Key Takeaways
- China does not recognize at-will employment. Employers generally need a lawful reason and must follow specific procedures when ending an employment relationship.
- Written employment contracts are typically required within one month of an employee's start date, and employers may face penalties for noncompliance.
- Minimum wage rates, leave entitlements, and social insurance contribution requirements vary by province and municipality, making local compliance a critical part of payroll management.
- Foreign companies can hire employees in China without establishing a local entity by partnering with an Employer of Record (EOR).
Whether you’re scaling fast or selectively recruiting international talent, there are plenty of compelling reasons to hire in China.
The country has a workforce of 773 million+ and affordable labor costs, making it an excellent location to set up manufacturing and supply chain hubs. Plus, China has a reputation for producing large numbers of specialized talent — employees accustomed to multinational work and skilled in technical fields such as engineering, IT, and advanced manufacturing.
Hiring in China can bring you that much closer to your business goals, but the expansion into the Chinese labor market also comes with major legal considerations. China has a complex employment law framework with strong employee protections and strict rules around contracts and social insurance contributions.
If you’re considering hiring in China, it’s crucial to understand the country’s labor laws to support your employees while minimizing your compliance risk. Below, we break down everything from working hours to employee data privacy requirements.
What Labor Laws Govern Employment in China?
There are three critical employment laws in China, each of which delves into a different aspect of worker protections and employer responsibilities:
- Labor Law of the People’s Republic of China: China’s 1995 Labor Law sets the overarching rules governing employer-employee relationships, defining workers’ rights and employers' obligations regarding working hours, employee leave, occupational safety, wage protections, and anti-discrimination policies. The Labor Law applies to any organization hiring within China, local or international.
- Labor Contract Law: Under China's Labor Contract Law, enacted by the Standing Committee of the National People's Congress in 2008, employers must comply with specific requirements governing employment contracts, probationary periods, termination, severance pay, and non-compete agreements.
- Social Insurance Law: China’s 2011 Social Insurance Law ensures that both employers and employees contribute to six mandatory programs: pension insurance, medical insurance, unemployment insurance, work-related injury insurance, maternity insurance, and a housing fund. Each city in China sets its own contribution rates and requirements.
Who Is Covered by China Employment Law?
Most employees in China are protected by the country’s comprehensive labor laws. Covered employees are typically people who:
- Work under employer supervision or control
- Receive fixed compensation
- Follow company work schedules and workplace policies
- Qualify for statutory protections and benefits
Certain types of workers fall outside the scope of China's labor laws or are subject to different legal protections. Those include:
- Student interns
- People who reach the official retirement age (63 years old for men, and between 55-58 years old for women), or who already receive a pension, aren’t eligible for standard employment contracts
- Government officials and public administration staff
- Independent contractors, since they’re not classified as standard employees
China has fairly strict rules when it comes to employee classification, evaluating the degree of employer control in a working relationship, work schedules, work processes, and exclusivity arrangements to distinguish between employees and contractors.
If a Chinese authority determines that you misclassified one of your employees as a contractor, you might have to make back payments to the employee and pay civil penalties.
Are Employment Contracts Mandatory in China?
In China, employers are required to write formal employment contracts outlining employee rights and workplace policies, including:
- Employee’s job title, job description, and responsibilities
- Compensation details
- Benefits
- Working hours and place of work
- Working conditions
- Company code of conduct
- Probation terms
- Leave entitlements
- Social insurance contributions
- Contract duration
- Termination conditions
Many employers use fixed-term contracts, where the end date is mutually agreed in advance, but open-ended and project-based contracts are also legal. Under the Labor Contract Law, employers generally must provide a written employment contract within one month of an employee's start date or risk fines and penalties.
What Is the Standard Workweek in China?
China has strict limits on employee working hours. There are three systems governing working hours:
- Standard Working Hours System: This applies to most workers across China. Employees can work a maximum of eight hours a day and 40 hours a week.
- Comprehensive Working Hours System: This structure applies to industries that work in week-, month-, or quarter-long cycles on big projects — industries such as: railway, manufacturing, transportation, aviation, fishery, and telecommunications, as well as seasonal businesses.
- Flexible Working Hours System: This system applies to people whose work doesn’t occur on a fixed schedule. Think: field employees or long-distance transportation personnel.
If you want to use the comprehensive and flexible working hours systems to calculate your employees’ work hours, you have to get approval from the local Chinese labor bureau.
How Is Overtime Calculated in China?
