Understanding China employment law is essential for foreign companies hiring employees, managing local teams, or expanding operations in China. The country has a comprehensive employment framework covering contracts, wages, working hours, social insurance, leave, termination, and employee protection.
For foreign employers, compliance can be more complicated because employment requirements may interact with national laws, local regulations, city-level contribution rules, and evolving judicial interpretations.
In 2026, employers should pay particular attention to minimum wage updates, the gradual retirement-age reform, new rules affecting workers above statutory retirement age, social insurance compliance, and the Supreme People’s Court’s updated guidance on employment disputes.
This guide explains the key China employment law requirements foreign companies should understand before hiring and managing employees in China.
What Foreign Companies Need to Know About China Employment Law in 2026
China employment law is based on national legislation but is also influenced by local implementation and administrative requirements.
For foreign companies, the most important areas to manage include:
- Written employment contracts
- Fixed-term and open-ended employment
- Probation periods
- Minimum wage requirements
- Working hours and overtime
- Salary payment
- Social insurance
- Housing provident fund
- Statutory leave and public holidays
- Termination and severance
- Foreign employee work authorization
- Employment dispute management
A company may therefore be compliant with one national requirement while still needing to verify additional local requirements in the city where an employee works.
Featured Snippet: What Are the Main Employment Laws in China in 2026?
China employment law requires employers to comply with rules covering written employment contracts, wages, working hours, overtime, social insurance, leave, termination, and employee protection. Foreign companies must also verify local requirements because minimum wages, social insurance contribution bases, and administrative procedures can vary by location.
Major China Employment Law Changes in 2026
Several developments are particularly relevant to employers in 2026.
1. Retirement Age Reform Is Being Implemented Gradually
China began implementing a gradual increase in statutory retirement ages from January 1, 2025.
Over a 15-year transition period:
- The statutory retirement age for men will gradually increase from 60 to 63.
- The statutory retirement age for women whose previous statutory retirement age was 55 will gradually increase to 58.
- The statutory retirement age for women whose previous statutory retirement age was 50 will gradually increase to 55.
The change is gradual rather than an immediate move to the final retirement ages. China also introduced flexible retirement arrangements under the new framework.
For foreign companies, this means retirement and workforce planning should no longer rely on the previous fixed retirement-age assumptions.
2. New Rules Protect Workers Above Statutory Retirement Age
A major 2026 development is the Interim Provisions on the Protection of Basic Rights of Workers Above Statutory Retirement Age.
The regulation was issued on May 10, 2026 and took effect on July 1, 2026.
It applies to employers in China that engage workers above the statutory retirement age where those workers are subject to the employer’s management and perform paid work.
The regulation addresses areas including:
- remuneration
- minimum wage
- working hours
- rest and leave
- occupational safety
- work-related injury protection
- rights and responsibilities between employers and workers
Employers should therefore review how they engage older workers rather than assuming that reaching statutory retirement age automatically eliminates all employer obligations.
3. Supreme People’s Court Employment Dispute Interpretation
The Supreme People’s Court issued Interpretation II on Several Issues Concerning the Application of Law in the Trial of Labor Dispute Cases, which took effect on September 1, 2025.
The interpretation addresses several areas relevant to employers, including:
- employment relationships
- social insurance disputes
- mixed or affiliated employment arrangements
- subcontracting and illegal outsourcing arrangements
- non-compete issues
- employer liability
Importantly, the interpretation states that an agreement or undertaking to avoid legally required social insurance contributions is invalid.
Foreign companies should therefore avoid treating social insurance as an optional employee benefit simply because an employee agrees to a different arrangement.
4. Minimum Wage Requirements Continue to Vary by Locality
China does not operate on one single nationwide monthly minimum wage applicable to every city.
Local governments establish minimum wage standards within the national framework.
For example, Beijing’s monthly minimum wage was increased from RMB 2,420 to RMB 2,540, effective September 1, 2025. Its non-full-time hourly minimum wage was set at RMB 27.7.
Shanghai’s monthly minimum wage was increased to RMB 2,740, effective July 1, 2025, while its non-full-time hourly minimum wage was set at RMB 25.
