China Employment Law 2026: A Practical Guide for Foreign Companies

Last updated: [27/10/2026]

Hiring employees in China involves more than preparing an employment contract and setting up payroll. Employers need to consider national labor rules, the employee’s actual work location, the employment arrangement, and local administrative requirements.

This guide explains key employment issues foreign companies should review when hiring and managing employees in China in 2026. It is a general overview, not a substitute for advice on a specific employment arrangement. Local requirements and individual circumstances can affect how the rules apply.

What has changed for employers?

Several developments are relevant to employers planning their workforce in 2026:

• China began a gradual increase in statutory retirement ages on January 1, 2025. The transition will take place over 15 years.
• New interim protections for workers above statutory retirement age took effect on July 1, 2026.
• The Supreme People’s Court’s Interpretation II on labor dispute cases took effect on September 1, 2025. It addresses, among other matters, disputes involving social insurance and employment relationships.
• Local minimum wages and some social insurance and housing provident fund requirements vary by location.

These developments do not replace the broader employment framework. Employers should review them alongside applicable labor laws, local rules, and the facts of each employment relationship.

China employment requirements can vary by location

China has national employment laws, but some employment requirements and administrative procedures are handled locally. The employee’s actual work location can affect minimum wage, social insurance contribution bases, housing provident fund administration, and other requirements.

For example:

• Beijing’s monthly minimum wage increased to RMB 2,540 from September 1, 2025.
• Shanghai’s monthly minimum wage increased to RMB 2,740 from July 1, 2025.

These figures are examples for those cities, not a nationwide minimum wage. Employers should check the current rules for every location where employees work. See the official notices from the Beijing Municipal Human Resources and Social Security Bureau and the Shanghai Municipal Human Resources and Social Security Bureau.

Before an employee starts work, identify:

• Where the employee will actually work
• Which employing entity will sign the contract
• Which local minimum wage and payroll rules apply
• Whether local social insurance or housing fund procedures need to be followed
• Whether the employee is a foreign national and requires work authorization

A company with employees in different cities should not assume that one payroll configuration or local compliance checklist will fit every employee.

Employment contracts

A written employment contract is a central part of the employment relationship in China. Under the Labor Contract Law, if the parties establish an employment relationship but do not sign a written contract at the same time, the contract should generally be concluded within one month from the employee’s start date.

The law specifies required contract matters, including the parties’ information, contract term, work content and location, working hours and rest, remuneration, social insurance, and labor protection.

Employers should make sure that the written terms match the arrangement in practice. A contract translated from a headquarters template may be a useful starting point, but translation alone does not confirm that the document meets applicable Chinese requirements.

Fixed-term and open-ended contracts

China recognizes fixed-term, open-ended, and project-based employment contracts. The appropriate contract type depends on the job, the employment history, and applicable legal requirements.

Contract renewal should not be treated as a routine administrative step. Before a contract expires, employers should review the employee’s contract history and the rules that apply to renewal or continued employment.

Probation

Probation is subject to statutory limits that depend on the contract term. The probation period, compensation, job requirements, and assessment process should be stated clearly and handled consistently with applicable law. It should not be used as a substitute for a lawful performance-management or termination process.

Working hours, rest days, and overtime

China’s standard working-hours system generally provides for eight hours of work per day and an average of 40 hours per week. Alternative working-hour systems may be available for certain work, but employers should confirm whether the required approval or procedure applies.

Under the standard framework, overtime is subject to limits and payment requirements. Article 44 of the Labor Law provides minimum overtime pay rates in specified circumstances:

• At least 150% of normal wages for qualifying extended work hours
• At least 200% for work on rest days when compensatory time off is not provided
• At least 300% for work on statutory holidays

The applicable calculation can depend on the employee’s working-hours system, work schedule, wage basis, and local rules. Employers should keep accurate attendance, overtime approval, and payroll records. For an overview of working-hours rules, see the Shanghai government’s employment guidance.

China’s annual holiday schedule may include both statutory holidays and government-designated adjusted working days. Employers should use the official calendar when planning shifts, leave, and payroll, and should distinguish statutory holidays from adjusted working days.

Wages and payroll

Payroll should reflect the employee’s contract, work location, working hours, and applicable statutory obligations. Depending on the circumstances, payroll may involve:

• Base salary
• Overtime pay
• Bonuses and allowances
• Individual income tax withholding
• Social insurance contributions
• Housing provident fund contributions
• Leave-related payments and deductions

Employers should document whether bonuses and allowances are fixed, conditional, discretionary, or contractual. Payroll records should also be consistent with the employment contract and other HR documents.

Local minimum wages

Minimum wages are set locally and may change over time. The Beijing and Shanghai figures above illustrate why payroll should be checked against the employee’s actual work location. Employers should verify current local rates before setting or changing compensation.

Social insurance and housing provident fund

China’s social insurance system generally includes pension, medical, unemployment, work-related injury, and maternity insurance. Housing provident fund is administered separately. Contribution bases, rates, and procedures may vary by location.

