Employment laws in China

China’s employment law framework is primarily governed by the Labor Law of 1994 and the Labor Contract Law of 2008. Both these laws typically establish the foundational rights and obligations of the employers and employees in China. 

Employment laws in China regulate various key aspects of the employment relationship, including mandatory written employment contracts, minimum wage standards, working hours, termination process, and more. 

As China’s economy evolves rapidly, employment legislation emphasises worker protections while balancing the operational needs of both foreign-invested and domestic enterprises. 

In this guide, we will explore the vital employment laws in China, including employment contracts, probation, wages, termination, leaves, and more. 

Also, learn how Payoneer Workforce Management helps in navigating the labor laws in the country, while supporting compliance. 

Key employment laws in China

Here are some of the most important employment and labor laws in China, covering various employment aspects in the country:

Labor Law of the People’s Republic of China (1994)

• This is the foundational legislation governing employment relationships, establishing core principles on working hours, wages, rest periods, dispute resolution,  workplace safety, etc. 

Labor Contract Law of 2008, amended 2012

• One of the most significant employment laws in China, this law mandates written employment contracts for employees within 30 days of hiring. 
• It also mandates severance pay obligations upon employment termination. 
• The law has rules on open-ended, fixed-term, and project-based contracts. 
• It also mandates restrictions on probationary periods. 

Social Insurance Law (2010)

• As per the Social Insurance Law, there are mandatory employer and employee contributions to five social insurance funds.
• These include medical insurance, pension, unemployment insurance, maternity insurance, and work-related injury insurance. 

Work Safety Law 2002, amended in 2021

• The Work Safety Law governs occupational health and safety standards, placing more obligations on employers. 
• The law mandates safe working conditions for employees and requires the conduct of safety training.
• It also covers compensation for work-related injuries and illnesses. 

Law of the People’s Republic of China on Promotion of Employment

• One of the most prominent labor laws in China, this law focuses on employment opportunities. 
• The law also prohibits discrimination based on gender, ethnicity, disability, age, or religion. 
• The law promotes employment for vulnerable groups, such as disabled persons, women, and rural migrants. 

Contract employment laws in China

Employment contracts in China are governed by the Labor Law of the People’s Republic of China. Written contracts, typically in Chinese and English, are mandatory for full-time employees in the country. 

Types of contract

Here are some of the most common kinds of employment contracts in China:

• Fixed-term contract
  • This is the most common form of employment contract in the country. 
  • The contract defines a specific start and end date. 

• Non-fixed term contract (open-ended)
  • The non-fixed term contract, also known as an open-ended contract, can be considered a permanent contract with no fixed end date. 

You may also implement a Task/project-based contract, which is temporary. Once the task or project is completed, the contract ends if there is no further requirement. Do consult government regulations before doing so.

Essential contract terms

Employment contracts in China must contain the following information:

• Name and address of the employee and the employer
• Term of the labor contract
• Job description and the description of the place of work
• Working hours, vacation, and rest hours
• Labor remuneration (salary/wages)
• Social insurance
• Working conditions, occupational protection, and protection against occupational hazards
• Probation and notice period
• Termination

Minimum wage in China

• As per the Labor laws of the Republic of China, the minimum wages for employees in the country are CNY 2,540 per month. 

Working hours in China

• Normal working hours in China are generally a maximum of 8 hours per day or 40 hours per week. 
• Average weekly hours should not be more than 44 hours.
• Employees are also entitled to at least 1 rest day per week.

Overtime in China

As per the overtime laws in China, employees are entitled to paid overtime.

Employers should negotiate the terms with labor unions and employees. 

• 1 hour per day of overtime, 150% of normal wages. 
• For overtime on off days, not less than 200% of normal wages.
• For overtime on statutory holidays, not less than 300% of normal wages. 

Typically, overtime should not go over 1 hour per day. However, in case of unique requirements, overtime can be extended to 3 hours per day, with a maximum of 36 hours per month.

Mandatory benefits

When it comes to employee rights in China, employees are entitled to certain mandatory benefits. Some of the most prominent ones are as follows:

• Public health insurance 
  • Public health insurance in China offers coverage for basic medical services, such as outpatient visits, hospitalization, preventive care, and prescription drugs. 
  • The insurance is divided into two schemes. 
    Urban Employee Basic Medical Insurance (UEBMI) is for employed individuals. 
    Urban and Rural Resident Basic Medical Insurance (URRBMI) is for unemployed residents, the rural population, and children. 
  • The coverage details vary by region. It might include chronic disease management, maternity care, and some reimbursement for traditional Chinese medicine treatments. 

