Employment Laws in China

Contractual Agreements in China

You are required to adhere to labor legislation when preparing and administering employment contracts. To prevent legal sanctions, all employment relationships must be documented in a written contract within a month of recruitment. 

Types of employment contracts in China

Be it a fixed-term, open-ended, project-based, or part-time contract, you must clearly define the terms in writing to maintain legal requirements and effective business operations.

• Fixed-Term Contracts: Set employment duration.
• Open-Ended Contracts: No fixed end date is required after two consecutive fixed-term contracts.
• Project-Based Contracts: Ends upon project completion.
• Part-Time Contracts: Less than 4 hours/day or 24 hours/week, no severance required.

Obligations and rights for both parties in China

China's employment contract law governs employer-employee relations to ensure fairness, openness, and conformity with labor regulations. 

As an employer, you are responsible to:

• Give a written employment contract within one month of hiring.
• Pay wages on time, following overtime pay in China and minimum wage laws.
• Contribute mandatory amounts to pension, medical, unemployment, work injury, maternity insurance, and the housing fund.
• Ensure a safe working place and follow occupational health & safety laws.
• Do not discriminate against gender, race, handicap, or socio-economic background.
• Make suitable notice and compensation payments wherever relevant.

It is your privilege as an employer to:

• Determine roles and responsibilities of work, wage, perks, and work standards.
• Act against misconduct, absenteeism, or underperformance by the labor laws.
• Terminate employees for serious misconduct, poor performance, or business restructuring.
• Impose confidentiality, non-compete, and intellectual property contracts.
• Perform evaluations and appraisals to maintain productivity and efficiency.

Working Hours and Overtime Pay in China

You are required to adhere to the labor and employment law in China, which has strict regulations regarding working hours and overtime compensation: 

Regular working hours in China

• Your workers should not work more than 8 hours a day.
• The total number of working hours in China per week should not exceed 40.
• You should adopt a 5-day workweek with at least one rest (usually Saturday or Sunday).
• You must coordinate employee schedules effectively to remain within the constraints of China working hours while ensuring productivity.

Overtime regulations and compensation in China

If your workers work more than the regular hours, you must extend compensation and benefits per China's overtime laws:

• Remunerate at least 150% of their usual hourly wage for any additional hours worked on a weekday.
• Suppose your workers work on a scheduled day off (Saturday or Sunday) without a compensatory day off. You must remunerate at least 200% of their usual hourly wage.
• If staff work on a public holiday, you must pay them at least 300% of their normal wage, and there is no provision for compensatory leave.

Further, Chinese employment law prescribes: 

• You cannot make staff work over 3 hours of overtime daily.
• The overall overtime per month cannot be more than 36 hours.
• You should also ensure that overtime does not harm the health and welfare of the staff.

Minimum Wage and Compensation in China

You are required to meet government-mandated minimum wage legislation and pay structures. Employees also pay a progressive tax on income from 3% to 45%, while you pay for social security contributions on pensions, medical insurance, and other obligatory benefits. Understanding these provisions helps you effectively manage payroll and remain compliant with employment laws in China. 

China’s Minimum Wage Rate in 2025

You are required to remit salaries in Chinese Yuan (CNY), with the monthly minimum wage in China being CNY 2,420, although this could be different per province:

Factors Affecting Wage Determination in China

The following are some of the most important factors determining China's wage level:

• Regions with better development levels, such as Shanghai and Beijing, offer higher wages because of stronger economies and increased business activity.
• Local governments occasionally determine and revise minimum wage requirements to ensure economic stability, minimize income inequality, and provide equitable pay.
• The minimum wage in China varies according to the demand and supply of skilled labor. Sectors facing a shortage of employees usually provide better compensation to lure talent.

Employee Benefits and Social Security in China

Employment laws in China oblige you to pay mandatory social security benefits to your workers, including payments for different insurance funds and housing funds. These benefits are necessary for compliance and the welfare of employees.

