10 Things You Need to Know About China Employment and Labor Laws
Are you considering expanding your business operations into China by hiring Chinese employees? With a population of over 1.4 billion people and a rapidly growing economy, China offers exciting possibilities for employers. However, foreign companies need to have a solid understanding of Chinese laws so labor disputes don’t arise.
From employment contracts to minimum wage, this guide highlights some of the most important aspects of Chinese labor and employment laws that every employer should know so you can tap into the Chinese talent pool with confidence.
1. Employment laws vary by region
Always check local labor laws when you hire a Chinese employee, as labor laws may vary depending on where they’re based. For example, if you hire two full-time Chinese employees who live in different provinces, you may be bound to different minimum wage rates. That's because minimum wage is determined on the local level depending on that area’s level of economic development and cost of living.
2. Any employees need an employment contract
Written employment contracts are mandatory for both full-time and part-time employees, per Chinese labor law. These contracts should outline all the terms of employment, including the employee’s role and duties, your company’s termination policy, employee benefits, and more.
Foreign companies hiring Chinese employees should supply the labor contract in English (or your local language) as well as Standard Chinese—and the meaning should be consistent across the document versions so there are no disputes over mistranslations. Your employees should read and sign the contract before they begin work.
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Take our FREE quiz3. At-will employment doesn’t exist in China
China’s labor laws stipulate that employees can’t be terminated at will, meaning that they can’t be fired without fault. In cases where termination is without fault—for example, if an employee can no longer complete their tasks due to illness or an injury—employers must give 30 days written notice or pay a month of wages instead of the notice, plus severance.
4. Z visas are the most common visa for foreigners working in China
In China, the Z visa is for those planning to stay and work in the country for more than six months. Qualified Z visa applicants must be between the ages of 18 and 60, be in good health, have valid travel documents, have no criminal record, and have a valid job offer in China.
5. NDAs may be unenforceable in China
Though US-style NDAs might not be enforceable in China, non-disclosure/non-use/non-circumvention agreements (NNNs or NNAs) are useful contracts to protect trade secrets, proprietary information, and confidential information. NNNs also protect employers from “behind the back” tactics where an employee might sell information to a competitor or use knowledge from their role to create a cheaper alternative to compete with your business.
6. If you fail to offer benefits, you’ll be hit with fines, penalties, and legal consequences
Employers are obligated to contribute to social insurance schemes covering pensions, medical care (including maternity care), work-related injury insurance, unemployment, and maternity benefits for their employees. Chinese employees also must get public holidays off. Those who have more than a year of tenure are owed paid time off or vacation days, depending on how long they’ve worked for their employer.
As part of social security insurance, maternity insurance is lumped under basic medical care insurance in Chinese cities. Female employees get 98 days' maternity leave, plus 15 to 30 days if complications arise or additional medical treatment is needed. Note that local laws may require longer maternity leave.
7. You must safeguard employee data
Employee data is protected under the Labor Contract Law of the People’s Republic of China (PRC) and the Personal Information Protection Law of the PRC. Employers can only obtain information from employees that is relevant to the job and must adequately protect their personal information, maintain confidentiality, and only use the data for legitimate, work-related purposes.
8. Protecting your intellectual property is critical
Though it’s critical to protect your IP worldwide, it’s especially important in China. Per a 2023 report from the Office of the US Trade Representative, China leads globally for counterfeit, pirated, and infringing products. E-commerce platforms like WeChat, Aliexpress (from Alibaba), and Baidu Wangpan sell counterfeit goods, as do Chinese markets.
9. You must compensate employees for overtime
Per Chinese labor law, employees should work a typical five-day work week, and shouldn’t work for more than 8 hours per day or 44 hours per week. Overtime is limited to 36 hours per month unless there’s a temporary work emergency. Overtime should always be compensated. On normal workdays, the minimum overtime pay is 150% of the standard hourly rate. On rest days, overtime should be paid out at 200%. Overtime should be paid out at 300% for statutory holidays.