Foreign employers should therefore verify the applicable minimum wage in the employee’s actual work location rather than applying one national figure.
Employment Contracts in China
Written employment contracts are a central requirement under China’s Labor Contract Law.
The law provides that an employment relationship should be established through a written labor contract and that, where a contract is not concluded at the start of employment, it should generally be concluded within one month from the date employment begins.
Written Employment Contracts
A China employment contract should clearly define important terms such as:
- Employer and employee information
- Job position
- Work location
- Contract term
- Compensation
- Working hours
- Rest and leave
- Social insurance
- Labor protection
- Contract termination conditions
Foreign companies should avoid simply translating an overseas employment agreement into Chinese and assuming it will automatically satisfy local requirements.
Fixed-Term Employment
China recognizes fixed-term employment contracts.
A fixed-term contract specifies the agreed termination date and may be appropriate for certain employment arrangements.
However, employers should carefully monitor contract renewals and the circumstances under which an employee may have rights relating to an open-ended employment contract.
Open-Ended Employment
An open-ended employment contract does not specify a fixed termination date.
The circumstances in which an employee may become entitled to an open-ended contract depend on statutory conditions and the employee’s employment history.
Foreign employers should therefore review renewal decisions before a fixed-term contract expires rather than treating each renewal as a purely administrative process.
Probation Period
Probation is permitted under China’s employment framework, but its maximum length depends on the term of the employment contract.
Employers should specify the probation period and applicable compensation and performance requirements clearly in the employment contract.
Using probation as an informal way to avoid employment protections can create significant compliance risk.
China Minimum Wage 2026
Minimum wage is one of the most important issues for foreign companies employing local staff in China.
The applicable minimum wage depends on the relevant locality and employment arrangement.
Beijing Minimum Wage
Beijing’s current monthly minimum wage is RMB 2,540, effective September 1, 2025.
The city’s non-full-time hourly minimum wage is RMB 27.7 per hour.
Importantly, Beijing’s rules specify that certain payments, including overtime pay and several types of allowances, are not counted as part of the monthly minimum wage.
Shanghai Minimum Wage
Shanghai’s current monthly minimum wage is RMB 2,740, effective July 1, 2025.
The non-full-time hourly minimum wage is RMB 25 per hour.
Shanghai also specifies that overtime pay and certain allowances are excluded from the monthly minimum wage calculation.
Why Minimum Wage Differs Across China
Foreign companies should not assume that Beijing, Shanghai, Shenzhen, Guangzhou, or other cities have identical minimum wage requirements.
Before onboarding an employee, employers should verify:
- The employee’s actual work location
- Whether the employment is full-time or non-full-time
- The applicable local minimum wage
- Whether specific allowances can be counted toward the applicable threshold
- Current local regulations and effective dates
This is particularly important for companies operating across multiple Chinese cities.
Does Minimum Wage Apply to Foreign Employees?
Foreign employees should not be treated as automatically outside China’s employment compliance framework.
The applicable employment, immigration, compensation, and social-security requirements depend on the employee’s status and circumstances.
For foreign employees working in China, companies should review employment documentation, work authorization, compensation arrangements, and applicable local requirements together rather than treating minimum wage as an isolated issue.
Working Hours, Rest Days & Overtime in China
Working hours and overtime are major sources of employment disputes.
Foreign companies should establish clear policies for working schedules, overtime authorization, time recording, and compensation.
Standard Working Hours
A common standard working arrangement is based on an eight-hour working day and a 40-hour working week.
However, China also recognizes different working-hour systems for certain jobs and circumstances.
Employers should therefore determine which working-hour system applies to the employee rather than automatically applying one schedule to every position.
Overtime Rules
Overtime compensation depends on when the overtime occurs and the applicable circumstances.
Common statutory overtime rates include:
- At least 150% of normal wages for qualifying overtime on ordinary working days
- At least 200% for qualifying work on rest days where compensatory time off is not provided
- At least 300% for work on statutory public holidays
Employers should maintain accurate attendance and overtime records and ensure that overtime is managed within applicable statutory limits.
Rest Days and Public Holidays
China’s public holiday arrangements include statutory holidays as well as adjusted working and rest days announced by the government.
