Whether you’re setting up a WFOE, hiring your first local employee, or scaling your China operations — understanding China’s 2026 labor regulations is non-negotiable. This guide covers everything foreign employers need to know, updated for the Supreme People’s Court September 2025 labor dispute interpretation, the retirement age reform, tightened foreign work permit enforcement from February 2026, and the latest provincial minimum wage adjustments.
Why 2026 Is a Critical Year for HR Compliance in China
Four major developments demand immediate attention from foreign employers.
The Supreme People’s Court Interpretation II, effective September 1, 2025, significantly raises the compliance burden for foreign-owned companies — confirming that any agreement to partially skip social insurance contributions is void, tightening rules on open-ended contracts and non-competes, and increasing financial liabilities in disputes.
The retirement age reform, effective January 1, 2025, has launched a 15-year phased increase:
- Male employees: retirement age rises from 60 → 63
- Female white-collar employees: 55 → 58
- Female blue-collar employees: 50 → 55
Work permit enforcement was tightened in February 2026, with full pre-pandemic salary thresholds and age ceilings reinstated nationwide — COVID-era relaxations have been fully withdrawn.
Finally, ongoing provincial minimum wage adjustments have placed:
- Shanghai at RMB 2,740/month
- Beijing at the highest hourly rate of RMB 27.7
1. Minimum Wage by Region 2026
| Region | Monthly (RMB) | Hourly (RMB) | Notes |
| Shanghai | 2,740 | 25.0 | Highest monthly nationally |
| Beijing | 2,420 | 27.7 | Highest hourly nationally |
| Shenzhen | 2,520 | 22.2 | Raised April 2025 |
| Tianjin | 2,310 | 26.6 | Second highest hourly |
| Jiangsu (Tier 1) | 2,490 | 22.0 | Varies within province |
| Zhejiang (Hangzhou) | 2,280+ | 22.0+ | Varies by district |
| Guangdong (excluding Shenzhen) | 2,100–2,300 | Varies | Tiered by district |
| Chengdu (Sichuan) | 2,100 | 20.8 | Western China hub |
| Tier 3–4 cities | 1,750–1,900 | 17–19 | Significant variation |
Always apply the local minimum wage where the work is performed — not where the company is registered.
The effective employment cost, including mandatory social insurance contributions, is typically 35–45% higher than the stated minimum wage figure.
2. Employment Contracts
This is the area that most frequently and expensively affects foreign companies in China — and the September 2025 SPC Interpretation II has made enforcement stricter.
A written employment contract must be signed within 1 month of the employee’s start date.
If not:
- The company must pay double salary from month two onward
- Liability continues for up to 11 months
- After 1 year without a written contract, the employee is automatically deemed to have an open-ended permanent contract
Never allow employees to begin work without a signed contract.
Fixed-Term Contracts
Fixed-term contracts remain the most commonly used structure.
However:
- After two consecutive fixed-term renewals, or
- After 10 continuous years of service
…the company must offer an open-ended contract if requested by the employee.
Open-Ended Contracts
Open-ended contracts:
- Have no expiry date
- Provide stronger employee protection
- May result in reinstatement or double severance if termination is unlawful
Employees with:
- 15+ years of continuous service, and
- Fewer than 5 years remaining until retirement age
…cannot generally be terminated due to contract expiry or business restructuring.
3. Severance & Termination
Termination in China cannot be done unilaterally without legal grounds.
Unlawful termination may lead to:
- Employee reinstatement, or
- Double severance compensation
Severance Formula (Jingji Buchang)
Severance is calculated at:
- 1 month’s salary per full year worked
Calculation rules:
- More than 6 months but under 1 year = counted as 1 full year
- 6 months or less = counted as half a month
Mass Layoffs
For layoffs involving:
- 20+ employees, or
- More than 10% of the workforce
…the company must:
- Explain the situation to the trade union 30 days in advance
- Report the layoff to the local labor bureau
4. Social Insurance & Housing Provident Fund 2026
All companies in China — including WFOEs — must enroll employees in:
- Five Insurances
- Housing Provident Fund
Any private arrangement to reduce contributions is legally void under the September 2025 SPC ruling.
Non-compliance may result in:
- Back-payments
- Daily late fees of 0.05%
- Administrative sanctions
| Program | Employer | Employee | Coverage |
| Pension | ~16–20% | 8% | Retirement fund |
| Medical Insurance | ~6–10% | 2% + fixed | Healthcare |
| Unemployment Insurance | 0.5–1% | 0.5% | Post-layoff support |
| Work Injury Insurance | 0.2–1.9% | — | Workplace injuries |
| Maternity Insurance | 0.5–1% | — | Maternity leave |
| Housing Provident Fund | 5–12% | 5–12% | Home ownership |
Rates and contribution bases vary significantly by city.
Always verify:
- Local contribution rates
- Salary ceilings
- Contribution bases
Declaring a lower salary base than actual earnings is a growing enforcement risk.
5. Working Hours & Overtime
Standard working hours in China:
- 8 hours/day
- 40 hours/week
Overtime rates:
- Weekday overtime: 150%
- Weekend overtime without compensatory leave: 200%
- National public holidays: 300%
Maximum overtime:
- 3 hours/day
- 36 hours/month
Two additional public holidays took effect on January 1, 2025, bringing the total to 13 statutory public holidays annually.
FAQ
Do China’s labor laws apply fully to WFOE companies?
Yes — fully and without exception.
The SPC’s September 2025 interpretation specifically reinforces stricter enforcement against foreign-owned SMEs and international companies.
Can we hire in China without setting up a local entity?
Yes, through an Employer of Record (EOR).
The EOR becomes the legal employer of record, handling:
- Employment contracts
- Payroll
- Social insurance
…while your team operates directly for your business.
Our employee has been working without a written contract for 3 months. What is our exposure?
The company is liable for double monthly salary beginning from month two.
You should:
Consult an HR advisor to mitigate existing liability
Sign the contract immediately
Review the employee file
Our expatriate’s work permit is up for renewal. What changed in 2026?
As of February 2026:
- Full pre-pandemic salary thresholds are reinstated
- Age ceilings are enforced nationwide
- COVID-era waivers are no longer available
Begin renewal processes early to evaluate all possible options.
2026 HR Compliance Checklist for Foreign Employers in China
- Ensure all employees sign written employment contracts within their first month
- Verify contract type, probation period, and salary against September 2025 SPC Interpretation II requirements
- Confirm district-level minimum wage for every city where employees are based
- Enroll all employees in Five Insurances and Housing Provident Fund using actual salary contribution bases
- Audit overtime records and confirm the 36-hour monthly cap is not exceeded
- Apply correct overtime rates (150% / 200% / 300%)
- Update HR records for the phased retirement age reform
- Initiate work permit and residence permit renewals early under the stricter February 2026 enforcement standards
- Review and correct any social insurance reduction arrangements that are now legally void under the SPC ruling
How Big Fish Global Can Help
Big Fish Global has supported 1,000+ international enterprises in expanding compliantly into China since 2018.
Our multilingual team (English, Bahasa Indonesia, Mandarin) covers:
- Employer of Record (EOR) — hire in China without a local entity
- Payroll & Social Insurance Management — compliant payroll across major Chinese cities
- HR Consulting — contract structuring, compliance audits, and SPC readiness reviews
- Work Visa & Immigration — work permits and residence permits under 2026 enforcement standards
- Legal Services — WFOE registration, company amendments, trade union advisory, and regulatory filings
