Successfully setting up and running a business in China begins with a clear understanding of the core principles of the China Labor Law. Mastering these regulations not only protects your company from potential disputes and compliance risks, but also helps you build a stable, efficient, and legally compliant workplace for your employees. In this article, we will walk you through the key areas of China labor law, including:
1. Employment Contract
2. Working Hours & Overtime
3. Leave Provisions
4. Minimum Wage
5. Mandatory Social Contributions
6. Labor Unions
7. Employment Termination
FAQs Related to China Labor Law
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?
Any 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. Can employers adjust an employee’s salary at any time?
Not unilaterally. Salary adjustments must be based on mutual agreement, documented company policies, or lawful performance systems. Any forced reduction may be considered a contract breach.
6. 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.
7. Do employees need to complete a handover before leaving the company?
Yes. Employers may require a reasonable handover, including returning company property and files. However, employers cannot delay issuing the Separation Certificate or final payment once the resignation process is completed.
8. 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.
9. 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.
10. 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.
11. Do companies need a Chinese entity to hire employees legally?
Yes. Unless they use a China Employer of Record (EOR) model. An EOR legally hires staff on behalf of foreign companies, handles payroll, contracts, and compliance, allowing market entry without registering a local entity.
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 understands both China labor law and the realities of day-to-day HR operations. We help you stay fully compliant with employment regulations — from contracts and working hours to social insurance and terminations — so you can focus on growing your business while we manage the legal and administrative complexities.
Contact us today to learn how we can support your long-term success in China.
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