The two-year minimum contract term belongs to labor dispatch, not to every arrangement sold as EOR. Structure decides which rules apply.
One common misunderstanding in China hiring: if a service provider employs a worker on your behalf, must the employment contract always last at least two years? The short answer is no.
The key question is whether the arrangement legally constitutes labor dispatch or another employment service structure. That question is answered by the actual contractual relationships and day-to-day operation, not by the label on the proposal.
Under Article 58 of China's Labor Contract Law, a labor dispatch agency must enter into a fixed-term labor contract of at least two years with a dispatched worker and pay the worker monthly. Article 59 separately requires the dispatch agency to sign a labor dispatch agreement with the company receiving the dispatched worker.
In other words, the two-year requirement concerns the employment contract between the dispatch agency and the dispatched worker. It should not automatically be treated as a universal contract-duration requirement for every arrangement marketed as EOR.
EOR is a commercial service term, not a standalone employment category expressly defined under that name in the Labor Contract Law. The legal analysis depends on the actual employment structure, the contractual relationships and the operational arrangements.
Labor dispatch is also subject to specific statutory restrictions. Under Article 66, dispatched workers are generally limited to temporary, auxiliary or substitute positions. For employers this means that checking the contract term alone is not enough; the underlying employment model has to be examined too.
Before engaging a China workforce provider, review these four points.
The two models carry different restrictions, different liability profiles and different termination mechanics. A provider that answers a question about contract length with a single number has answered the wrong question.
The practical test is whether the provider can explain, in writing, which entity employs the worker, which statutory category the arrangement falls into, and what happens on termination. That documentation is also what you will need if the relationship is ever challenged.
The two-year rule is real, but its application depends on the legal structure. International companies should not choose an employment model based on a service label or a single contract-duration rule. Understand the structure first, then assess which legal requirements apply.
This article is a legal explainer, not a report of a client case. Individual circumstances and local implementation may affect the analysis; consult qualified China employment counsel before making decisions.
Rowint is your China expansion partner, helping international companies build, manage and grow teams in China. With local support from Shanghai since 2012, we bring together China Recruitment, Employer of Record (EOR), PEO, and China Entity and Finance services. Our EOR offering covers employment contracts, payroll and individual income tax, social insurance, benefits and leave, and employee lifecycle administration, helping companies hire in China without setting up their own local entity. If any of this sounds familiar, reach out to us for a free compliance check-up at rowint.com.
Rowint supports international companies with China recruitment, EOR employment, PEO outsourcing and entity & finance services — from Shanghai, Suzhou, Nanjing, Hangzhou, Wuxi, Changzhou and Beijing.
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