• Social security contributions
  • Social security contributions in China include the following components: medical insurance, endowment insurance, unemployment insurance, childbirth insurance, provident fund, work-related injury insurance, etc. 
  • Some provinces in China may also require supplementary contributions to the serious illness medical insurance fund or disability insurance fund. 

• Sick leave
  • Employers in China cannot dismiss an employee for being absent due to non-work-related injury or sickness for a certain period of time. 
  • The duration of the sick leave is ascertained by the employee’s length of service with the current employer and the cumulative work experience. 
  • The protection period for sick employees ranges from 3 months to 24 months.
  • During this period, employees will be paid 60% to 100% of their salary. The percentage depends on the length of absence and service period. 

• Maternity leave
  • According to the Labor Law of the People’s Republic of China, female employees are granted a minimum of 98 days of paid maternity leave for childbirth.
  • The employee can take 15 days as pre-natal leave. (Article 62 of the Labor Law)
  • Each province in China has implemented separate regulations granting extra maternity leave to female employees. 
  • Female employees covered by the maternity insurance shall receive maternity allowance from the relevant social security agency. The employer will not pay any such allowance. 

• Paternity leave
  • In China, there is no unified paternity leave legislation. 
  • The municipal or provincial family planning regulations manage paternity leave policies.  

• Annual bonus
  • There is no statutory requirement to pay employees a 13th-month pay in China. 

• Annual leave and public holidays
  • Employees who have completed a year of employment with the employer are eligible for annual/earned leaves in China. The details are as follows:
  • In case you fail to grant your employees the annual leave, you must compensate them an amount equivalent to 300% of their daily wage for each unused leave day. 
  • There are 28 days of public holidays in China. The list is as follows:
    • New Year’s Day Holiday (1 day)
    • Spring festival holiday (8 days)
    • Qingming festival holiday (3 days)
    • Labor Day holiday (5 days)
    • Dragon Boat festival holiday (3 days) 
    • National Day & Mid-Autumn festival holiday – (8 days)

Termination

• Termination laws in China are governed by the Labor Law of the People’s Republic of China. 
• Employers must have legal cause, such as incompetence, misconduct, or business restructuring, to terminate. 

Types of termination scenarios

Here are the different termination scenarios commonly seen in China:

• By mutual agreement between the employer and the employee.
• The employee is not up to the requirements for recruitment.
• The employee has seriously violated labor discipline or the rules and regulations of the employer.
• Gross neglect of duty or malpractice for personal gain, causing great loss to the employer.
• Having been investigated for criminal responsibility in accordance with the law.

Notice period in China

• Employees have to serve a notice period in China prior to employment termination. 
  • Notice period during probation – 3 days
  • Notice period after probation – 30 days

Severance payable 

• Severance pay in China is equal to one month’s average wage for each year of service.
• If an employee has worked for less than one year, the severance payment is calculated on a proportional basis.
• If the employee is employed for less than one month, the work time is considered as one month. 

Navigate employment laws in China with trusted support

Employment and labor laws in China are detailed. Labor law compliance in China is mandatory for both employers and employees to avoid penalties and legal complications. 

Payoneer Workforce Management helps navigate employment laws in China and supports compliance. The workforce management platform also extends help with payroll management, employment contracts, onboarding, benefits, timesheets, and more. 

Book a demo right now!

FAQs

1. What are the common types of employment contracts in China?

There are three common types of employment contracts in China. They are fixed-term contracts, non-fixed-term contracts, and task/project-based contracts. 

2. Is there a leave carry-forward policy in China?

Employees in China can take annual leave at once or several times within the year. The leaves are generally not carried over to the following year unless there is a special working reason, such as special production, etc. 

3. Is there a notice period in China for employees?

Yes, employees have to serve a notice period while terminating employment in China. The notice period is 3 days during probation and 30 days after the probation period. 

4. What is the payout currency and the minimum wage in China?

The payout currency in China is Chinese Yuan (CNY). The minimum wage in the country is CNY 2,540 per month. 

5. Are written employment contracts mandatory in China?

Yes. Chinese law requires written contracts in Chinese and English to be signed, typically within one month of an employee’s start date.