For 2026, employers should use the official annual holiday schedule when planning payroll, staffing, overtime, and leave.
This distinction matters because an adjusted working day is not necessarily the same thing as a statutory public holiday.
Wage Payment Rules in China
Employment compliance is not limited to paying employees at least the applicable minimum wage.
Employers should also establish reliable processes for salary calculation and payment.
Salary Payment
Employment contracts should clearly specify compensation and payment arrangements.
Companies should maintain consistent payroll records showing:
- Base salary
- Overtime
- Allowances
- Bonuses where applicable
- Deductions
- Employee social insurance contributions
- Other legally required payroll items
Wage Deductions
Employers should be careful when making deductions from employee compensation.
Unclear or unsupported deductions can create disputes, particularly when the employment contract, company policy, and actual payroll practice are inconsistent.
Bonuses and Allowances
Chinese employment packages may include components beyond base salary, such as:
- Performance bonuses
- Attendance incentives
- Transportation allowances
- Housing-related allowances
- Meal allowances
- Other contractual benefits
Foreign companies should clearly define whether these payments are contractual, discretionary, fixed, variable, or conditional.
Payroll Documentation
Payroll records should align with the employment contract and applicable local requirements.
This is one reason why foreign companies often use structured payroll and HR services rather than managing Chinese payroll entirely through an overseas finance team.
Social Insurance & Housing Provident Fund
Social insurance is an important employer obligation in China.
The framework includes several forms of social insurance, while housing provident fund requirements operate through a separate system.
Five Social Insurances
China’s employee social insurance framework generally includes:
- Pension insurance
- Medical insurance
- Unemployment insurance
- Work-related injury insurance
- Maternity insurance
Employer and employee contribution rates and bases can vary by locality.
Housing Provident Fund
The housing provident fund is separate from the five social insurance programs.
Contribution requirements, contribution bases, and applicable local rules should be verified in the relevant city.
Contribution Bases Vary by City
Foreign companies should avoid using one national contribution percentage as a universal payroll rule.
Instead, payroll teams should verify:
- Local contribution rates
- Contribution base
- Minimum and maximum contribution bases
- Employer contribution
- Employee contribution
- Effective dates
- Local registration procedures
This is particularly important for companies employing people in multiple cities.
Foreign Employee Social Insurance
Foreign employees working legally in China may be subject to social insurance requirements depending on their circumstances and applicable rules.
Companies should review the employee’s nationality, work location, employment structure, immigration status, and any applicable social-security arrangements before determining whether contributions are required.
Employee Leave & Benefits in China
China provides statutory leave and employee benefit protections that employers need to incorporate into payroll and workforce planning.
Annual Leave
Employees who have worked continuously for at least one year are generally entitled to paid annual leave.
The standard statutory entitlement is:
- 5 days for cumulative service of 1 to less than 10 years
- 10 days for cumulative service of 10 to less than 20 years
- 15 days for cumulative service of 20 years or more
Statutory public holidays and rest days are not counted as annual leave days.
Sick Leave and Other Leave
Leave requirements may include sick leave, maternity-related leave, marriage leave, family-related leave, and other statutory or locally regulated leave.
Because some leave requirements can be affected by local rules, foreign companies should verify the applicable requirements in the employee’s location.
Public Holidays
China’s annual holiday schedule includes statutory holidays and government-designated adjusted working days.
Payroll and HR teams should use the official annual schedule when calculating holiday work, overtime, and employee leave.
Termination & Severance in China
Termination is one of the highest-risk areas of China employment law.
Foreign companies should not assume that an employment contract can be terminated simply because the employee is underperforming or the business wants to reduce headcount.
Lawful Termination
Termination must be based on legally recognized grounds and follow applicable procedural requirements.
Depending on the circumstances, employers may need to consider:
- Employee performance
- Misconduct
- Contract expiration
- Business restructuring
- Economic redundancy
- Mutual agreement
- Notice requirements
- Statutory compensation
Severance Pay
China’s statutory severance framework generally uses an employee’s length of service and applicable monthly wage as key elements of the calculation.
A simplified starting point is generally one month’s salary for each completed year of service, with proportional treatment for partial years under the applicable rules.
However, statutory salary bases, caps, and special circumstances can affect the actual calculation.
