China’s employment framework sets strict requirements for businesses operating in the market. From mandatory written contracts and probation periods to social contributions and termination procedures, compliance involves navigating a mix of national, provincial and city-level legislation that is subject to frequent change.
This guide covers the core employment and labour law requirements for hiring and managing employees in China, including contract types, leave entitlements, working hours and statutory contributions.
- Employers must provide a written employment contract compliant with PRC law within one month of an employee’s start date, with a double wage penalty applying for non-compliance.
- Probation periods are strictly regulated by contract length, ranging from one to six months, and only one probation period is permitted per employee.
- Foreign nationals require a valid work permit and residence permit before starting work in China, with eligibility assessed under a three-tier categorisation system.
- Statutory leave entitlements, including maternity and paternity leave, vary significantly by province and should be confirmed at the local level.
- Social insurance and housing fund contributions are mandatory for most employees and are administered locally, with rates and bases varying by city.
What are the types of employment contracts in China?
China recognises three types of employment contracts: fixed-term, open-ended and project-based.
- Fixed-term: sets a specific employment period and is the most common type for new hires. Probation is permitted, subject to length limits
- Open-ended: no fixed end date; employees can request this after two consecutive fixed-term contracts. Probation is permitted, up to six months
- Project-based: tied to the completion of a specific task or project; no probation permitted
Employers should ensure every employee has a signed written employment contract in Chinese that complies with PRC law before starting work. If a signed contract is not provided within 30 days of the employee’s start date, a double wage penalty applies for each month without a written contract. After one year, the employment relationship is automatically treated as an open-ended contract. Companies new to hiring in China may find it useful to read our guide on how to hire employees in China before drafting employment contracts.
Probation period rules
Probation periods are strictly limited by contract length and are not permitted for project-based roles or contracts of three months or less. Only one probation period is allowed per employee.
The maximum duration is one month for contracts of three months to one year, two months for one to three years, and six months for contracts of three years or more or open-ended contracts. The probation period is stated in the contract, and the salary is at least 80% of the agreed wage and not below the local minimum wage. All contracts must also meet statutory requirements on benefits, paid leave and social insurance contributions.
Employment of foreign nationals in China
Foreign nationals who wish to work in China must hold a valid work permit and residence permit before beginning employment. China uses a three-tier categorisation system to assess foreign worker eligibility:
| Category | Description |
|---|---|
| Category A | High-level talent, senior experts and in-demand specialists |
| Category B | Professional personnel with a bachelor’s degree or above and at least two years of relevant experience |
| Category C | Temporary or seasonal workers, subject to regional quotas |
Most foreign employees fall under Category B, with cities such as Beijing and Shanghai applying minimum salary thresholds for eligibility. Applicants over 60 face restrictions on renewing Category B and C permits, making Category A status the primary route for continued employment beyond that age. Expatriate social security obligations are covered in our guide on Chinese social security coverage for expatriates.
Work permit and resident permit
The standard process for employing a foreign national involves the following steps:
- The employer applies for a Foreigner’s Work Permit Notification Letter on behalf of the employee
- The employee applies for a Z visa at a Chinese consulate in their home country
- After entering China, the employee obtains a residence permit within 30 days from the local Entry-Exit Administration
- The employer registers the employee for social insurance within 30 days of work authorisation being issued
Where available, China’s one-stop service integrating work permit, residence permit and social insurance registration into a single online process, simplifying the steps above for employers in many cities. Labour contracts with foreign employees should not exceed five years. Employers wishing to renew must apply to the relevant labour administrative authorities within 30 days of expiry. When the contract ends, the employer reports the termination to the relevant authorities and cancel the work permit and residence certificate.
Statutory leave entitlements in China
China’s statutory leave framework covers annual leave, maternity and paternity leave and sick leave. Entitlements are set at the national level but frequently extended by provincial and municipal regulations, so the applicable rules depend on where the employee is based.
Annual leave
Employees who have completed at least 12 months of total employment are entitled to paid annual leave, based on cumulative years across all employers. Employees with one to 10 years of total employment receive five days per year, those with 10 to 20 years receive 10 days and those with more than 20 years receive 15 days.