Employers should confirm the applicable registration, contribution, and reporting requirements for each employee and location. Foreign employees may require separate review based on nationality, work location, employment structure, immigration status, and applicable local arrangements.

The Supreme People’s Court’s Interpretation II on labor dispute cases took effect on September 1, 2025. It addresses social insurance disputes, among other issues. A public announcement summarizing the interpretation states that agreements or promises to avoid legally required social insurance contributions may be invalid under the relevant rules. See the National Healthcare Security Administration’s summary.

Annual leave and other leave

Employees who have worked continuously for at least 12 months are generally entitled to paid annual leave. The national entitlement is based on an employee’s cumulative working years:

Cumulative working years	Annual leave entitlement
1 year to less than 10 years	5 days
10 years to less than 20 years	10 days
20 years or more	15 days

Statutory holidays and rest days are not counted as annual leave. The entitlement and administration of other types of leave may depend on national rules, local regulations, and the employee’s circumstances. The State Council’s Regulations on Paid Annual Leave provide the national framework.

Employers should keep leave records aligned with attendance and payroll. They should also check whether local rules provide additional leave rights.

Retirement-age transition and older workers

China began gradually increasing statutory retirement ages on January 1, 2025. Over a 15-year transition, the statutory retirement age for men will increase from 60 to 63. For women in the former categories with retirement ages of 55 and 50, the ages will gradually increase to 58 and 55, respectively. The transition applies according to the relevant schedule; the final ages do not apply to everyone immediately. The official decision on the retirement-age reform describes the phased changes.

Separate interim protections for workers above statutory retirement age took effect on July 1, 2026. They apply to covered situations where an employer hires an over-age worker, manages the work, and provides remuneration. Employers should review the worker’s circumstances and the requirements of the Interim Provisions on the Protection of Basic Rights of Workers Above Statutory Retirement Age.

Employers should not assume that reaching a particular age automatically resolves every employment, workplace-safety, remuneration, or benefit obligation.

Foreign employees

Employing a foreign national in China can involve employment, immigration, tax, payroll, and documentation requirements at the same time. Before the employee begins work, employers should confirm:

• Whether the employee is eligible for the proposed role
• Required work authorization and residence documentation
• The employing entity and work location
• Contract terms and payroll treatment
• Applicable social insurance requirements
• Renewal dates and reporting obligations

These requirements can depend on the employee’s circumstances and the location of work. Employers should verify them with qualified local advisers or the relevant authorities before onboarding.

Termination and severance

Termination should be reviewed against the employment contract, the legal basis, the employee’s history, supporting records, and applicable procedure. The employer’s business reason alone does not determine whether a termination is lawful.

Before taking action, employers should review:

• The contract and renewal history
• Performance or disciplinary records, if relevant
• The legal basis for termination
• Notice and consultation requirements
• Any required employee or government procedures
• Severance and other amounts due
• The employee’s work location and local rules

Severance calculations can depend on length of service, the employee’s wage base, statutory limits, and the reason and circumstances for termination. Employers should verify the calculation and procedure before issuing a notice or agreement.

Large-scale workforce reductions may involve additional consultation, selection, notification, or reporting steps. They should be reviewed as a separate compliance process rather than treated as a series of ordinary individual terminations.

When an EOR or other employment model is being considered

A foreign company evaluating how to employ workers in China should assess the full legal and operational arrangement before selecting a model. The label used by a service provider does not by itself determine who employs the worker or which party carries each responsibility.

Before entering an arrangement, clarify:

• Which entity signs the employment contract
• Who pays the employee and handles payroll
• Who manages the employee’s day-to-day work
• Which party handles tax, social insurance, and HR administration
• How work authorization and local compliance are addressed
• Which responsibilities remain with the client company

The suitable structure depends on the company’s business activities, workforce, and circumstances. Obtain local legal and tax advice before relying on a third-party employment arrangement.

Practical checklist for foreign employers

Before hiring

• Confirm the employing entity and employment arrangement.
• Identify the employee’s actual work location.
• Check local minimum wage and payroll requirements.
• Prepare and review a written employment contract.
• Confirm work authorization for foreign employees.
• Determine applicable social insurance and housing provident fund requirements.

During employment

• Keep contracts, employee records, and payroll data consistent.
• Track attendance, overtime, and leave accurately.
• Process statutory contributions and required filings.
• Monitor local rule changes that affect the employee’s location.
• Document changes to compensation, duties, or work location.

Before termination

• Confirm the legal basis and required procedure.
• Review the contract and employment history.
• Check supporting records and any consultation requirements.
• Calculate notice, severance, and other amounts due.
• Obtain local advice when the legal or financial risk is material.

Frequently asked questions

Conclusion

China employment compliance requires employers to connect the employment contract, work location, payroll, working hours, leave, social insurance, and employee records. The correct approach may differ between employees and locations, so a single headquarters policy should not automatically be treated as a complete local compliance plan.

Foreign companies should verify current local requirements before hiring, review changes when an employee’s role or location changes, and obtain qualified local advice before making high-risk employment decisions.

Need support reviewing your China employment setup?
Contact Big Fish Global Consulting to discuss your workforce requirements.