Hiring the first employee changes a Hainan company from a registration project into an operating business. It also creates deadlines that foreign employers often underestimate.
China’s employment system is document-led. A clear written contract, consistent payroll records and timely social-insurance registration prevent far more disputes than an elaborate employee handbook copied from another country.
Use a written employment contract
A Chinese employer should sign a written employment contract with the employee. The contract normally covers the parties, term, role, workplace, working hours, rest and leave, remuneration, social insurance, labour protection and other agreed terms.
Chinese should be the controlling language or at least one authoritative version for local enforcement. A bilingual contract is useful for foreign management, but the two versions must say the same thing.
If a written contract is not signed within the statutory period, the employer can face additional wage liability. Do not let someone start on the understanding that “HR will finish it later”.
Choose the contract term and probation carefully
Probation is not a free trial. Its maximum length is linked to the term of the employment contract, and the same employee generally cannot be placed on repeated probation for the same employer.
Pay during probation is also protected. The employer should define objective role expectations and keep evidence of performance. A vague statement that the employee “did not fit the culture” is weak support for termination.
Register payroll and social insurance
The employer withholds individual income tax from salary and makes required social-insurance contributions. Local contribution bases and procedures should be confirmed for the relevant city.
Foreign employees working lawfully in China are generally covered by China’s social-insurance rules. Bilateral social-security agreements may exempt nationals of certain countries from specified contributions if the conditions and certificates are satisfied.
For a foreign employee, the company should connect the employment start date with the work-permit, residence-permit, payroll and social-insurance timelines.
Working hours and overtime
The standard working-hours system is commonly eight hours a day and 40 hours a week. Alternative comprehensive or flexible systems require the conditions and approvals applicable to the role.
Overtime cannot be solved by writing “salary includes all overtime” into every contract. Keep attendance records, define approval procedures and calculate overtime under the applicable system.
Termination needs a legal basis and evidence
China does not generally follow at-will employment. An employer needs a statutory or contractual basis to terminate and must follow the required procedure.
Common disputes arise from poor performance, misconduct, restructuring and expiry or non-renewal. The practical problem is often evidence: no signed rules, no warnings, no performance targets and inconsistent treatment of employees.
Before terminating, review the contract, employee handbook, evidence, notice requirement, severance exposure and whether the employee is in a protected category.
Hiring a foreign founder or foreign employee
A business licence alone does not authorise a foreign national to work. The employee normally needs the appropriate work permit and residence status.
The job title, salary, qualifications and actual work should be consistent across the employment contract, work-permit application, payroll and tax filings. A foreign founder who manages the Hainan company on the ground should plan this sponsorship as part of formation.
A practical first-hire checklist
- Prepare a China-law employment contract.
- Confirm the working-hours system and salary structure.
- Create lawful workplace rules and an acknowledgement process.
- Register payroll, tax and social insurance on time.
- Check work authorisation before a foreign employee starts.
- Keep attendance, leave, performance and disciplinary records.
- Review termination risk before communicating a decision.
Good employment compliance is not about making the workplace bureaucratic. It is about making expectations and decisions provable.
Related reading
- China work permits and visas for foreign founders
- Annual compliance for a foreign-owned company in Hainan
- How to set up a company in Hainan Free Trade Port
Official sources
- China’s Guide to Working and Living for Business Expatriates
- Relevant services for work and social insurance in China
- Hainan One-Stop Service for Investment
Employment rules and contribution bases vary by facts and locality. Review the current Hainan requirements before issuing an offer or ending employment.
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