Employment Laws in China

1. Legal Framework and Oversight

China's employment landscape is governed by the Labor Law and Labor Contract Law, overseen by the Ministry of Human Resources and Social Security (MOHRSS) and local labor bureaus. These regulations cover employment contracts, wages, working conditions, social insurance, and termination procedures. Non-compliance can result in significant fines, administrative penalties, and potential criminal liability for severe violations.

2. Employment Contracts

All employment relationships in China require written contracts within one month of hiring. Contracts must specify job duties, work location, compensation, working hours, social insurance, and termination conditions. Three contract types exist: fixed-term, open-ended, and project-based. After two consecutive fixed-term contracts, employers must offer open-ended agreements unless specific exceptions apply.

3. Working Hours and Rest Periods

China enforces strict working time limits: 8 hours daily and 44 hours weekly maximum. Employees are entitled to at least one rest day per week and cannot work more than 36 overtime hours monthly. Overtime requires employee consent and premium pay rates (150% weekdays, 200% rest days, 300% holidays). Violations can trigger labor inspections and penalties.

4. Wages and Minimum Pay

Minimum wages vary by province and city, ranging from RMB 1,420 to RMB 2,690 monthly (as of 2025). Wages must be paid monthly in Chinese currency with detailed payslips. Deductions require legal basis and employee consent. Wage arrears trigger immediate penalties and potential blacklisting of employers.

5. Social Insurance and Housing Fund

Employers must contribute to five social insurance schemes: pension (16%), medical (6-10%), unemployment (0.5%), work injury (0.2-1.9%), and maternity insurance (varies by location). Additionally, Housing Provident Fund contributions of 5-12% are mandatory in most cities. Foreign employees are generally included unless bilateral agreements provide exemptions.

6. Employment of Foreign Nationals

Foreign employees need work permits and residence permits before starting employment. Categories include A (high-end talent), B (professional talent), and C (restricted roles). Employers must demonstrate business necessity and salary compliance with local standards. Illegal employment of foreigners carries severe penalties including substantial fines and business license revocation.

7. Termination and Compensation

Termination requires statutory notice periods (30 days for most cases) or payment in lieu. Severance is mandatory for most terminations except serious misconduct, calculated as one month's salary per year of service. Mass layoffs require government approval and additional procedures. Wrongful termination can result in double compensation payments.

8. Labor Inspections and Dispute Resolution

Labor bureaus conduct regular inspections and investigate complaints regarding wages, working conditions, and contract compliance. Disputes are resolved through mediation, arbitration, and courts. Employers must maintain employment records for legal minimum periods. The social credit system can impact non-compliant businesses' operations.

9. How AYP Ensures Compliance

AYP navigates China's complex employment regulations by managing contract drafting, payroll processing, social insurance contributions, and work permit applications. We provide ongoing compliance monitoring, dispute resolution support, and guidance on regulatory changes to ensure your operations remain fully compliant.

10. Contact Us

Hiring in China? AYP ensures full labor law compliance while you focus on scaling your team.

👉 Contact us today.