Found a Candidate in China but Have No Entity? How an EOR Employs Them (Recruiter-to-Payroll Guide)

You can hire an employee in China without an entity by using an Employer of Record (EOR). The EOR, not your client, signs the labor contract, registers the employee for social insurance and the housing fund, runs payroll, and carries the employer's legal duties, while the client directs the daily work. For recruiters, the risk sits in the gap between "offer accepted" and "contract signed." An offer letter is not a labor contract, the candidate's notice period can push the start date, and PRC law attaches penalties to a missing written contract once work begins. Word the offer conditionally, bring the EOR in before the candidate resigns, and keep the contract, start date and probation terms consistent across every document.

Table of Contents

1. The Short Answer: Can a Company With No Chinese Entity Employ Your Candidate?
2. Why an Offer Letter Is Not a Labor Contract
3. How an EOR Becomes the Legal Employer
4. Conditional Offer Wording That Does Not Promise What the EOR Cannot Deliver
5. Who Does What: Recruiter, Client, EOR and Candidate
6. From Accepted Offer to First Payroll: Step by Step
7. Probation Period Management
8. Common Pitfalls and How to Avoid Them
9. Illustrative Scenario (Hypothetical, Not a Real Client)
10. Checklists for Recruiters and Hiring Managers
11. How Knit's EOR Service Handles This
12. The Path to a Future Entity
13. Frequently Asked Questions
14. Glossary of Key Terms
15. About Knit
16. Related Reading

1. The Short Answer: Can a Company With No Chinese Entity Employ Your Candidate?

Yes, but not directly. A foreign company with no registered presence in China cannot put a Chinese resident on its own payroll in a compliant way. In practice, the "employing unit" (用人单位) in a labor contract needs to be a locally registered organization that can sign the contract, register with the social insurance and housing fund authorities, and answer to a labor bureau or arbitration body if there is a dispute. A client with no entity cannot do any of those things.

An Employer of Record solves that problem. The EOR is a locally registered entity that becomes the legal employer on paper. It signs the labor contract with your candidate, enrolls the candidate in the statutory programs, pays wages and withholds individual income tax, and manages the employment relationship through to termination. Your client assigns the work, sets goals and manages performance day to day. This split is the core of any China EOR arrangement, and it is why companies commonly use one while they decide whether a full entity is worth the effort.

If you are a recruiter or headhunter, this matters because you are usually the first person to discover the problem. You close the placement, the candidate says yes, and then the client's HR lead writes back: "We don't have an entity in China. How do we pay this person?" Your placement is now at risk, and so is your fee if the candidate walks away during a long delay.

This guide walks through what happens from that moment to the first payslip. It covers how to word the offer, which documents the candidate will sign, what the law requires and when, and where recruiters and clients most often trip. It is written for a Chinese-resident candidate in the typical case. Section 6 adds notes for candidates who are foreign nationals, because they need work authorization before an EOR can employ them.

One caution before the detail. Employment rules in China are national in outline and local in practice. Social insurance bases, minimum wages, probation enforcement and registration procedures differ by city. Treat what follows as a framework, and have the EOR's local team or licensed PRC counsel confirm how it applies in the candidate's city.

2. Why an Offer Letter Is Not a Labor Contract

Recruiters often handle the offer stage, and many assume the signed offer letter is the legal start of employment. In China it is not.

Three provisions of the Labor Contract Law of the PRC (2012 amendment, as published on the Shanghai government portal) explain why the distinction matters:

• Article 7 says the employment relationship is established from the date the employer begins using the worker's labor (用工之日), and that the employer must keep a staff roster. The relationship begins at actual work, not at the date of an email.
• Article 10 requires a written labor contract. If the relationship has already begun without one, the parties must sign within one month of the start of work. If they sign before work begins, the relationship still begins on the first day of work.
• Article 82 says an employer that goes more than one month but less than one year without a written contract must pay the employee double wages for each month of the gap. Under Article 14, once a full year passes with no written contract, the law treats the parties as having an open-ended contract.

