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Contractors in CnChina.

Population

1,411,750,000

Languages

1.

Standard Chinese

Country Capital

Beijing

Currency

Renminbi (元/¥) (CNY)

When you wish to grow your company, you may hire globally to support your goals. Before you begin recruiting, you should consider the legal parameters for independent contractors in China to ensure compliance.

An independent contractor in China is a person who provides temporary services to a company or organization under the terms of a business or service contract. Therefore, an independent contractor is a self-employed person or entity hired as a non-employee to perform work for or provide services to a company.

Hiring independent contractors in China

Before you begin the hiring process, it’s crucial to understand the regulations surrounding independent contractors to keep your company compliant throughout the working relationship.

Employees vs. independent contractors

The law refers to the concept of an employment relationship to determine the worker classification that applies. Below are 3 non-exhaustive factors that constitute an employee-employer relationship:

  • Both parties must be legally allowed to enter an employment relationship.
  • The employer has rules and regulations the employee must abide by.
  • The employee is subject to the direction, supervision, and control of the employer.
  • The employee’s work is a part of the employer’s core business.

Local courts consider various other factors when determining whether an individual is an employee or independent contractors. While employees are covered by employment laws and regulations in China, independent contractors are not covered by such laws, but rather contract and commercial law.

Penalties for misclassification

Companies that misclassify employees as independent contractors are subject to penalities, including:

  • Retroactive payment for wages and benefits for the misclassified employee
  • Back-payment of taxes which should have been withheld for the misclassified employee
  • Publishing of your company name and violation for public display
  • Fines and sanctions
  • Inspections by the Bureau of Labor (random or scheduled)

How to hire independent contractors in China

The contractor hiring process should involve 3 key steps.

1. Carefully conduct interviews.

During the contractor interview process, you should focus on skills and experience rather than character traits or an individual’s contributions to the company culture.

2. Create a service agreement.

While independent contractors are not provided benefits like paid leave or social security contributions, creating a contract for services will clarify the terms of the relationship. Your service contract should include:

  • Payment method and schedule
  • Description of the project and deadlines
  • Applicable termination policies

3. Introduce necessities.

An important step in engaging the services of independent contractors is understanding how to work with them. Independent contractors should not receive the level of control or supervision that employees do. This worker type is generally free to perform the work according to their own schedule and methods.

Introduce your contractor to any team members they may interact with and clarify when you’ll meet to review the project progress and who they can turn to if questions arise.

How to pay independent contractors in China

You may choose to pay your contractor hourly or with a single fee once the designated project is complete. You may also offer a pre-payment arrangement or a partial deposit where you provide part of the fee at the beginning of the agreement and pay the rest when the project is done. Contractors are responsible for paying their own taxes.

Terminating independent contractors

A company can terminate an independent contractor with notice based on terms set in the contract for service or in the Contract Law of the People’s Republic of China. If a termination violates your contract or contract law, your contractor may claim compensation for damages.

Turn to G-P when hiring independent contractors in China.

As a part of our #1 suite of global employment products, G-P Meridian Contractor™ allows companies to hire and pay global contractors faster, with self-service workflows and a wide set of flexible payment options. Whether you’re hiring employees or contractors, our platform streamlines the process with a single solution for your global workforce.

Contact us to learn more.

Disclaimer

THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). G-P does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect G-P’s product delivery in any given jurisdiction. G-P makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.

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