An HR compliance audit in China should test what the workforce records show against how work is actually organised. Start by defining the employing entities, cities, worker populations, audit period and transaction context, then reconcile contracts, payroll, time, social-insurance and personnel-system data.
Local rules matter. Minimum wages, social-insurance bases, leave, working-time approvals, payroll practices and enforcement can differ by location, so a national checklist must be converted into an entity-by-city control matrix.
Subject to editorial and legal review. This guide provides an audit framework, not a universal compliance conclusion. Confirm current national and local rules for every employing entity and work location.
Set scope and governance
Define entities, sites, headcount, worker types, audit period, risk triggers and materiality. Identify the legal employer, actual manager, payroll payer, social-insurance account and data-system owner. Establish privilege and reporting protocols where available, preserve relevant records, and agree how urgent violations will be escalated.
Build the workforce population
Reconcile the employee roster across contracts, payroll, tax, social insurance, housing fund, attendance, access-control and finance records. Segment fixed-term, open-term, probationary, part-time, dispatched, outsourced, intern, retiree, foreign and remote personnel. Investigate anyone performing employee-like work outside the official roster.
Employment contracts
Check timely written contracts, required terms, signatures, copies delivered to employees, renewals, open-term entitlement, probation limits, job and location changes, confidentiality, training-service periods and restrictive covenants. Sample actual duties and reporting relationships against the documents rather than reviewing templates alone.
Policies and employee consultation
Inventory rules affecting pay, hours, leave, discipline, performance, monitoring and termination. Confirm lawful employee-representative or union consultation where required, internal approval, publication or individual acknowledgement, consistent language versions and evidence of communication. A well-drafted rule may still be unusable if adoption or notice cannot be proved.
Payroll, minimum standards and deductions
Reconcile gross-to-net payroll, wage components, bonuses, allowances, commissions, overtime, leave pay, deductions, individual income tax and bank payments. Test minimum-wage compliance and whether discretionary labels match actual practice. Trace late, off-book or third-party payments and retain complete wage records under applicable rules.
Working time, overtime and leave
Identify the approved working-time system for each role. Compare schedules, attendance, access, travel, messaging and payroll evidence; test overtime calculation and approvals without assuming unapproved work is irrelevant. Review rest days, statutory holidays, annual leave, sick leave, maternity and parental entitlements under national and local rules.
Social insurance and housing fund
Match enrolment, city, contribution base and payment period to each worker and payroll amount. Identify missing months, understated bases, historic transfers and foreign-worker treatment. Employee waivers generally do not eliminate statutory exposure. Quantify principal, late-payment and penalty risks separately and plan correction with local authorities.
Staffing models and third parties
Review labour dispatch, outsourcing, platform, agency, consultant, intern and secondee arrangements against actual control, integration and economic dependence. Check provider qualifications, permitted dispatch roles and headcount restrictions. Recharacterisation can affect wages, benefits, social insurance, termination and joint or direct liability.
Recruitment, equality and background checks
Test advertisements, application forms, medical checks, interview records, algorithms and offers for prohibited discrimination or irrelevant data collection. Limit background checks to job-related, transparent and lawful purposes. Obtain an appropriate processing basis and special consent where required, and control vendors, retention and cross-border access.
Employee data and monitoring
Map HR data from collection through deletion, including sensitive information, biometrics, health, location and disciplinary records. The Personal Information Protection Law permits processing necessary for HR management under lawfully adopted rules or collective contracts, but necessity, transparency, security and other obligations still apply. Review overseas HR platforms and transfer mechanisms.
Performance, discipline and exits
Sample performance plans, warnings, investigations, employee responses, union notification, severance calculations, termination grounds, certificates and transfer of files and social insurance. Compare stated rules with consistent treatment. Quantify reinstatement, double-wage, overtime, severance and wrongful-termination exposure.
Remediation and evidence
Rank findings by employee harm, enforcement likelihood, accumulated liability and transaction impact. Assign owners, deadlines and proof of closure. Correct prospective processes promptly, but assess employee communication, admissions, back payments, tax and social-insurance filings before altering historic documents or records.
Working-file checklist
- Entity, city, workplace and workforce scope.
- Reconciled employee population and exceptions.
- Contract and open-term/probation sample.
- Policy consultation, approval and notice evidence.
- Payroll, hours, overtime and leave reconciliation.
- Social-insurance and housing-fund contribution test.
- Dispatch, outsourcing and contractor classification.
- Recruitment, equality and background-check controls.
- HR data map, vendor and cross-border-transfer review.
- Exit sample, exposure model and remediation tracker.
Official sources
- National People’s Congress: Labor Contract Law
- National People’s Congress: Labor Law
- National People’s Congress: Social Insurance Law
- State Administration for Market Regulation: Labor Security Supervision Regulation
- National People’s Congress: Personal Information Protection Law
Law checked: September 11, 2026. Current national and local employment, payroll, social-insurance and data rules control.