Read together, those rules put a clock on the employer, and the clock starts when the candidate begins work. An offer letter does not stop it. A document that lacks the required terms is also a weak substitute. Article 17 lists what a labor contract must contain: the employer's name, address and legal representative; the employee's name, address and ID number; the contract term; job content and work location; working hours and rest and leave; pay; social insurance; labor protection and working conditions; and any other matters that laws and regulations require. A typical offer letter from a recruiter's template covers perhaps half of that.

There is a second problem. In an EOR model, the client's name belongs on the offer, but the EOR's name belongs on the contract. If the offer letter names Company X as the employer and promises terms, and the contract later names the EOR with different terms, the candidate may reasonably say they were misled. Article 8 requires the employer to disclose job content, conditions, location, occupational hazards, safety conditions and pay truthfully when hiring, so recruiter messaging that differs from the final contract creates exposure for the employer, and indirectly for the placement.

The fix is simple to state and takes discipline to apply. Use the offer letter to record agreement in principle, make it expressly conditional (see Section 4), and treat the bilingual labor contract as the document that actually creates rights.

3. How an EOR Becomes the Legal Employer

In an EOR structure, three parties have separate relationships, and mixing them up is the source of most confusion.

Between the client and the EOR: a service agreement. It sets out the client's role (directing work, approving pay and bonus, supplying role information) and the EOR's role (employer of record, payroll, statutory filings, HR administration). This agreement is commercial. The candidate is not a party to it.

Between the EOR and the employee: the labor contract. This is the legally binding employment document under PRC law, and the EOR is the named employer. The employee is on the EOR's roster, and the EOR files social insurance and housing fund registrations in its own name.

Between the client and the employee: a working relationship, usually supported by a role description, IP and confidentiality terms and a code of conduct. The client manages the work but is not the legal employer. Clients should be careful not to behave as though they hold the employer's powers, for example by issuing disciplinary notices or terminating without going through the EOR. A termination that skips the statutory process can lead to a dispute that lands on the EOR and flows back to the client under the service agreement.

For a deeper explanation of the concept, see our overview of what an Employer of Record is. For China specifically, our guide to hiring employees in China before establishing a local company compares the EOR route with representative offices, labor dispatch and contractor arrangements.

One point worth stating plainly: labor dispatch and EOR are not the same thing. Labor dispatch is regulated separately in the Labor Contract Law (Articles 57 to 67) and is limited to temporary, auxiliary or substitute positions. Using a dispatch arrangement for a full-time professional hire is a different legal question from using an EOR, and clients should have local counsel confirm that the structure they are being offered fits the role.

4. Conditional Offer Wording That Does Not Promise What the EOR Cannot Deliver

The recruiter's most useful contribution at this stage is the offer wording. A well-drafted conditional offer protects the candidate, the client and the recruiter's relationship with both. A poorly drafted one makes promises that the EOR, which is the actual employer, never agreed to honor.

The principle: the offer should state the commercial intent (role, base pay, target start) and say plainly that employment will be established by a labor contract with a local employing entity, subject to its terms and PRC law.

The table below maps common offer clauses to a safer approach. These are drafting suggestions for discussion with the client and the EOR, not a legal template.

A few notes on the table.

Do not promise a guarantee. Statements such as "guaranteed 12 months" or "no probation" are hard to square with how PRC law treats probation, termination and economic compensation. Probation limits are fixed by statute (see Section 7), and termination rights depend on statutory grounds.

Do not ask for deposits or hold documents. Article 9 of the Labor Contract Law says the employer may not retain the worker's resident identity card or other certificates, and may not demand a guarantee or collect property from the worker under any pretext. If a client's HR department asks you to collect original certificates or a "good faith deposit" from a Chinese candidate, push back.

Keep recruiter messaging consistent with the contract. If you tell the candidate "13 months of pay," and the contract describes 12 monthly payments plus a discretionary bonus, the candidate will remember what you said. Send the EOR any written job description or compensation summary you have already shared so that the contract draft reflects it or corrects it before signing.

Equity and cross-border incentives sit outside. Stock options or phantom equity from a foreign parent raise tax and foreign-exchange questions that depend on the structure and the candidate's residency. Flag them early and route them to the client's tax advisors and the EOR.

