Hiring a freelancer for your China business can be a great way to bring in some targeted expertise, typically for a shorter period of time, either to deliver a fixed project or support for a particular period.
Here are the major, practical considerations you need to make when going down this road...
Get the right type of agreement in place
When hiring staff in China, there are two main types of contract to be aware of:
1. Labour Contract
For full time employees in China, written employment contracts must be in place with employees (Part-time employees come under Labour Service Agreements as freelancers).
Terminating a full time employee under a Labour Contract can be more difficult than you think, so make sure you don't use this method to employ a freelancer.
2. Labour Service Agreement
This is the common framework with which freelancers or part-timers are employed, and differs from a Labour Contract in that this is a contractual agreement between the freelancer and hirer on an individual basis.
In this case, the hirer can either be an organisation or an individual representative and is built upon a mutual understanding of the role and it's duties.
A Labour Service Agreement is not as strictly regulated by the authorities, and is mainly managed in accordance with Chinese commercial law rather than Labour law.
For both methods, you'll either need to have a registered company in China or employ a local agent to manage on your behalf
Protect yourself! What you need to cover...
The process of putting together a contract for a freelancer is similar to how you may go about it elsewhere in the world, but the devil's in the detail...
The following areas should always be crystal clear, written in Chinese, with little room for misinterpretation, paying particular attention to:
- Agreement length
- Working times/locations
- Duties expected
Leaving any grey areas puts you at risk of a dispute later down the line. If you're unfamiliar with the local culture and employment norms, it's always advisable to work closely with a Chinese HR expert to ensure your contract is watertight, particularly when translating requirements from another language to Chinese.
Cutting corners here could end up being incredibly costly later on during a dispute.
What are the major differences compared to the UK?
1. The employer must withhold individual income tax for freelancer and declare monthly to the Chinese Tax Bureau, paying the net value to the employee
2. There is no obligation for the employer to pay social security
Compared to the UK, freelancers in China do not have to process their own income tax and self declare, this is the responsibility of the employer.
Unlike when employing a full-time, permanent employee with a Labour Contract, an employer can choose not to pay any additional social security.
The freelancer in China will usually receive no other benefits that a full-time employee would, including annual leave entitlement or insurance from the employer, not too dissimilar to western arrangements. If they wish, social security or commercial insurance can be purchased privately.
The key to hiring a freelancer successfully in China
1. Get the right contract type in place
2. Set out a clear description of the role
3. Lean on trusted, local support where needed
Leave nothing to chance and avoid needless HR firefighting that only serves to distract you from the task at hand - growing your business in China.