Foreign employers should therefore have a local HR or legal professional verify the calculation before issuing a termination notice.
Unlawful Termination
Improper termination can expose an employer to significant financial and legal risk.
Potential consequences can include:
- Severance-related liability
- Compensation for unlawful termination
- Reinstatement-related disputes
- Arbitration
- Litigation
- Additional administrative or compliance consequences
The safest approach is to document the employment issue before taking termination action.
Mass Layoffs
Economic layoffs and workforce reductions can trigger additional statutory procedures.
Companies considering significant headcount reductions should review:
- Employee selection criteria
- Business justification
- Consultation requirements
- Union involvement where applicable
- Government notification or reporting requirements
- Severance
- Documentation
Foreign companies should obtain local employment advice before executing a large-scale workforce reduction.
Hiring Foreign Employees in China
Foreign employee compliance involves more than signing an employment contract.
A foreign employee may require appropriate work authorization and residence documentation before legally working in China.
Work Authorization
Employers should verify the employee’s:
- Eligibility
- Work permit requirements
- Employment position
- Employer information
- Work location
- Residence documentation
- Relevant renewal requirements
Employer Responsibilities
Foreign employees should be managed under a coordinated HR and immigration process.
The employment contract, payroll, work authorization, tax treatment, and employee documentation should be consistent.
This is particularly important when a foreign employee is transferred between group companies or cities.
China Employment Compliance Checklist for Foreign Companies
Before hiring or managing employees in China, foreign companies should review:
Before Hiring
- Confirm the employing entity
- Confirm employee work location
- Determine the applicable local employment rules
- Prepare a compliant employment contract
- Verify compensation against applicable minimum wage
- Determine social insurance requirements
- Determine housing provident fund obligations
- Confirm foreign employee work authorization where applicable
During Employment
- Maintain employment records
- Process payroll correctly
- Track working hours and overtime
- Maintain leave records
- Pay required social insurance contributions
- Review local minimum wage changes
- Keep employee policies updated
- Maintain accurate personnel documentation
Before Termination
- Confirm the legal basis for termination
- Review the employment contract
- Review employee records
- Calculate statutory compensation
- Follow applicable notice and procedural requirements
- Document the termination process
- Obtain local employment advice where risk is significant
Business Perspective
For foreign companies, China employment compliance is not simply an HR administration issue.
The biggest risk often comes from the gap between the employment policy approved by headquarters and the employment practices actually used by the local team.
A global employment contract may look comprehensive but still fail to address local requirements around social insurance, minimum wage, overtime, termination, or employee documentation.
Companies entering China should therefore design their employment model around the actual location, workforce structure, and local compliance requirements from the beginning.
This becomes particularly important when the company starts with a small team and later expands across multiple Chinese cities.
Expert Insight
The most effective approach for a foreign company is to treat employment compliance as an operating system rather than a collection of individual HR documents.
The employment contract, payroll, employee handbook, working-hour records, leave records, social insurance, and termination procedures should all tell the same story.
If the contract says one thing, payroll does another, and the company’s internal policy says something else, the employer becomes significantly harder to defend during a dispute.
Common China Employment Compliance Mistakes
Using a Generic International Employment Contract
A contract designed for another country may not address China’s employment requirements.
Foreign companies should use employment documentation designed for the Chinese employment environment.
Applying One Minimum Wage Across China
Beijing, Shanghai, and other localities can have different minimum wage requirements.
Companies operating across multiple cities should maintain location-specific payroll rules.
Treating Social Insurance as Optional
Employees cannot simply waive legally required social insurance obligations through a private agreement.
The Supreme People’s Court’s 2025 employment dispute interpretation specifically addresses the invalidity of arrangements intended to avoid legally required social insurance contributions.
Ignoring Local Rules
China’s national employment framework is only part of the compliance picture.
Foreign companies should also monitor local requirements affecting wages, social insurance, leave, payroll, and administrative procedures.
Terminating Employees Without Documentation
A termination decision without sufficient supporting documentation can create significant dispute risk.
Employers should document performance issues, disciplinary matters, business reasons, consultations, and relevant decisions before taking action.