5. Who Does What: Recruiter, Client, EOR and Candidate

Placements stall when no one owns a step. The table below assigns responsibility for the main tasks. Your actual division of labor depends on your recruitment agreement, the client's service agreement with the EOR and local practice, so treat it as a starting point.

The line that causes the most friction is the recruiter's role after the candidate accepts. A recruiter is not the employer, has no authority to promise contract terms, and should not collect sensitive personal documents beyond what the recruiting relationship needs. Pass identity and onboarding documents directly to the EOR through a secure channel. Candidate data moves across borders in this arrangement, so confirm with the EOR how personal information is collected, stored and transferred.

6. From Accepted Offer to First Payroll: Step by Step

The sequence below is the logical order of events. It is not a promise of how many days each step takes. Knit does not publish a fixed onboarding duration, and the timing depends on how quickly the candidate, the client and the local authorities move. What we can say with confidence are the statutory points that frame the process.

Step 1: Client signs the EOR service agreement and submits the hire request. The client provides the role description, work location, proposed base pay and proposed start date. The EOR checks the details against local rules, such as the local minimum wage, and flags problems before an offer goes out. Where possible, do this before the candidate resigns.

Step 2: The conditional offer goes to the candidate. Use the wording approach in Section 4. The candidate accepts the offer in principle.

Step 3: The candidate gives notice at the current employer. Under Article 37 of the Labor Contract Law, an employee may terminate by giving 30 days' written notice to the employer, and three days' notice during probation. That 30-day period is the single biggest driver of the offer-to-start gap and is within the candidate's control, not the client's or the EOR's. Individual circumstances (a long-service agreement, a restrictive covenant, a training cost clawback) may add complications, which is why Section 8 treats the candidate's prior obligations as a risk item.

Step 4: The candidate submits onboarding documents to the EOR. Typical requests include identification, proof of education where relevant, a release or termination certificate from the previous employer, bank details for payroll, and information needed for social insurance and housing fund registration. The exact list is set by the EOR and local authorities. Candidates should send copies only through the EOR's secure process.

Step 5: The EOR issues the bilingual labor contract. The contract is drafted with the Article 17 required terms. Our article on bilingual HR support in China explains why the Chinese version matters in a dispute: the Chinese-language text is what local authorities and arbitration bodies work from, so the two versions need to match. The candidate should review both versions. Ideally the contract is signed before the first day of work. Under Article 16, a labor contract takes effect once both parties have signed or sealed it, and Article 10 confirms that a contract signed before work starts still leaves the relationship beginning on the first day of work.

Step 6: Social insurance and housing fund registration. The Shanghai municipal government's English guidance on social insurance states that employers must register employees for social insurance within 30 days of the start date, citing Article 58 of the Social Insurance Law. See the Shanghai government's social insurance guide. For the housing provident fund, the State Council's Regulations on the Administration of Housing Provident Funds (2019 gazette text, Article 15) require an employer that hires an employee to register deposits with the housing provident fund management center within 30 days of the hire date and to open or transfer the employee's account. The State Council also issued Decree No. 844 amending these Regulations, published on the government portal in August 2026 with an effective date of September 20, 2026. As summarized from that text, it raises the fine for an employer that fails to register for the fund or open employee accounts to a range of 50,000 to 300,000 yuan after a deadline to correct passes, so registration should not be left to chance. Article numbers may have shifted, so have the EOR confirm the current text. The contribution bases and rates are set locally. For background on what pay counts toward the social insurance base, see our explainer on what counts as wages for social insurance.

Step 7: The first payroll cycle. The EOR collects pay inputs from the client, calculates gross-to-net pay, withholds the employee's share of social insurance and housing fund, withholds individual income tax, and pays the employee. The employer's share of statutory contributions is an additional cost for the client, invoiced through the EOR. The first cycle is where mistakes surface, such as a prorated month, a late start or a missing bank detail, so check the first payslip with the employee.

Step 8: Ongoing administration and probation management. After start, the EOR keeps the employee on its roster, manages contract renewals, leave records and any changes in pay, and runs the probation process described in Section 7.

