payroll solution, we empower businesses to confidently and compliantly hire and pay their workforce in over 160 countries. By partnering with ChaadHR, companies can eliminate the burdensome task of entity establishment and navigating complex labor laws, while ensuring their payroll operations are fully compliant with local regulations.
ChaadHR helps businesses expand globally. We provide support for testing new markets, hiring employees, and setting up subsidiaries. Our platform offers compliant onboarding of international contractors, remote employee hiring, and consolidated payroll management through a single dashboard. Book a demo to learn more.