10. Fail to maintain a safe workplace and you could be fined millions
Employers are responsible for creating and maintaining safe working conditions—and those who put workers at risk face hefty fines. Under China’s Law on Workplace Safety, safety violations can result in fines of 20,000 to 50,000 RMB (about $2,800 to $7,000 USD), and workplace accidents can result in fines of up to 100 million RMB (approximately $14 million USD).
Frequently asked questions about Chinese labor laws
What are the minimum wages in China?
In China, the minimum wage varies and is set at the local level depending on that region’s level of economic development. For example, in mid-2023, Shanghai had the country’s highest monthly minimum wage at 2,690 RMB (approximately $370 USD) per month, while Beijing had China’s highest hourly minimum wage at 25.30 RMB (approximately $3.50 USD) per hour. Meanwhile, in Hong Kong, a special administrative region of the People’s Republic of China, the minimum wage for that period was 40 Hong Kong dollars per hour (approximately $5.10 USD).
What are the overtime laws in China?
China is on a five-day work week. Unless your employee has agreed to work overtime, they shouldn’t work for more than 8 hours/day or 44 hours/week. China limits overtime to 36 hours/month. Overtime remuneration is as follows:
- Overtime on regular workdays: 150% of usual pay
- Overtime on rest days: 200% of usual pay
- Overtime on statutory holidays: 300% of usual pay
Note that Chinese contractors are not subject to overtime pay, as they are not employees and they determine their working hours.
If that sounds tricky to monitor, Rippling EOR will automatically track hours and give your Chinese employees the correct overtime rate—no matter their city or province.
What are the required benefits in China?
All full-time Chinese employees are entitled to the following benefits:
- Social security insurance, which covers pension, unemployment insurance, medical insurance, maternity insurance, and work-related injury insurance
- Housing fund contributions
- Vacation entitlements (which vary depending on the years of tenure)
- Public holidays
- Sick leave (which varies depending on the years of tenure)
While Chinese workers are covered by the government’s basic health insurance, it’s common for employers to offer supplementary, comprehensive medical and dental plans. Employers may also choose to supply life insurance or additional paid time off.
For more information on employee benefits in China, read our guide.
How do I terminate Chinese employees?
Because China does not allow for at-will termination, there are only a few ways to terminate an employee:
Termination during probationary periods. In China, the maximum probationary period for a non-fixed-term contract is 6 months for non-managerial positions and 12 months for managerial positions. Even during probation periods, there must be a reason for the termination and the employee must get sufficient notice, though they are not owed severance. Some reasons for termination during probation include:
- Not meeting their job requirement or incompetence in their role even after a job transfer
- Violating company rules and regulations
- Committing a crime
- Taking a second job and, by doing so, harming the original employer’s interests
- Inability to work due to sickness/injury
- Committing fraud to get their labor contract
Termination by mutual agreement. In this scenario, the employee and employer agree to part ways. Employees are owed severance.
Unilateral termination with lawful cause. If an employee has violated your terms of employment or behaved inappropriately in the workplace, you can terminate them without severance pay. This is only allowed if the employee has seriously violated company rules, is convicted of a crime, causes the employer to suffer a serious loss, signed their contract under false assumptions, lies, or coercion, or if they take a role elsewhere and, by doing so, might damage their employer. If the employee is in a labor union or a trade union, employers need to notify the union about their termination.
Termination with 30 days’ notice. This can only be employed if an employee can’t work due to being sick or hurt, is incompetent in their role, or if their labor contract can’t be fulfilled due to an unforeseen change. In this situation, the employee would be owed 30 days of notice or a month of compensation, plus severance.
Mass layoffs are legal in China if an employer needs to cut upwards of 20 employees or if there are fewer than 20 employees who need to be let go but the loss comprises more than 10 percent of their workforce. In China, mass layoffs are allowed if the employer undergoes restructuring, has serious production or business difficulties, or undergoes massive upheaval in terms of production, technology, or operations.
Automatic termination upon the employer’s bankruptcy, dissolution, or revocation of their license. In this case, employees are still owed severance.
China offers special protection from termination for employees who have or are suspected to have an occupational disease, are seeking medical treatment, are pregnant/on maternity leave/nursing a baby, or have a tenure of more than 15 years with the employer and are less than five years from retirement age.
Want to know more about terminations in China? Read our guide.
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Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.