A note on foreign-national candidates

If your candidate is not a Chinese citizen, an extra layer applies before the EOR can employ them. The State Council's English portal publishes A Guide to Working and Living in China as Business Expatriates (2025 edition). It describes an employer-led work permit process through an online system, with supporting documents such as a certificate of no criminal record and a physical health examination, and a separate step for the work visa or residence permit. The same guide states that the employer must register foreign employees for social insurance within 30 days of applying for the work permit, with contribution bases and employer shares matching those for Chinese employees under local standards, subject to any social security agreement exemptions. The National Immigration Administration's English site carries the English reference text of the Rules for the Administration of Employment of Foreigners in China, which says the employer must obtain permission before employing foreigners and that foreigners may be employed only in posts that meet the rules. That page is an older rules text, so confirm which current rules apply with the EOR and a licensed immigration professional. In practice, build the permit timeline into the start date, because the candidate cannot lawfully begin work first.

7. Probation Period Management

Probation is where recruiters and clients most often import assumptions from other countries. The PRC rules are specific.

Under Article 19 of the Labor Contract Law:

• A contract term of three months or more but under one year allows a probation period of up to one month.
• A term of one year or more but under three years allows up to two months.
• A fixed term of three years or more, or an open-ended contract, allows up to six months.
• The same employer and the same employee may agree to probation only once.
• A contract for a specific task, or with a term under three months, cannot include probation.
• Probation counts toward the contract term. If the contract states only a probation period, the probation clause is not recognized, and that period becomes the contract term.

Article 20 sets a pay floor: probation wages may not be lower than 80 percent of the contracted wage or of the lowest wage grade for the same position at that employer, and may not fall below the local minimum wage. Article 21 limits termination during probation to the situations in Articles 39 and 40(1) and (2). The most relevant ground in a recruiter's world is Article 39(1), which allows the employer to end the contract if the employee is shown during probation not to meet the conditions of employment. The employer is also expected to explain its reasons to the employee.

That ground only works if the conditions of employment were defined in writing, communicated at hiring and applied consistently. "Not a culture fit" is a weak basis. "Did not meet the delivery targets A, B and C set out in the role description attached to the contract" is a stronger one.

What this means in practice:

1. Set probation length at contract design, not at offer. A recruiter who tells the candidate "three months' probation" without knowing the contract term may promise something the law does not allow.
2. Put measurable conditions of employment in writing. The client and EOR should agree on them before the contract is signed, and the candidate should see them.
3. Schedule check-ins. A documented mid-probation review gives the client a basis for any later decision and gives the candidate a fair chance to improve.
4. Route any termination through the EOR. The EOR follows the statutory process and keeps the records. Clients that tell the employee informally that "it is not working out" create evidence problems.
5. Align the recruiter's guarantee period with reality. Many placement agreements include a replacement or refund window. Check that the guarantee period and the probation period are understood by all parties, because a candidate can resign during probation on three days' notice under Article 37.

8. Common Pitfalls and How to Avoid Them

The table below lists the problems that most often interrupt an "offer accepted, no entity" placement.

Two of these deserve more explanation.

Notice period. For recruiters, the offer-to-start gap is a client-relations issue as much as a legal one. Clients accustomed to two-week notice norms in the US or UK may not expect 30 days to be the baseline. Say so early. Some candidates also negotiate a shorter handover with their current employer, which is a conversation between the candidate and that employer, and is not something the recruiter or new client should promise.

The prior employer. Article 91 of the Labor Contract Law addresses an employer that hires a worker who has not yet terminated or ended a contract with another employer and causes that employer a loss. This is not a reason to avoid hiring anyone with a non-compete. It is a reason to ask the question before the offer becomes unconditional and to have the EOR's local team assess the risk.

9. Illustrative Scenario (Hypothetical, Not a Real Client)

This scenario is invented to show how the pieces fit. Company X, Candidate A and every figure or date are hypothetical and do not describe a real client.

Setup. Company X is a software firm in Europe with no entity in China. It engages a recruiter to find a senior backend engineer for a role based in Shanghai, working with its European engineering team. The recruiter presents Candidate A, who is currently employed at a Shanghai technology company. Company X makes a verbal offer, Candidate A accepts, and the recruiter sends a written offer.

Assumptions for the illustration.