Under China's Labor Law, employees may work overtime, as long as they’re compensated accordingly — and they don’t exceed the overtime caps. Overtime is limited to 3 hours per day and 36 hours per month.
When overtime is required, employers must provide premium pay based on when the additional work is performed:
- 150% of regular wages for overtime worked on regular workdays
- 200% of regular wages for work performed on rest days if no substitute leave is provided
- 300% of regular wages for work performed on public holidays
Minimum Wage in China
No. China does not have a national minimum wage. Minimum wage rates are set by individual provinces and municipalities and change in response to fluctuations in the cost of living, economic conditions, and the residents’ consumption price index.
Here are the minimum wages (as of 2026) in popular areas:
- Shanghai: RMB 2,740 (USD 378) per month
- Beijing: RMB 27.7 (USD 3.70) per hour
- Shenzhen: RMB 2,520 (USD 372) per month
- Guangzhou: RMB 2,520 (USD 372) per month
- Chongqing: RMB 2200-2330 (USD 324-487) per month
- Chengdu: RMB 2200-2330 (USD 324-487) per month
What Benefits Are Employers Required to Provide in China?
Employers are required to provide employees in China with multiple paid leave benefits, including:
Annual Leave
Considered vacation or paid time off, employees are entitled to paid annual leave based on their cumulative years of work service.
- 1–10 years: 5 days
- 10–20 years: 10 days
- 20+ years: 15 days
Sick Leave
Workers in China also get paid sick leave, which can be no lower than 80% of their local minimum wage.
Employers set their own sick leave requirements, which might differ based on employees’ medical needs, employee tenure, and local provincial regulations.
Prenatal Leave
China requires employers to offer unlimited paid prenatal leave for employees who need time off to attend prenatal appointments, but only after their 12th week of pregnancy.
Maternity Leave
Under the State Council's Special Provisions on Labor Protection for Female Employees, workers are entitled to at least 98 days of maternity leave, though they may receive additional time depending on where they live.
Beijing, for example, grants workers 60 extra days of maternity leave, and Guangxi gives workers 60 extra days of leave for their first child, 70 for their second, and 80 for their third.
Certain provinces and employers may also grant paternity leave, childcare leave, or parental care leave (to care for a hospitalized or injured child).
Public Holidays
The General Office of the State Council sets the public holiday calendar each year.
Employees are entitled to paid leave on China’s official public holidays, such as National Day, the Tomb Sweeping Festival, Labor Day, and Spring Festival.
Social Insurance in China and Payroll Contributions
China’s social security system has five separate insurance programs, plus a mandatory housing fund. Three of the social insurance programs and the housing fund require contributions from both employers and employees. The other two programs only require employer contributions.
Employers are responsible for calculating and withholding contributions from employee paychecks. The exact contribution amount varies by location.
The programs are:
- Pension insurance: To financially support people during retirement. Employers contribute around 16%, and employees contribute roughly 8%.
- Medical insurance: To cover some medical treatment costs in the event of an employee’s non-work-related illness or injury. Employers contribute 5-12%, and employees contribute around 2%.
- Unemployment insurance: To give temporary financial support to people who lose their jobs involuntarily. Employers contribute 0.5-1%, and employees contribute around 0.5%.
- Work injury insurance: To partially cover medical treatment for work-related injuries or illnesses. Employers contribute 0.5-2%; employees are not required to contribute.
- Maternity insurance: To offset the cost of childbirth and lost wages during maternity leave. Employers contribute 0.5-1%; employees are not required to contribute.
- Housing fund: A government-mandated housing savings program that helps employees finance home purchases and other housing-related expenses. Both employers and employees contribute 5–12%.
Employee Data Protection and Privacy
Countries around the world are on a mission to ensure their data privacy laws keep pace with technological advancements — and China is no exception.
The country has introduced or expanded a few key data privacy requirements in recent years, including:
- Personal Information Protection Law (PIPL): China's Personal Information Protection Law (PIPL), adopted by the Standing Committee of the National People's Congress in 2021, serves as the country's primary data privacy framework for protecting online personal information. PIPL includes guidance on collecting employee data, obtaining consent to use employee data, and minimizing data processing.
- Cybersecurity Law: The 2016 law established cybersecurity requirements for network operators in mainland China. Covered organizations must protect network and user data, verify identities, maintain incident response plans, and cooperate with government authorities during criminal investigations when required.
