Successfully setting up and operating a business in China starts with mastering the essentials of the China Labor Law. A solid grasp of these regulations not only shields your company from costly labor disputes, but also ensures full compliance with local requirements—empowering you to foster a productive, motivated, and legally secure workplace for your team. China labor laws covered in this article will include:
1. Employment Contract
2. Working Hours & Overtime
3. Leave Provisions
4. Minimum Wage
5. Mandatory Social Contributions
6. Labor Unions
7. Employment Termination
FAQ
1. Do foreign employees in China need to follow the same labor laws as local staff?
Yes. Foreign employees working legally in China are protected under the same labor laws as local workers, including contract terms, working hours, and social insurance participation (unless exempted by bilateral agreements). Employers must also provide written contracts and comply with termination and severance rules.
2. Can employers include probation or non-compete clauses in labor contracts?
Yes. Non-compete applies mainly to senior or confidential positions, with compensation paid monthly after termination (usually 20–50% of the employee’s pre-departure salary).
3. Are verbal agreements or email confirmations legally valid as employment proof?
They can serve as supporting evidence, but not as substitutes for a written labor contract. In labor disputes, emails, WeChat records, and payment receipts may prove the existence of an employment relationship — however, a written and signed contract remains the strongest legal protection for both sides.
4. What are the employer’s obligations when changing an employee’s position or work location?
ny substantial change in job duties, salary, or workplace must be made with the employee’s written consent. Unilateral changes can be considered a breach of contract. Employers should issue formal change notices and update HR records accordingly.
5. How should employers handle employee resignations?
Employees must give 30 days’ written notice (or 3 days during probation). Employers should confirm acceptance in writing, calculate any remaining salary, unused annual leave, and issue a Separation Certificate within the legal timeframe to complete the process.
6. Are employers required to provide payslips in China?
Yes. Employers must issue monthly payslips detailing salary, social insurance, and tax deductions. Payslips serve as critical compliance records and employee rights evidence during audits or disputes.
7. How long must employers keep employment and payroll records?
Employment records, payroll data, and social contribution proofs must be kept for at least two years after termination — in practice, many companies retain them for five years to meet audit and arbitration requirements.
8. What’s the difference between dispatch employees and direct hires in China?
Dispatched employees are legally employed by a licensed labor dispatch agency, not the client company. Dispatch arrangements are allowed only for temporary, auxiliary, or substitute roles, and the number of dispatched staff must not exceed 10% of total employees.
How China Payroll can help
Navigating China’s complex labor laws can be challenging for both new entrants and established businesses. China Payroll provides end-to-end HR and compliance solutions designed to help global employers operate legally and efficiently across all regions of China.
Our Support Includes:
- Labor Law Compliance – We ensure your employment contracts, working hours, and termination procedures meet national and local legal standards.
- Payroll & Benefits Administration – Full management of salaries, tax, and the “Five Insurances and One Housing Fund,” ensuring accuracy and timely contributions.
- Legal & HR Advisory – Expert guidance on employee relations, leave entitlements, and severance calculations to help you avoid disputes and penalties.
- Entity-Free Employment (EOR) – Hire and manage staff in China without establishing a local entity through our Employer of Record (EOR) services.
- Ongoing Policy Updates – Stay informed as we monitor and interpret new labor and tax regulations for your continued compliance.
By partnering with China Payroll, you gain a trusted local expert who bridges legal compliance and practical HR operations — enabling your business to focus on growth while we handle the complexity of China’s employment regulations.
Contact us today to see how we can help your business succeed in China.