• Candidate A is a Chinese citizen resident in Shanghai, so no work permit is needed.
• Candidate A's current contract requires the statutory 30 days' written notice and contains no non-compete.
• Company X has not yet signed with an EOR.
• Base pay and role details are agreed in principle. No equity is involved.

What goes wrong in the unprepared version. The recruiter's offer letter says "Company X will employ you from the first of next month" and includes "six months' probation." Candidate A, trusting the letter, gives notice at the current employer. Company X's HR lead then learns that there is no entity, and starts looking for an EOR. The contract is not ready when notice ends. Candidate A is between jobs with no signed contract, uncertain about the employer's name, and hearing that the start date has moved. Candidate A also discovers that the probation period promised may not fit the contract term the EOR proposes. The candidate's trust in the recruiter and the client is damaged before day one.

What the prepared version looks like.

1. Before the offer. The recruiter tells Company X that, because it has no entity, an EOR is needed. Company X signs with an EOR and submits the hire request.
2. Conditional offer. The offer letter says Company X intends to engage Candidate A through its employment partner in China, which will be the legal employer under a written labor contract. It gives a target start date, base pay, and says probation will follow the contract within PRC limits. It is conditional on signing the contract, a lawful background check and release from the current employer.
3. Candidate gives notice. Because the offer is clear about who the employer will be and when the contract will arrive, Candidate A gives 30 days' written notice with confidence.
4. Onboarding. Candidate A sends documents to the EOR directly. The recruiter's role is to nudge, not to hold files.
5. Contract. The EOR issues a bilingual labor contract naming the EOR as employer, with the Article 17 terms, the agreed role description and measurable conditions of employment attached. Candidate A reads both versions and signs before the start date.
6. Registrations and payroll. The EOR registers Candidate A for social insurance and the housing fund and runs the first payroll after the start date. Candidate A checks the first payslip.
7. Probation. Company X and Candidate A hold a mid-probation review. The recruiter checks in to confirm fit and keeps an eye on the guarantee window.
8. Longer term. Company X later decides it will hire several more people in Shanghai and begins evaluating an entity. Because the EOR service agreement recorded that intention, the transition conversation starts with a plan.

The lesson. The offer was the same in both versions. The difference was the sequence: EOR first, conditional wording second, candidate resignation third, signed contract before work.

10. Checklists for Recruiters and Hiring Managers

Use these as working lists. Adapt them to your agreements and to the EOR's own process.

Recruiter's checklist

• Ask at the first screening whether the client has a Chinese entity. If not, raise the EOR route before the offer stage.
• Confirm the candidate's nationality and residency status. Flag foreign nationals for the permit process.
• Ask about notice period, non-compete, training clawbacks and bonus clawbacks at the current employer.
• Use conditional offer wording that names the employment partner structure.
• Do not promise probation length, contract term, bonus guarantees or equity beyond what the client has approved.
• Send the EOR any compensation or role summary you have already given the candidate.
• Do not collect or hold original certificates, deposits or sensitive documents.
• Tell the candidate not to resign until the conditional offer, the identity of the employing entity and the expected contract timing are clear.
• Reset client expectations on start date based on the candidate's notice period.
• Check how your placement guarantee interacts with probation and with the three-day probation resignation right.
• Keep a written record of what was communicated to the candidate.

Hiring manager's checklist

• Confirm the headcount, role, location, grade and budget, including employer-side statutory costs.
• Sign the EOR service agreement before the offer becomes unconditional.
• Provide a written role description and measurable conditions of employment for probation.
• Decide who inside the company approves pay, bonus and changes, and tell the EOR.
• Prepare equipment, system access and a first-week plan that does not start before the contract is signed.
• Agree internally that all warnings, performance plans and terminations go through the EOR.
• Understand which tasks the new hire can perform under the contract. Work outside the role or in another location may need a contract change.
• Plan for IP, confidentiality and data-handling terms to be reviewed by counsel in both jurisdictions.
• Record whether the arrangement is meant as a bridge to an entity.
• Schedule a mid-probation review.

11. How Knit's EOR Service Handles This

Knit People operates as an Employer of Record in China, with a China operations hub in Shenzhen. In a case like the one in this guide, the EOR's responsibilities fall into a few groups.

Employer of record. Knit's EOR service acts as the legal employer on the labor contract for the client's employee, so the client does not need its own Chinese entity to hire.

