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Employment contracts and policies in China
Contract terms in China
Fixed-term contracts in China
Contract extensions in China
Working hours in China
Remote work in China
Tailored employment contracts in 100+ countries
Employment contracts in China
When hiring in China, having a written employment contract is a legal requirement — and a crucial part of staying compliant. Chinese labour law sets out detailed rules around employment contracts, including what they must contain, how long they can last, and how they can be terminated. For foreign employers, understanding these rules is essential to avoid legal risks and ensure workers are treated fairly.
In this section, we will walk you through the key aspects of employment contracts in China. You’ll learn about mandatory contract terms, the rules governing fixed-term and project-based contracts, language requirements, and how contracts come to an end. Whether you’re hiring directly or through an employer of record, this guide will help you navigate the contract landscape in China with confidence.
Employment contracts and policies in China
All countries have their own rules, requirements, and expectations when it comes to employment contracts. For example, employment contracts in China must be concluded in Standard Chinese. While employers can provide a bilingual version if needed, only the original (Chinese) version is legally binding. Read on to learn more about employment contracts and policies in China.
Written employment contracts in China
All employment contracts in China must be provided to the employee in writing within 30 days of hiring. If the employer does not provide a written employment contract after one month, they must pay the employee double the normal wages for each month they do not have a contract.
If this situation continues for a year, the employee is considered to be employed on an indefinite basis. The labour authorities can also impose fines on employers for failing to provide written employment contracts.
Probationary periods in China
Probationary periods are permitted in China but are subject to certain limits. The maximum length of a probationary period depends on the length of the employment contract, as follows:
- Contract of 3–12 months: One month.
- Contract of 1–3 years: Two months.
- Contract of 3+ years or open-ended contract: Six months.
Probationary periods are not permitted for contracts lasting three months or less or for project-based agreements. During the probationary period, employers can pay the employee 80% of the agreed final salary, as long as this is at least equal to the legal minimum wage and the lowest salary for similar positions in your company.
Third-party approval for employment contracts in China
Unlike in some other countries, there is no formal requirement to lodge employment contracts with a third party for approval in China.
Mandatory employment policies in China
Employers in China are required to have internal rules and regulations. These are often implemented through an employee handbook or policy manual, and must cover essential areas such as:
- Remuneration.
- Working hours.
- Rest.
- Disciplinary measures.
- Health and safety protocols.
Employers must consult with employees or their representatives when developing or changing these rules.
Contract terms in China
Chinese labour law sets out the terms that must be included in every employment contract in China. Employers are also free to include additional terms, even if these aren’t legally mandated — read on to learn what you need to know to put your contracts together.
Mandatory contract terms in China
According to Chinese labour law, the following are mandatory employment contract terms in China:
- Name, address, and legal representative of the employer.
- Name, address, and ID number of the employee.
- Terms of the contract.
- Job description and work location.
- Working hours, rest period, and days off.
- Details of compensation.
- Statements related to social insurance, labour protections, labour conditions, and protection from occupational hazards.
Optional contract terms in China
Employers in China can also choose to include additional terms in their employment contracts, including:
- Details related to the probationary period (if applicable).
- A non-compete clause to prevent employees competing with the employer’s activity.
- A confidentiality clause to protect trade secrets and confidential information.
- Details about allowances and benefits.
- A reference to the employee handbook or staff manual.
Fixed-term contracts in China
Unlike in many other countries, fixed-term contracts are the standard form of employment contract in China. They set a specific term limit on the employment agreement and can be concluded for either full-time or part-time work. Under Chinese law, there is no maximum duration for fixed-term contracts. However, there are limits on the number of renewals.
Reasons for concluding a fixed-term contract in China
Unlike in other countries, employers don’t need to provide a specific reason for concluding a fixed-term contract in China. However, the termination of a fixed-term contract still requires valid legal grounds and must follow consultation or probation procedures.
Ending a fixed-term contract in China
Generally speaking, fixed-term contracts in China automatically end on the expiry of their term. However, employers may be required to pay severance pay if they choose not to renew the contract of an employee who has been engaged for one year or more. This requirement does not apply if the employer offers a new contract to the employee on equal or better terms than the original contract and the employee refuses the new contract.
There is no official requirement for employers to give notice for the termination of a fixed-term contract at its term date. However, it is generally expected that employers will let employees know of their decision to renew the contract (or not) in advance. Some areas have specific local legislation on this issue which provides more specific requirements. For example, employers in Beijing are required to give fixed-term employees 30 days’ notice if they do not intend to renew the contract.
