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When hiring in China, it’s important to note that written labour contracts are mandatory and termination is hard to do unilaterally.
In addition, mandatory social insurance and housing fund contributions, covering pension, medical, unemployment, and housing, vary by city. It’s important to follow these labour laws to ensure full compliance and avoid high fees and penalties. Finally, Mandarin-language documentation is often expected or required for official filings.
China offers employers access to a large, skilled talent pool, especially in software engineering, AI/ML, hardware design, and manufacturing-adjacent fields, often at lower cost than US or Western European hires for comparable experience levels.
English proficiency is strong in tech hubs like Beijing, Shanghai, and Shenzhen, and the country produces a large number of STEM graduates each year.
It can also be a strategic choice if you're building products for the Chinese market or need engineering talent close to Asian supply chains and manufacturing partners.
Finding talent in China is one thing, but employing them legally in alignment with local labour laws and regulations is a completely different challenge. Luckily, Native Teams’ Employer of Record services can help you hire in China without setting up a legal entity and handle social security contributions and overall compliance on your behalf.
Hire your first Chinese employee with Native Teams.
These are some of the regulations employers need to comply with when hiring and onboarding new team members in China.
The labour law protects workers' rights, establishes orderly labour relations, and improves working conditions. It requires employers to execute employment contracts according to national labour standards and regulates working hours, overtime, and rest periods to prevent excessive work demands. It also sets rules for wage payments and minimum wage levels, and guarantees maternity leave, sick leave, and annual leave.
The main types of contracts in China are the indefinite contract and the fixed-term contract.
Fixed-term employment contracts are commonly used when there is a clear need for an employee for a specific, limited period, such as in seasonal work, temporary projects, or covering for an absent employee.
The length of employment is fixed, meaning that when the specified period expires, the employment relationship is automatically terminated unless both the employer and the employee mutually agree to extend or renew the contract.
The contract must include the employer's full legal name, address, contact details, and legal representative (if applicable). It must also include the employee's full name, address, and contact details. The contract must define its duration, fixed-term or indefinite, to clarify the arrangement's longevity and obligations for both parties.
Download a free employment contract for China through Native Teams.
Employers must enter into a written employment contract with the employee to formalise and legally recognise the employment relationship. They must sign the contract within one month of the employee's start date.
The standard working week is eight hours per day and 40 hours per week, with at least one day off per week. Overtime must not exceed one hour per day in principle, or three hours per day in exceptional circumstances, and must not exceed 36 hours per month.
Night work is typically defined as work performed between 10:00 PM and 6:00 AM. Employers cannot assign pregnant women or breastfeeding mothers to night shifts, and minors under 18 are generally restricted from night work.
The law doesn't mandate specific requirements for the length or frequency of daily breaks, though employers may provide an unpaid break of up to one hour during the workday. Employees are entitled to at least one full rest day per week, typically on Saturday or Sunday.
Chinese employees are entitled to annual leave based on cumulative work experience: no statutory entitlement for less than 1 year, 5 days for 1 to 10 years, 10 days for 10 to 20 years, and 15 days for more than 20 years.
China's minimum wage depends on the region and local economic conditions. By law, local governments have to review and adjust these rates at least every two years to keep pace with growth, inflation, and cost of living.
To calculate the salary and taxes in China, click here.
Employees can take sick leave if illness or a non-work injury keeps them from working, usually with a medical certificate from a licensed doctor or hospital. How much paid sick leave they get depends on how long they've worked there: 3-6 months for those with under 10 years of service, and 6-12 months for those with more than 10 years.
The national government encourages local authorities to set their own parental leave policies, so entitlements vary by region. In Beijing and Shanghai, eligible parents get five fully paid working days of parental leave per year until their child turns three. This leave accrues based on the child's birthdate rather than the calendar year.
While there's no unified national law on paternity leave for male employees in China, eligible female employees get 98 days of maternity leave, with 15 days available before delivery.
They can get 15 extra days for complications or for each additional child in multiple births. Local regulations often extend this further. Cities like Beijing and Shanghai offer up to 158 days. Employees who miscarry get 15 days off (if within four months of pregnancy) or 42 days (if after four months).