Contract and onboarding. The EOR prepares the bilingual labor contract, collects and verifies onboarding documents from the employee, and keeps the employee file.

Statutory registration and payroll. The EOR handles social insurance and housing fund registration, monthly payroll, individual income tax withholding and statutory filings in line with local rules.

HR administration. The EOR administers leave records, contract renewals, probation process and terminations under PRC law, and coordinates with the client on performance inputs.

Support in Chinese and English. The working language of the contract and local authorities is Chinese, so bilingual support matters. Our bilingual HR support article describes how that works in practice.

What the EOR does not do. An EOR is not a recruiter and does not guarantee a candidate's start date, because the notice period at the previous employer and any permit process are outside its control. Knit does not publish a fixed onboarding duration for the process described here. The client keeps responsibility for directing the work and for the commercial terms it approves.

For the full service description, see Knit's Employer of Record services page, or read the overview of hiring in China and why to use an EOR. If you are a recruiter with a live placement and want to talk through the sequence before the candidate resigns, you can contact the Knit team.

12. The Path to a Future Entity

For many clients the EOR is a bridge rather than a permanent solution. A few signals suggest that it is time to evaluate an entity: headcount is growing beyond a handful of people, the business wants to hold contracts and invoice customers in China, or the company needs to control corporate functions directly.

Our article on WFOE legal hurdles and the EOR alternative covers the main considerations in setting up a Wholly Foreign-Owned Enterprise. For a financial comparison of the two routes, see the cost math of EOR versus entity setup, which discusses compliance, management time and exit costs alongside setup fees.

When a client does decide to move, the employment side of the transition deserves its own plan:

• Employment continuity. Employees move from the EOR to the new entity. The mechanics, such as whether the existing contract is terminated and a new one signed or the contract is transferred by agreement, and how service years are treated, should be agreed in writing with the employee and reviewed by local counsel. Years of service matter for statutory economic compensation, which Article 46 of the Labor Contract Law ties to years worked at the unit.
• Employee consent. Do not assume the transfer is automatic. Candidates should receive clear written information about the new employer, any change in terms and how their accrued rights are treated.
• Social insurance and housing fund continuity. The new entity must register in its own name. Local practice on account transfers varies.
• Service agreement terms. Check the EOR agreement for notice, transition support and any conversion terms before you rely on them.

Recording the entity plan in the original EOR service agreement turns a later transition into a project with owners and dates, instead of a scramble.

13. Frequently Asked Questions

Q: Can I hire an employee in China without an entity?

Yes, through an Employer of Record. The EOR is a locally registered entity that signs the labor contract, registers the employee for statutory programs and runs payroll. Your company directs the work but is not the legal employer. Direct employment without any local entity is not a compliant route for a Chinese-resident employee, so confirm the structure with a licensed PRC adviser.

Q: Is a signed offer letter enough to start the candidate in China?

No. Under the Labor Contract Law, the labor relationship starts on the first day of work, and a written labor contract is required. If the contract is not signed within one month of the start of work, Article 82 requires double wages for each month of the gap, up to one year. Use the offer letter for intent and the labor contract for rights.

Q: How long will it take from offer acceptance to start date?

It depends mostly on the candidate's notice period and on how quickly documents and approvals are completed. A resigning employee generally gives 30 days' written notice under Article 37 of the Labor Contract Law. Foreign nationals also need work authorization first. Knit does not publish a fixed onboarding duration, so set a target date and confirm it after notice is given.

Q: Should the candidate resign before the EOR contract is signed?

Ideally not. A candidate who resigns before seeing the employer's name, contract terms and expected start date takes on avoidable risk. Better practice is to confirm the EOR engagement and share a draft or summary of terms first, then have the candidate give notice. The final signing should happen before work begins.

Q: Can the offer letter promise a specific probation period?

It should not. Probation limits depend on the contract term under Article 19: up to one month, two months or six months, and only one probation period per employer and employee. A promise made before the contract is drafted may not fit those limits. Keep the offer wording general and let the labor contract set the term.

Q: Who pays social insurance and the housing fund for the employee?