Statutory Benefits in China

Laws in China for employees require you to give the following statutory benefits to employees:

• Pension Insurance – Funds employees' retirement.
• Medical Insurance – Covers employees' basic healthcare and hospitalization costs.
• Unemployment Insurance – Offers financial support during unemployment.
• Work-Related Injury Insurance – Covers medical costs and compensation for work-related injuries.
• Maternity Insurance – Funds maternity leave and childbirth expenses.
• Housing Provident Fund – Assists employees in saving for housing purchases or rentals.

These advantages are obligatory and involve employer and employee contributions, with rates differing by region.

Furthermore, employment laws in China for female employees guaranteed at least 98 days of maternity leave, which is extendable according to local rules. During this time, they receive maternity allowances sponsored by the maternity insurance scheme.

Additional perks and benefits in China

In addition to compulsory contributions, you can provide various other benefits to compete for and hold on to staff:

• Superior medical coverage after the minimum basic medical insurance.
• Monetary bonus based on person or firm performance.
• Professional development opportunity to improve ability and career.
• Counseling facilities for personal as well as professional problems.

Social security contributions and requirements in China

You are mandated to pay into a range of social security funds as part of the total cost to the company:

• 16% to endowment insurance (pension)
• 6.5% to medical insurance
• 0.5% to unemployment insurance
• 0.2%–1.5% to work-related injury insurance
• 0.7% to childbirth insurance, and 
• 5%–12% to the housing provident fund.

Other employer expenses may be applicable, but there is no obligatory severance accrual system other than in the case of particular terminations. Salaries do not incur VAT, so you don't have to include that in payroll expenses.

Vacations and Paid Time Off in China

You will need to give workers statutory paid leave entitlements, such as annual leave, public holidays, and other forms of paid or unpaid time off.

Annual leave entitlement in China

You can frame your company's annual leave policies in China as follows: 

• Annual leave is based on employees' total work experience across all employers, not just their current company.
• For employees with:
  
  • Less than 1 year's work experience – No statutory paid leave.
  • 1–10 years of overall work experience – 5 days of paid leave.
  • 10–20 years of combined work experience – 10 paid days of absence.
  • Over 20 years of overall work experience – 15 days of paid vacation.

• All leaves should be used within the year, either at once or in parts. However, you might need to pay employees for unused days. The employment law in China enforces a fine of 300% of their daily wage for each day of unused leave. 

Public holidays and special leaves in China

You must mark 28 public holidays in China for 2025. Furthermore, you must extend the following special leaves in China:

Termination and Severance in China

Terminating an employee legally should be done according to rigid legal guidelines to prevent conflict. Below is what you should know: 

Grounds for Termination in China

Terminations are done under different circumstances, but you must adhere to notice periods, severance pay, and labor regulations. China employment law on termination allows you to terminate an employment contract under the following circumstances:

• The employee quits voluntarily after giving due notice.
• Both you and the employee mutually decide to end the contract.
• You may terminate an employee for not satisfying job expectations, but you have to give a 3-day notice in the event of termination without cause.
• You can terminate an employee because of:
  
  • Misconduct (e.g., stealing, dishonesty, or policy breaches)
  • Performance Issues (following documented warnings and training)
  • Absence Without Leave (absence without leave for an extended period)
  • Termination Without Cause (Severance Pay Required)

• Sometimes, you have to dismiss an employee for business grounds, and you are required to pay severance pay:
  
  • If your organization is restructuring, downsizing, or facing financial problems (legal justification is required).
  • If the employee cannot perform their work despite training or transfer.
  • If you choose not to extend a fixed-term contract.

• You are allowed to terminate an employee without severance pay if they:
  
  • Have serious misconduct (e.g., fraud, theft, or tarnishing company image).
  • Systematically fail to meet performance standards despite retraining and warnings.
  • Break company policies or injure your business.
  • Employ elsewhere without your authorization (dual employment).
  • Get convicted of a crime.
  • Restricted Termination (Prohibited)

• You are not allowed to dismiss employees who are:
  
  • On maternity leave or sick leave.
  • Under a protected period of contract according to labor laws.

Notice period and severance pay in China

When terminating an employee, always ensure proper documentation, notice periods, and compliance with Chinese labor laws to avoid legal risks.