China doesn't allow at-will employment. Employees can resign without giving a reason, just by submitting written notice. Employers, though, can only terminate a contract on specific legal grounds: mutual agreement between both parties, the employee's own resignation (no reason needed), or dismissal by the employer, which requires a justified reason and supporting evidence.
Employers can immediately terminate a contract without notice if the employee commits serious misconduct or doesn’t meet the job requirements during probation; cases where the employee's actions or qualifications fundamentally break the terms of employment or fall short of what was expected at hiring.
Employers can also dismiss employees for poor performance or critical errors, but only if they can back it up with clear evidence.
The statutory minimum notice period is 30 days, though employers can pay one month's salary instead of giving notice. If a longer period was agreed upon, the employer has to honour it. Collective redundancies also require 30 days' notice. Mutual termination agreements (MTAs) don't require any statutory notice period.
Employees dismissed for reasons beyond their control, like layoffs or restructuring, may qualify for unemployment benefits, provided they meet a few requirements: at least one year of social insurance contributions before dismissal, involuntary job loss, and registration as unemployed with their local Human Resources and Social Security Bureau, usually within 60 days of leaving the job.
Employers must provide severance pay when: termination is mutually agreed upon at the employer's request, the employee quits due to the employer's fault, or the employer terminates the employee without cause.
Severance is based on the employee's average monthly salary over the 12 months before termination. If that salary exceeds three times the local average monthly salary, severance is capped at three times the local average, with a maximum of 12 years factored into the calculation.
Employers and employees can agree to only one probation period per employment relationship. The duration depends on the contract's duration. For fixed-term contracts of three years or more, or open-ended contracts, probation can't exceed six months.
IP rights in employment are governed by several legal provisions covering ownership and protection of what employees create.
Generally, the employer owns any IP an employee develops during their work, including inventions, designs, works of authorship, as outlined in employment contracts and company policies.
Under the PRC Patent Law, inventions related to the employer's business belong to the employer unless otherwise agreed. Employees are entitled to rewards or remuneration for inventions that bring the employer economic benefits, and can seek recognition for their contributions even though the employer holds the rights.
Employees have the right to access personal information their employer holds on them. China's Personal Information Protection Law (PIPL) requires employers, as data processors, to comply with PIPL and other data protection laws when handling employee data.
Under the PRC Labour Contract Law, employers and employees can include a post-termination non-compete clause in a labour contract or confidentiality agreement. These typically apply to senior managers, specialised technical staff, or others trusted with confidential company information. Non-compete restrictions can last a maximum of 24 months.
In China, employment contracts or company policies must clearly define remote work arrangements to avoid misunderstandings and stay compliant with local laws.
Employers should specify the approved remote work location, set clear working hours, and outline expectations for communication and responsiveness.
Remote work in China still comes with tax and social security obligations for both employers and employees. Regardless of where they physically work, employees must comply with Individual Income Tax (IIT) rules and contribute to standard social security programs.
Individual income tax is typically calculated based on the employee's place of residence, while social security contributions cover pension, medical insurance, work-related injury insurance, unemployment insurance, and maternity insurance.
Employers should encourage dedicated workspaces with ergonomic chairs and desks adjusted to reduce strain. Clear workspace guidelines also help; keeping areas tidy and organised prevents accidents, and fire safety and emergency exits deserve attention, especially in densely populated environments.
China's labour market allows companies to build teams at scale quickly, something harder to do in smaller talent markets. It also offers deep expertise in specific niches like e-commerce, fintech, gaming, hardware/IoT, and supply-chain-linked engineering, often harder to find at the same depth elsewhere.
Many Chinese professionals, especially in major cities, have experience working at multinational companies, giving them familiarity with international business practices and standards.
Heavy government investment in AI, semiconductors, and advanced manufacturing has also grown a large, specialised workforce in these areas.
Native Teams helps you employ and pay your team in China directly through owned entities and infrastructure.
Get in touch with us. We'll be happy to assist you!
