Employment Laws and Policies in China

Employment in China is governed primarily by the Labor Contract Law (2008), the Social Insurance Law, and the Employment Promotion Law. These frameworks protect workers’ rights and define employer obligations in contracts, payroll, benefits, and termination.

Employment Contracts

• Written contracts are mandatory and must be signed within one month of the employee’s start date.
• Contracts must specify job title, compensation, working hours, social insurance, and termination clauses.
• Types of contracts:
  • Fixed-term (commonly used for new hires)
  • Indefinite-term (after two consecutive renewals or 10 years of service)
  • Project-based contracts
• Probation Period:
  • 1 month (for contracts <1 year)
  • 2 months (for 1–3 years)
  • 6 months (for >3 years or indefinite contracts)
• Contracts must be in Simplified Chinese and governed by Chinese labor law.

Working Hours

• Standard Hours: 8 hours/day, 40 hours/week.
• Overtime Pay:
  • Weekdays: 150% of normal rate
  • Weekends: 200%
  • Public Holidays: 300%
• Flexible work systems (e.g., comprehensive or irregular hours) require approval from local labor authorities.

Leave Entitlements

• Annual Leave:
  • 0–1 year of service: none
  • 1–10 years: 5 days
  • 10–20 years: 10 days
  • 20+ years: 15 days
• Public Holidays: 11 national holidays (plus local variations).
• Sick Leave: Paid according to tenure and local regulations (typically 60–100% of salary).
• Maternity Leave: 98 days (plus local extensions, up to 158 days in some provinces).
• Paternity Leave: 7–30 days, depending on the region.
• Marriage Leave: 3 days (varies regionally).

Payroll, Tax & Contributions

• Income Tax: Progressive, from 3% to 45%.
• Employer Contributions:
  • Pension Fund: 16%
  • Medical Insurance: 10%
  • Unemployment Insurance: 0.5%–1%
  • Work Injury Insurance: 0.2%–1.9% (depends on industry risk)
  • Maternity Insurance: 0.8%
  • Housing Fund: 5%–12% (varies by city)
• Employee Contributions:
  • Pension: 8%
  • Medical: 2%
  • Unemployment: 0.5%
  • Housing Fund: 5%–12%
• Employers must withhold IIT (Individual Income Tax) monthly and remit all social insurance and housing fund contributions to local authorities.

Health & Safety

• Employers are required under the Work Safety Law (2021) to provide a safe and healthy workplace, ensure training, and implement emergency procedures.
• Occupational safety is monitored by the Ministry of Emergency Management and local bureaus.
• Work-related injuries must be reported and compensated per the Work Injury Insurance Regulations.

Termination & Severance

• Notice Period: 30 days’ written notice (or pay in lieu).
• Severance Pay:
  • 1 month’s average salary per year of service (capped at 12 months).
  • Required for layoffs, redundancy, or contract expiration without renewal.
• Termination must have a lawful reason (e.g., redundancy, misconduct, incapacity).
• Unlawful termination can result in reinstatement or double severance.

Non-Discrimination & Equality

• Chinese labor law prohibits discrimination based on gender, ethnicity, religion, disability, or medical conditions.
• Equal pay for equal work is mandated.
• Sexual harassment is punishable under the Civil Code (2021).
• Employers are encouraged to promote workplace diversity and inclusion initiatives.