Project-based contracts in China
Job contracts or project-based contracts are the third type of legally recognised employment contract in China, in addition to fixed-term and open-ended contracts. These do not have a specific term limit but expire on completion of a specific task or project. For example, an employer may hire a developer specifically to design a new website. Their contract would come to an end automatically once the website has been launched. If using this type of contract, it is important to clearly define the scope of work to be completed. In some cases, courts have considered ambiguous contracts to be fixed-term, triggering additional obligations for the employer.
Contract extensions in China
An employer in China can choose to renew an employee’s fixed-term contract if they still require their services. However, after two fixed-term contracts or a total of ten years of employment, the employee must be offered an open-ended contract. While the employee can opt for another fixed-term contract instead, the employer cannot impose this on them.
Certain employees, such as pregnant women and long-service employees, have specific protections against the non-renewal of a fixed-term contract. Not renewing a contract for an employee belonging to one of these groups could require additional justification and/or compensation.
Working hours in China
The standard working hours in China are eight hours per day or 40 hours per week. Employees are also entitled to at least one day off per week. Overtime is permitted subject to certain conditions — read on to find out what you need to know about working hours in China as an employer.
Irregular working hours in China
The above describes the standard working hour system in China, which applies to most white-collar jobs. However, the labour code also provides two alternative systems:
- Comprehensive working hours system: This system is used for employees who work irregular hours or shifts. Instead of imposing a maximum daily limit, the employee’s hours are counted over a specified cycle (such as weekly, monthly, quarterly, or yearly), and calculated as an average over that period. This system may be applied to employees in seasonal or project-based roles.
- Non-fixed (flexible) working hours system: This system is designed for employees whose working hours are impractical or difficult to measure. These employees are typically paid a set monthly salary instead of being paid by the hour.
Overtime in China
Overtime is permitted in China but is capped at 36 hours per month on top of an employee’s contracted hours. Overtime must also be compensated at a specific rate, which depends on the working hours system adopted by the employer. If the employee works standard working hours, they must be paid:
- 150% of normal wages for standard overtime hours.
- 200% of normal wages for work on rest days.
- 300% of normal wages for work on official public holidays.
Employees engaged in the comprehensive working hours system must receive compensation for overtime worked above the standard hours per cycle. However, there are no designated rest days. Therefore, the minimum overtime rates are:
- 150% of normal wages for standard overtime hours.
- 300% of normal wages for work on official public holidays.
This applies even if the worker’s normal shift pattern means they work a public holiday.
Industry- and region-specific working hours in China
Some industries and regions have specific rules regarding overtime and compensation, which employers need to be aware of. It’s important to check local regulations and any rules that apply to your industry to ensure compliance with working hours laws.
Remote work in China
As in many countries, remote work has recently become more popular in China, especially for white-collar workers. Read on to learn what employers need to know about remote work in China.
Remote work laws in China
There are currently no specific laws regarding remote work in China that employers need to be aware of. However, general labour law regulations apply to remote workers as well as those working in person. These include regulations on working hours, labour conditions, and equipment, for example.
Employer responsibilities towards remote workers in China
Remote work in China must generally be agreed between the employer and employee, though it can also be implemented through a collective bargaining agreement. Employers in China typically don’t have the right to require employees to work from home without their agreement and are not obliged to accept an employee’s request to work from home.
Employers in China must generally provide employees with the equipment and supplies they need to perform their jobs, even if they work from home. Employers may also have to reimburse employees for the additional costs associated with working remotely, such as internet access and electricity. There is no specific work-from-home allowance for employees working remotely in China.
Health and safety for remote workers in China
As with onsite workers, employers in China are responsible for ensuring their remote employees have a safe and healthy working environment. Since this is difficult to ensure in practice when an employee is working from home, employers may require remote employees to ensure their home is a safe, healthy, and suitable for work.
Tailored employment contracts in 100+ countries
Like all countries, China has its own rules and regulations when it comes to employment contracts — and non-compliance could land your company in hot water.
Thankfully, our team is experienced in drawing up tailored, compliant contracts in China (and more than 100 countries worldwide). That means that, when you work with us, you won’t need to waste time worrying about whether you’ve got it right. Instead, you can focus on what matters: your business.
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