China Employment Law & Compliance Guide for Employers
Key employment laws in China: what employers need to know
Employment in Mainland China is governed mainly by the Labour Law and the Labor Contract Law, while minimum wages, social insurance and the housing fund are set city by city. Foreign employers are most often surprised by the double-wage penalty for a missing written contract, the narrow grounds for dismissal, and the rule that social insurance cannot be waived, even at the employee’s request. This page summarises the core employer rules as of October 2026, with official sources.
China employment rules at a glance
| Topic | What the rule is | Official source |
|---|---|---|
| Minimum wage | Set by each province or city, not nationally. Monthly examples: Shanghai CNY 2,740 (from 1 Jul 2025), Beijing CNY 2,540 (from 1 Sep 2025), Shenzhen CNY 2,700 (from 1 Sep 2026). Shanghai and Beijing exclude employee social insurance and housing fund from the minimum. | Shanghai Municipal Human Resources and Social Security Bureau – minimum wage notice |
| Standard working hours | 8 hours a day and 40 hours a week, with at least one rest day a week. Comprehensive or irregular working-hour systems are allowed only with prior approval from the labour authority. | Shanghai Government – Working hours |
| Overtime pay | At least 150% of normal pay for extra hours on workdays, 200% on rest days if no time off in lieu is given, and 300% on public holidays. Overtime is capped at 3 hours a day and 36 hours a month. | Labour Law of the PRC, Arts. 41 and 44 (NPC English text) |
| Paid annual leave | After 12 months of continuous work: 5 days (1–10 years of total working life), 10 days (10–20 years), 15 days (20+ years). Unused leave the employer did not arrange is paid at 300% of the daily wage. | Regulations on Paid Annual Leave for Employees (State Council Decree 514) |
| Public holidays | 13 paid public holidays since 1 January 2025: New Year 1, Spring Festival 4, Qingming 1, Labour Day 2, Dragon Boat 1, Mid-Autumn 1, National Day 3. Work on these days is paid at 300% or more. | State Council Order No. 795 (National Holidays Regulation) |
| Sick leave | No fixed number of paid sick days. Employees get a protected medical treatment period (3–24 months, by length of service) during which no-fault dismissal is barred. Sick pay is set locally and may not fall below 80% of the local minimum wage. | Labour Law of the PRC, Art. 29 (NPC English text) |
| Maternity and parental leave | 98 days of maternity leave nationally (up to 15 before birth), plus 15 days for a difficult birth and 15 for each extra baby. Provinces add extra maternity, paternity and childcare leave. Maternity allowance is paid from maternity insurance. | Special Rules on Labour Protection of Female Employees (State Council Decree 619) |
| Probation period | Tied to contract length: up to 1 month (3 months to 1 year), 2 months (1–3 years), 6 months (3+ years or open-ended). One probation per employee; pay at least 80% of the contract wage and not below minimum wage. | Shanghai Government – Labour contracts |
| Notice period | No-fault dismissal needs 30 days' written notice or one extra month's pay in lieu. Employees resign with 30 days' notice (3 days in probation). Dismissal for serious misconduct needs no notice. | Shanghai Government – Resignation and termination of employment |
| Severance pay | Economic compensation (N) is one month's wage per year of service (half a month for under 6 months). Above 3x the local average wage, the monthly base is capped at 3x and service at 12 years. Unlawful dismissal costs 2N. | Labor Contract Law of the PRC, Arts. 47 and 87 (NPC English text) |
| Employer social contributions | Set by city. Shanghai: pension 16%, medical incl. maternity 9%, unemployment 0.5%, work injury 0.16–1.52%, plus housing fund 5–7% (about 31–34% in total). Shanghai base: CNY 7,546–37,731 a month from 1 Jul 2026. | Shanghai Municipal Human Resources and Social Security Bureau – employer contribution rates |
| Employee social contributions | Shanghai: pension 8%, medical 2%, unemployment 0.5%, plus housing fund 5–7%, about 15.5–17.5% of salary up to the base cap. Other major cities are similar. The employer withholds and pays monthly. | Shanghai Government – Social insurance contribution rates |
| Income tax on salaries | Employers withhold Individual Income Tax monthly on a cumulative basis. Residents pay progressive rates of 3%–45% on annual income after a CNY 60,000 standard deduction, social contributions and special deductions. Annual reconciliation: 1 March–30 June. | PwC Worldwide Tax Summaries – China, taxes on personal income (reviewed July 2026) |
| Mandatory bonuses and 13th-month pay | None required by law. Year-end bonuses and a '13th month' are common but depend on the contract, company policy or collective agreement. | Labour Law of the PRC, Chapter V on wages (NPC English text) |
| Work permits for foreign nationals | The Chinese employer applies for a Foreigner's Work Permit, graded Category A (high-end talent), B (professionals, typically a degree plus 2 years' experience) or C (other, quota-controlled). The worker enters on a Z visa and gets a residence permit within 30 days. | Shanghai Government – Categories and talent standards for foreign employees |
| Employment contract requirements | Written contract required within one month of the start date, or double wages are owed, and after one year an open-ended contract is deemed. Must state term, job, place, hours, pay, social insurance and protections. A Chinese or bilingual version is advisable. | Shanghai Government – Before signing a labour contract |
Employer obligations in China, topic by topic
Filter by primary service relevance
Does an employment contract in China have to be in writing, and how long can probation last?
