Under China Labor Law, every employer must sign a written employment contract to define rights and obligations clearly. This section explains the legal requirements, key elements, and contract types essential for compliance, helping businesses establish transparent, lawful, and well-structured employment relationships in China.
1. Legal Requirement
In China, all employment relationships must be governed by a written labor contract. According to the Labor Contract Law of the People’s Republic of China, employers are legally required to sign a written contract with employees within one month of the employee’s start date.
Failure to do so may result in the employer being liable to pay double salary to the employee for each month without a written contract, and potential administrative penalties.
Key legal obligations include:
- The contract must clearly define both parties’ rights and obligations.
- The employer must provide one copy to the employee for record keeping.
- Any modification or termination must be made in written form and in accordance with legal procedures.
- The employment contract must comply with national and local labor regulations on wages, working hours, leave, and termination.
2. Key Elements
A standard Chinese labor contract must contain the following essential elements:
| Element | Description |
|---|---|
| Employer & Employee Information | Full legal names, ID numbers, and contact details |
| Employment Term | Fixed-term, open-ended, or project-based duration |
| Job Description | Specific position, responsibilities, and workplace |
| Working Hours & Rest | Regular hours, overtime policy, and leave entitlements |
| Salary & Benefits | Base salary, bonus, social insurance, housing fund, and payment cycle |
| Social Insurance | Contribution obligations for both employer and employee |
| Termination Clause | Legal procedures, notice period, and severance rules |
| Confidentiality & Non-compete | Optional clauses for sensitive positions |
3. Contract Types
Under China’s labor law, there are three main types of employment contracts:
| Contract Types | Description |
|---|---|
| Fixed-term Contract | The most common type. The contract specifies a start and end date, often used for regular employees or project-based work. |
| Open-ended Contract | No expiry date. Usually applicable when an employee has worked continuously for the same employer for 10 years or after two consecutive renewals of fixed-term contracts. |
| Project-based Contract | The contract ends when a specific project or task is completed. Often used in construction, consulting, or short-term assignments. |
💡 Employer Tips
- Always ensure written contracts are signed before or within the first month of employment.
- Avoid using “oral agreements” — they are not legally recognized.
- Regularly review and update contract templates to reflect local policy changes.
- Keep all signed contracts on file for at least two years after termination.
China Labor Law defines key rules for fair and legal employment. By complying with China Labor Law, businesses protect rights, avoid risks, and ensure workplace stability.
At China Payroll, we help foreign companies manage payroll, navigate regulations, and stay compliant, so you can focus on growing your business. Contact us today to see how we can help your business succeed in China.