Discrimination and Equal Opportunity in China

You are also mandated to give an equitable and diverse workplace under employment discrimination laws in China.

Prohibitions against workplace discrimination in China

You can't discriminate on the grounds of:

• Equal opportunity for career growth must be available for men and women.
• Workers of every ethnicity must receive equal treatment.
• A person's religious beliefs may not be considered when making an appointment, promoting, or terminating employment.
• Reasonable adjustments need to be made for employees who have a disability.
• It is not permissible to fire or deny someone employment based on their health status.
• All employees from varying areas should be treated equally.
• If certain job functions call for age restrictions, it is not permitted to discriminate based on age.

Furthermore, you owe certain duties under employment laws in China: 

• Apply equitable hiring, employment, and promotion procedures.
• Provide employees with equal remuneration who do the same work.
• Offer anti-discrimination training to management and HR staff.
• Implement internal reporting procedures for discrimination complaints.

Breaking anti-discrimination laws can result in legal sanctions, reputational harm, and labor conflicts. 

Maintaining fair employment practices not only keeps you in compliance but also builds a positive work environment. Here is where you can rely on Employer-of-Record [EOR] solutions to stay compliant with employment laws in China.

Health and Safety Regulations in China

You have a legal duty to ensure your workplace is safe and healthy for your staff. Adhering to health and safety standards is necessary to stay away from penalties and maintain workers' well-being in the workplace:

• Furnish required protection equipment, training, and gear to avoid work-related accidents.
• Ensure a safe workplace by removing risk factors and implementing regular health inspections for workers employed in high-risk sectors.
• Create fire safety, evacuation, and first-aid procedures to respond to emergencies properly.
• Regularly conduct safety checks and cooperate with inspections by the authorities.
• Report workplace accidents and injuries immediately to the concerned labor authorities.

Stay Compliant in China with Skuad

Dealing with an expanding workforce could become a concern for you, expanding into new territories in China. This is where Skuad makes it easy. 

You can hire, onboard, and manage staff in China and more than 160 countries without establishing a local entity thanks to Skuad's Employer of Record (EOR) solution. 

Skuad fully covers you under local labor legislation, the tax code, and social security contributions so that you can concentrate on building your business while we take care of the legalese.

Whether you need to hire full-time staff, freelancers, or remote teams, Skuad allows you to easily create and expand a globally dispersed workforce. Book a demo to remain compliant, minimize admin hassles, and confidently grow new markets.

FAQs

What are the employment laws in China?

China's labor laws govern contracts, wages, benefits, work hours, and termination to ensure compliance. Employers are required to provide written contracts, have a 40-hour workweek, and pay overtime compensation. Regional minimum wages differ, with social security payments being compulsory. Termination demands notice and payment of severance. Companies need to adhere to workplace safety and anti-discrimination legislation. 

To simplify recruitment and compliance, Employer of Record (EOR) offerings such as Skuad simplify workforce regulations seamlessly.

Does China have a 5-day work week?

Yes, China employment law prescribes a 5-day work week totaling 40 hours. However, certain industries and occupations might have unique arrangements, such as shift work or flexible working schedules. Most modern businesses outsource HR compliance to EOR solutions. 

What is the minimum wage in China?

Employers are required to remit salaries in Chinese Yuan (CNY). The monthly minimum wage in China is CNY 2,420, although this could be different per province. According to the latest data, Beijing prescribes the highest hourly minimum wage at 26.4 RMB.

Does China have good workers' rights?

China has good workers’ rights, including the right to a safe and healthy workplace, fair compensation, freedom from discrimination, and protection against unfair dismissal. Though China has a legal system to safeguard workers' rights, the overall quality of worker protection is usually uneven and confronts obstacles. 

What is China's employment structure?

China's labor market includes state-owned enterprises (SOEs), private sector employment, contract employment, and an increasing gig economy. Written contracts are required for all employees, and the law strictly dictates wages, benefits, and firing. The manufacturing economy depends heavily on migrant workers, and freelancing and gig work are growing, particularly in technology and e-commerce.