China Employment Law FAQ

Recognition depends on the applicable authorization or status category, not merely on having signed a contract.

Article 4 of Judicial Interpretation II identifies permanent residence, a work permit combined with lawful stay or residence, and completion of other nationally prescribed formalities as qualifying categories.

Outside a qualifying category, recognition may be refused. Article 33 of Interpretation I addresses employment without required authorization. Separately, Article 41 of the Exit and Entry Administration Law requires the relevant work and residence authorization.

Evaluate your employment status

A qualifying foreign employee may have termination-related entitlements; authorization, grounds and applicable practice matter.

Articles 46 and 47 of the Employment Contract Law address statutory severance and its calculation. Article 87 provides compensation at twice the applicable statutory severance amount for unlawful termination.

These are distinct remedies, not automatically cumulative. A dismissal does not establish unlawfulness by itself. The stated grounds, procedure, evidence, service period, remuneration and contract terms require evaluation.

Location and contract review

Do not assume that a formula will be applied identically in every foreign-employee case. The engagement should examine the relevant court practice and employment arrangement, including where the employee works in Shanghai.

Employment exit and representation services

The foreign-employment regulations contain a five-year limit; an open-ended entitlement requires separate evaluation.

Article 17 states that the contract term must not exceed five years and provides for renewal through the prescribed process. Article 18 addresses the employment certificate at expiry.

The application of the Employment Contract Law’s open-ended contract provisions must be assessed against the employee’s status, authorization and relevant practice. Contract duration and current permit validity should not be treated as interchangeable.

Employment contract review

Qualifying employees are entitled to statutory paid annual leave; the unused-leave calculation has important conditions.

The annual-leave regulation provides eligibility after one year of continuous work and sets leave at five, ten or fifteen days according to cumulative service, subject to its conditions and exclusions.

The 300% figure

The statutory unused-leave remuneration figure includes ordinary wages already paid. Where those wages have been paid, the additional unpaid component is generally 200%, not another 300%.

The implementation measures use the preceding twelve-month average monthly remuneration, excluding overtime pay, and a 21.75-day divisor. Leave records, eligibility, proportional calculations and any applicable exceptions must also be examined.

Timing

Article 27 of the arbitration statute establishes a general one-year limitation framework. Its application to particular leave claims requires assessment; this is not a universal entitlement to recover exactly two years.

Evaluate annual-leave records and claims

It can, but signature alone does not establish that every restriction is enforceable.

Employment Contract Law Articles 23 and 24 address eligible employees, post-employment compensation and a maximum two-year restriction.

Interpretation II, Article 13, also addresses access to protected confidential matters and proportionality: restrictions must correspond to what the employee knew or accessed. Excessive scope may be invalid.

Non-compete evaluation and negotiations

An entity mismatch presents a material authorization and employment-status issue.

Article 23 of the foreign-employment regulations requires consistency with the recorded employer and prescribed procedures for changes.

The contract entity, permit record, actual management, remuneration arrangements and any approved transfer must be evaluated together. Working for an associated company does not by itself establish that the authorization extends to that company.

Evaluate the employing entity and records

Non-renewal can raise both financial-entitlement and work-authorization questions.

Article 46(5) addresses severance on fixed-term expiry, including an exception where the employee declines renewal on maintained or improved terms.

For a foreign employee, evaluate the proposed renewal, employment status and applicable practice. Separately, verify the permit and residence position with the relevant records and procedures.

Employment exit services

Participation is generally required for qualifying foreign employees, subject to applicable treaty arrangements.

Article 3 addresses participation in pension, medical, work-injury, unemployment and maternity insurance, with contributions under the applicable rules. Article 9 provides for relevant bilateral or multilateral social-insurance agreements.

Under Article 5, an employee leaving before the prescribed pension age can retain the personal account and accumulate contribution periods upon returning to employment in China. On a written application terminating the insurance relationship, the personal-account balance may instead be paid as a lump sum.

That provision does not establish a refund of all employer contributions. Treaty eligibility, covered branches, account records and administrative requirements require review.

Evaluate employment-related insurance issues

A lawfully established permanent representative office can be a party to an employment dispute.

Interpretation II, Article 5, also permits an application to add the foreign enterprise to the litigation. Party eligibility does not itself determine the employment relationship or substantive liability.

Employment dispute representation

Employment disputes generally proceed through labor arbitration before court litigation. A foreign-law clause does not automatically displace Chinese rules.

Procedure

The arbitration statute provides the framework for applications, awards and subsequent proceedings. Not every award follows the same challenge route: Articles 47–50 distinguish certain final awards and the available employee and employer procedures.

Governing law

Article 43 of the Law on the Application of Laws to Foreign-Related Civil Relations generally points to the employee’s place of work; where that is difficult to determine, it points to the employer’s principal place of business. Labor dispatch has an additional rule.

Article 4 preserves direct application of mandatory Chinese provisions. A contract selecting foreign law should therefore be examined alongside the actual working arrangement and the statutory conflict rules.

Evaluate the procedural route