Assuming Retirement Ends Every Employer Obligation
The 2026 rules on workers above statutory retirement age demonstrate why employers should review the actual employment relationship and applicable protections rather than relying on assumptions based solely on age.
When Should a Foreign Company Consider an EOR in China?
An Employer of Record can be considered when a foreign company needs to employ workers in a market without immediately establishing or operating its own local employment infrastructure.
An EOR model can help companies manage areas such as:
- Local employment contracts
- Payroll administration
- Employee onboarding
- Statutory contributions
- HR administration
- Employment documentation
- Local compliance coordination
For companies entering a new market, an EOR can also provide a practical way to test operations before committing significant resources to a full local setup.
However, an EOR does not eliminate the need for appropriate legal, tax, immigration, and employment compliance. The employment model should be selected based on the company’s actual activities and long-term expansion plans.
Companies evaluating employment models can also compare Employer of Record, HR outsourcing, and direct local employment before deciding how to structure their workforce.
FAQ
What are the main employment laws in China in 2026?
China employment law covers employment contracts, wages, working hours, overtime, social insurance, leave, termination, employee protection, and employment disputes. Foreign companies must also consider local requirements that may vary between cities.
What is the minimum wage in China in 2026?
China does not have one universal monthly minimum wage for every locality. Minimum wage standards are determined locally. For example, Beijing’s monthly minimum wage is RMB 2,540 and Shanghai’s is RMB 2,740 under their current published standards.
What is the minimum wage in Beijing?
Beijing’s monthly minimum wage is RMB 2,540 under the standard effective from September 1, 2025. The non-full-time hourly minimum wage is RMB 27.7.
What is the minimum wage in Shanghai?
Shanghai’s monthly minimum wage is RMB 2,740, effective from July 1, 2025. The non-full-time hourly minimum wage is RMB 25.
How many hours can employees work in China?
A common standard working arrangement is eight hours per day and 40 hours per week, but different working-hour systems may apply to certain employees and industries.
How is overtime paid in China?
Common statutory overtime rates include 150% for qualifying overtime on ordinary working days, 200% for qualifying work on rest days where compensatory leave is not provided, and 300% for work on statutory public holidays. The applicable circumstances should be verified before calculating payroll.
Can foreign companies hire employees in China without a local entity?
The answer depends on the employment structure and the activities the company intends to conduct in China. Companies that do not have an appropriate local employing structure may consider an EOR or another compliant employment arrangement after reviewing their legal, tax, immigration, and business requirements.
What happens if an employee is terminated unlawfully?
An unlawful termination can expose an employer to compensation, reinstatement-related disputes, arbitration, litigation, and other liabilities. Employers should review the legal basis and documentation before terminating an employee.
Do China employment rules apply differently in different cities?
Yes. National employment legislation provides the core framework, while local governments and authorities may establish or administer requirements affecting minimum wage, social insurance, housing provident fund, leave, and other employment matters.
Conclusion
China employment law in 2026 requires foreign companies to manage more than employment contracts alone.
Employers need to coordinate contracts, payroll, minimum wage, working hours, overtime, social insurance, leave, termination procedures, and foreign employee requirements within a consistent compliance framework.
The gradual retirement-age reform, new protections for workers above statutory retirement age, updated judicial guidance on employment disputes, and continuing local wage differences make regular compliance reviews increasingly important.
For foreign companies, the safest approach is to verify requirements based on the employee’s location, employment structure, and actual business activities rather than relying on generic international HR policies.
Why Businesses Choose BigFish Global Consulting
BigFish Global Consulting helps foreign companies navigate employment, HR, payroll, recruitment, legal, finance, tax, and immigration requirements when expanding into Indonesia and Southeast Asia.
Our team supports international businesses that need practical local assistance without building every function internally from day one.
Our services include:
- Employer of Record
- Payroll management
- HR hosting and administration
- Recruitment and executive search
- HR consulting
- Legal and compliance services
- Visa and immigration support
- Finance and tax services
For companies expanding from China or other international markets, our Mandarin-speaking and multilingual support can help bridge the gap between headquarters and local operations.
If your company is evaluating a new market, hiring its first employee, or building a larger regional workforce, the right employment structure should be considered before the hiring process begins.