What are the standard working hours and overtime rules in China?
What is the minimum wage in China in 2026, and how must salaries be paid?
How much annual leave, holiday and maternity leave must employers in China give?
What social insurance and payroll taxes does an employer pay in China?
How can an employer in China end an employment contract, and what does it cost?
What permits does a foreign national need to work in China?
Can a company in China engage individuals as contractors instead of employees?
How is China's statutory retirement age changing from 2025?
Key employment laws in China and official sources
- Labour Law of the People’s Republic of China (1994, amended 2018) — Sets working hours, overtime limits and premiums, the minimum wage system, leave and basic labour protection.
- Labor Contract Law of the People’s Republic of China (2007, amended 2012) — Governs written contracts, probation, non-competes, termination grounds, economic compensation and labour dispatch.
- Social Insurance Law of the PRC (2010, amended 2018) and Interim Measures for Foreigners (2011) — Makes pension, medical, unemployment, work injury and maternity insurance mandatory for all employees, including foreign nationals.
- Individual Income Tax Law of the PRC (amended 2018) — Sets the 3%–45% rates on comprehensive income, residency rules and the employer’s monthly withholding duty.
- Interpretation II of the Supreme People’s Court on Labour Dispute Cases (effective 1 September 2025) — Confirms that agreements to waive social insurance are invalid and clarifies several dispute rules for employers.
- NPC Standing Committee Decision on Gradually Raising the Statutory Retirement Age (2024) — Phases in higher retirement ages from 1 January 2025 and a longer minimum pension contribution period from 2030.
- Foreigner’s Work Permit system (Wai Zhuan Fa [2017] No. 40) — Created the unified work permit with Category A, B and C classification for foreign employees.
- Regulations on Paid Annual Leave for Employees (State Council Decree 514, 2007) — Sets 5, 10 or 15 days of paid annual leave and 300% pay for unarranged leave.
FAQs: hiring employees in China
Can a foreign company hire employees in China without a local entity?
Not directly. Only an entity registered in China can sign a Chinese labour contract, pay social insurance and sponsor a work permit. Foreign companies usually set up a wholly foreign-owned enterprise, hire through a licensed agency for a representative office, or use an Employer of Record that employs the worker through its local entity. Engaging people as contractors to avoid this carries a high risk of a deemed employment relationship.
How much does an employee cost in China on top of gross salary?
In Shanghai, employer social insurance is about 25.7–27% of salary (pension 16%, medical 9%, unemployment 0.5%, work injury 0.16–1.52%), plus 5–7% for the housing fund, so roughly 31–34% in total. Contributions are calculated on a base between CNY 7,546 and 37,731 a month from July 2026, so the percentage falls for high earners. Other cities differ.
What is the minimum wage in China in 2026?
China has no single national minimum wage; each province or city sets its own. In 2026 the monthly minimum is CNY 2,740 in Shanghai (since 1 July 2025), CNY 2,540 in Beijing (since 1 September 2025) and CNY 2,700 in Shenzhen (since 1 September 2026). Separate hourly rates apply to part-time staff, such as CNY 25 in Shanghai.
How much notice and severance does an employer owe when dismissing an employee in China?