- Data Security Law: Passed in 2021, the Data Security Law established rules for classifying a wide range of data, localizing data, and transferring data outside mainland China. If employers need to export employee data, they must either pass a security assessment conducted by the Cyberspace Administration of China (CAC) or obtain special certification from a CAC agency.
Does China Have At-Will Employment?
No. Unlike some countries, like the United States, China generally does not recognize at-will employment. Employers must have a lawful reason to end an employment relationship and follow specific notice, severance, and procedural requirements.
There are five common situations in which an employment relationship may end in China:
- Mutual agreement: Employers and employees can agree to part ways at any time. A mutually agreed separation may reduce the risk of disputes compared to a unilateral dismissal.
- Employee misconduct: Employers may immediately dismiss an employee for serious misconduct. Severance is generally not required, but employers must be able to document and substantiate the misconduct.
- Poor performance or inability to perform the role: If an employee is not meeting performance expectations or is otherwise unsuitable for the position, employers generally must provide 30 days' written notice or one month's salary in lieu of notice.
- Automatic expiration of employment: Certain events automatically end the employment relationship, including the expiration of a fixed-term contract or an employee reaching retirement age.
- Workforce reductions: Employers may conduct layoffs for economic reasons, provided they satisfy the statutory requirements. Generally, this includes reducing headcount by at least 20 employees or 10% of the workforce and demonstrating a qualifying business reason, such as restructuring, operational difficulties, or significant changes to the company's business model.
Certain employees receive additional protections and generally cannot be included in workforce reductions, including those who:
- Work in positions involving occupational disease hazards requires a pre-departure occupational health examination
- Have partially or fully lost working capacity due to a work-related injury or occupational disease
- Are within the statutory medical treatment period for an illness or non-work-related injury
- Are pregnant, on maternity leave, or breastfeeding
- Have at least 15 years of continuous service and are within five years of retirement
Severance Pay
In many cases, employers must provide severance when an employment relationship ends. Severance is generally required when:
- The employer proposes a mutual separation
- Employees are laid off as part of a workforce reduction
- An employer dismisses an employee for reasons unrelated to misconduct
- An employee resigns because of employer wrongdoing
- A fixed-term employment contract expires, and severance is required under applicable law
Failing to follow China's dismissal requirements can expose employers to wrongful dismissal claims, reinstatement orders, and double-severance penalties.
Challenges for Foreign Companies Hiring in China
While hiring in China can offer significant advantages, it also increases the operational and compliance responsibilities employers must manage.
Common challenges for companies expanding their hiring into China include:
- Navigating complex labor laws
- Managing city-specific social insurance contributions and requirements
- Drafting compliant bilingual employment contracts
- Handling employee terminations properly
- Meeting payroll and tax requirements
- Keeping pace with evolving data privacy regulations and technology requirements
Can Foreign Companies Hire Employees in China Without an Entity?
Establishing a local Chinese business entity can be expensive and time-consuming, especially if you’re just testing the market or looking to hire a small team.
When you open a local entity, there are more than a dozen administrative and legal steps to take, including:
- Registering with local tax and business authorities
- Getting a business tax ID
- Opening a local bank account
- Creating or revising your company’s articles of incorporation
- Submitting copies of your founders’ passports and proofs of address
- Submitting a detailed business plan
- Obtaining an official local address
- Hiring a consultant to advise on local labor laws
- Setting up local payroll systems
Because setting up an entity can be time-consuming and expensive, many businesses partner with an Employer of Record (EOR) instead. An EOR handles everything on the backend of hiring, including:
- Gathering employee paperwork
- Creating employment contracts
- Onboarding new hires
- Setting up payroll
- Navigating tax and social insurance requirements across cities
- Remitting local taxes and calculating insurance withholdings
- Administering employee benefits
- Facilitating employee terminations
How RemoFirst Helps You Hire in China
Hiring global talent doesn’t have to be so logistically and legally taxing. RemoFirst gives you the flexibility to hire, pay, and manage employees in China without opening a local business entity.
As an Employer of Record, we act as the legal employer, shouldering all the compliance risks, so you can manage recruitment and oversee your employee’s day-to-day responsibilities.
With RemoFirst, companies have the power to:
- Hire in 185+ countries
- Run a compliant global payroll
- Offer competitive benefits, including private health insurance through RemoHealth
- Get support with visas and work permits
- Manage contractors and employees on one platform
Ready to hire in China without opening a local entity? Schedule a demo to see how RemoFirst can help you onboard employees, run payroll, manage benefits, and stay on top of local employment requirements.