Both the employer and the employee contribute. The employer withholds the employee's share from pay and pays its own share on top. In an EOR arrangement, the EOR remits the contributions and invoices the client for the employer-side cost. Bases, rates and procedures vary by city, so ask the EOR for a local breakdown before you finalize the offer.

Q: What happens if the candidate has a non-compete or notice obligation to their old employer?

The new employer can face risk. Article 91 of the Labor Contract Law makes an employer jointly liable for losses if it hires a worker who has not ended a contract with another employer. Ask the candidate to share relevant clauses early, and have the EOR's local team or counsel review them before the offer becomes unconditional.

Q: Does the EOR or the client manage the employee day to day?

The client does. The client assigns work, sets goals and evaluates performance. The EOR handles the legal employment relationship: contract, payroll, statutory filings, leave records and formal HR processes such as probation outcomes and terminations. Clients should route warnings and terminations through the EOR rather than acting directly.

Q: Can we move the employee to our own entity later?

Usually yes, but plan it. The transfer should be agreed in writing with the employee, treat years of service carefully because they affect statutory compensation, and re-register social insurance and housing fund under the new entity. Check the EOR service agreement for transition terms, and have local counsel review the transfer documents.

Q: Does this process work for foreign nationals placed in China?

It can, but a work permit and the right visa or residence permit come first. The State Council's 2025 guide for business expatriates describes an employer-led online work permit process, and employers must register foreign staff for social insurance within 30 days of applying for the permit. Build the permit timeline into the start date and confirm the route with the EOR.

14. Glossary of Key Terms

Employer of Record (EOR): A locally registered entity that acts as the legal employer of a worker on behalf of a client company that has no entity in that country. The client directs the work. The EOR handles contracts, payroll and statutory compliance.

Labor contract: The written agreement between employer and employee that creates the employment relationship under the PRC Labor Contract Law. It must contain the terms listed in Article 17.

Offer letter: A commercial document stating intent to hire. It does not replace the labor contract and should be worded conditionally.

Probation period: A trial period set within the labor contract and limited by Article 19 according to the contract term. Only one probation period is allowed per employer and employee.

Conditions of employment: The criteria that an employee must meet during probation. They should be written, communicated at hiring and applied consistently.

Social insurance: Statutory insurance programs, with contributions from employer and employee, registered and administered at the local level.

Housing provident fund: A statutory savings scheme with contributions from employer and employee, administered by local housing fund management centers. Under the State Council Regulations, contributions belong to the employee.

Written contract deadline: The Article 10 requirement to sign within one month of the start of work, with double-wage exposure under Article 82 if missed.

WFOE: A Wholly Foreign-Owned Enterprise, a company in China fully owned by foreign investors. It can employ staff directly once registered.

Labor dispatch: A separate legal arrangement in which a dispatch agency employs workers and places them with a user company, restricted under the Labor Contract Law to temporary, auxiliary or substitute roles.

15. About Knit

Knit People was founded in Canada in 2015 and has about 11 years of experience supporting international employers. It serves 4,000+ clients across 172 countries and regions, processes over USD 600 million in annual payroll, operates 60+ owned entities, and maintains a China operations hub in Shenzhen. Its services include Employer of Record, PEO, Global Payroll and Contractor of Record, along with headhunting and recruitment, background checks, entity registration, global tax, insurance and work visa support. Knit holds MSB license No. M23187879. To discuss a placement or a hiring plan in China, contact the Knit team or review the Employer of Record services page.

16. Related Reading

• Hiring in China: What to Know and Why Use an EOR
• The Complete China Employer of Record Guide for 2026
• Hiring Employees in China Before Establishing a Local Company
• Why Companies Use an EOR Before a Legal Entity in China
• What Counts as Wages for Social Insurance in China
• EOR vs. Entity Setup: The Real Cost Math

This article provides general educational information about employing candidates in the People's Republic of China through an Employer of Record. It is not legal, tax or immigration advice. Labor, social insurance, housing fund and immigration rules, thresholds and procedures change and vary by city and province, and the statutory references here reflect public texts reviewed in October 2026. Before making an offer, signing a labor contract, resigning from a current job or relying on any figure above, confirm the position with Knit's local team or with licensed PRC counsel and tax advisors.