For a no-fault dismissal, the employer gives 30 days’ written notice or one month’s pay in lieu, plus economic compensation of one month’s wage per year of service. For high earners, the base is capped at 3x the local average wage and 12 years. No notice or severance is due for serious misconduct. An unlawful dismissal costs double compensation.
Can a company hire a foreign national in China, and what permit is needed?
Yes, through a registered Chinese employer. The employer applies for a Foreigner’s Work Permit, graded Category A, B or C, and the worker enters on a Z visa, then obtains a residence permit within 30 days of arrival. Category B usually requires a bachelor’s degree and at least 2 years of relevant experience. The employee must also join Chinese social insurance.
Is it risky to engage contractors instead of employees in China?
Yes, if the person works like an employee. When someone follows company rules, receives regular pay and does core business work, arbitrators usually find a labour relationship. The employer can then owe double wages for the missing contract, back social insurance and severance. Since 1 September 2025, any agreement to waive social insurance is invalid.
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Regulation Updates in China
Discover the latest employment and compliance updates in China — helping you stay ahead in a changing regulatory landscape.
Interim Provisions on the Protection of the Basic Rights and Interests of Over-Age Workers
What it is: The Interim Provisions on the Protection of the Basic Rights and Interests of Over-Age Workers establish new requirements for employers when hiring Over-Age Workers, with an effective date in July 2026.
What it changes: Employers must sign written work agreements with Over-Age Workers, ensure remuneration is not lower than the local minimum wage, include them in work-injury insurance, and reasonably limit working time.
Who is affected:
- Employers that hire Over-Age Workers
What employers should do:
- Ensure a written work agreement is signed with Over-Age Workers
- Maintain remuneration at least equal to the local minimum wage
- Include Over-Age Workers in work-injury insurance
- Reasonably limit the working time of Over-Age Workers
Notes: Effective month: 2026-07.
Implementation Plan for Accelerating the Establishment of the Long-term Care Insurance System
What it is: The implementation plan requires participants to join and fund a new national Long-term Care Insurance scheme, creating new private employer obligations for social contributions and payroll withholding that EORs and payroll providers must operationalize.
What it changes: Employers and employees must participate in and jointly fund the new Long-term Care Insurance. This creates private employer obligations for social contributions and payroll withholding that must be implemented by EORs and payroll providers.
Who is affected:
- Employers
- Employees
What employers should do:
- Prepare to implement social contribution payments and payroll withholding for the new Long-term Care Insurance through EORs and payroll providers.
- Coordinate with payroll providers to ensure the new scheme is operationalized.
Notes: Effective month: 2026-03.
Notice of the Jin'an District Human Resources and Social Security Bureau on Agreeing to the Implementation of an Irregular Working Hours System and a Comprehensive Calculation Working Time System for Certain Positions of Fuzhou Meike Food Co., Ltd.
What it is: The Jin’an District Human Resources and Social Security Bureau approved that certain positions at Fuzhou Meike Food Co., Ltd. may adopt an irregular working hours system and a Comprehensive Calculation Working Time system.
What it changes: This approval creates employer obligations under working time rules for scheduling and overtime accounting for the specified employees, effective March 2026.
Who is affected:
- Certain positions at Fuzhou Meike Food Co., Ltd. designated by the approval.
What employers should do:
- Prepare to apply an irregular working hours system and a Comprehensive Calculation Working Time system for the specified employees starting 2026-03.
Notes: Effective month: 2026-03.
Notice on Carrying Out the 2026 'Spring Warm Migrant Workers' Service Action
What it is: A national-level Notice directing a 2026 Spring Warm Migrant Workers service action to support migrant workers around the Spring Festival.
What it changes: It mandates transport and point-to-point travel support, conducts concentrated online/offline recruitment drives, and implements a training-to-placement model described as ‘job-demand + skills training + skills assessment + employment service,’ along with health outreach and strengthened labor-rights protection for migrant workers.
Who is affected:
- Workers or employers explicitly mentioned or clearly implied by the policy summary.
What employers should do:
- Provide or facilitate access to transport and point-to-point travel support as part of onboarding or worker services.
- Participate in or support the collaboration for recruitment drives (online and offline).
- Align with the training-to-placement model components: address job demand, offer or support skills training and skills assessment, and connect workers with employment services.
- Support health outreach initiatives and reinforce labor-rights protection efforts for migrant workers.
Notes: Effective month: 2026-01.