Maternity and paternity leave
The national minimum for maternity leave is 98 days, with most provinces extending this to between 128 and 190 days. Paternity leave varies significantly by location, ranging from 10 days in Shanghai to 30 days in some provinces. Foreign employees are entitled to the 98-day national minimum only and do not qualify for provincial extensions, which are reserved for Chinese nationals.
Sick leave
Sick leave is payable to both local and foreign employees. The percentage of salary paid depends on the employee’s tenure and the duration of the leave, generally ranging from 40% to 100% of salary for leave under six months and from 40% to 60% for extended leave beyond six months. Cities and regions apply different standards.
Working hours and overtime rules
Standard working hours in China are eight hours per day and an average of 40 hours per week. Employers may extend working hours after consulting the trade union, but overtime is generally limited to one hour per day. Under exceptional circumstances this may extend to three hours per day, with a monthly cap of 36 hours.
Overtime pay rates are set by national law. Weekday overtime attracts 150% of the regular wage, rest day overtime where no time off in lieu is provided attracts 200% and work on statutory holidays attracts 300%.
Minimum wage requirements
Minimum wages in China are set by local governments at the provincial or municipal level and are reviewed annually or every two years. The key factors considered include average wage levels, cost of living and the degree of economic development in the region.
Minimum wages come in two forms:
- a monthly rate for full-time employees
- an hourly rate for part-time and temporary workers
Employers should confirm the applicable rate for each city where staff are based, as figures vary significantly across regions.
Mandatory social insurance and housing fund contributions
In addition to salaries, employers and employees are required to contribute to China’s social security system, which covers five types of insurance and a mandatory housing fund. Contribution rates are set locally and vary by city. The table below provides indicative rates:
| Benefit | Employer contribution rate | Employee contribution rate |
|---|---|---|
| Pension | 16% | 8% |
| Medical | 9%–10% (varies by city) | 2% |
| Unemployment | 0.5%–0.8% | 0.2%–0.5% |
| Maternity | Integrated into medical in some cities | 0% |
| Work-related injury | 0.2%–2% (by industry) | 0% |
| Housing fund | 5%–12% | 5%–12% |
Note: Rates, bases and caps are set by local authorities and updated annually. For a full picture of what employing staff in China costs, see our guide on how much does an employee cost in China.
Grounds for terminating an employment contract in China
China does not permit at-will employment, so every termination has a legal basis and the employer must be able to justify it if challenged. There are four main grounds for termination.
| Termination type | Key conditions |
|---|---|
| Mutual agreement | · Either party can initiate · If the employer initiates, severance is payable |
| Employee resignation | · 30 days written notice required, or three days during probation · No notice required if the employer has created unsafe conditions, failed to pay salary, contradicted the contract or used coercion |
| Employer-initiated termination | Immediate termination without severance where the employee has violated company rules, caused harm through misconduct or has been found criminally liable |
| Automatic termination | Applies for contract expiry, retirement age, death or disappearance, employer bankruptcy or business licence revocation |
The full termination process, including documentation requirements and severance calculations, is set out in our guide on how to terminate an employee in China.
Conclusion
China’s employment and labour framework is detailed, locally administered and subject to frequent change. Getting the fundamentals right across written contracts, probation terms, statutory leave compliance, social insurance contributions and termination procedures is the most effective way to reduce compliance risk and avoid costly disputes. Given the pace of regulatory change and the variation across cities and provinces, keeping employment practices under regular review is a practical necessity.
How Acclime can help with employment law compliance in China
Acclime China offers complete support related to employment law compliance and HR regulatory requirements for businesses operating in China. From onboarding support to ongoing advisory services, our team of experts can assist with everything from understanding labour contract requirements and benefits to managing employee termination processes and handling labour disputes.
By partnering with us, local and foreign businesses can confidently navigate China’s complex employment law landscape and maintain workforce compliance. Contact us to learn more about how we can support your specific needs for HR compliance and labour relations management.
Contact our teams for expert support and further information about HR and employment solutions in China to ensure you are compliant in the market.
Grace Zhang, HR Services Manager, g.zhang@acclime.com
Stella Zhou, HR & Payroll Director, y.zhou@acclime.com
Jacob Ketcher, Business Development Manager, j.ketcher@acclime.com
