Chinese employment law is employee-protective. Plan accordingly.
Termination "at will" does not exist in China. An employee on a second fixed-term contract is generally entitled to an open-term contract; a termination without statutory grounds means double severance; and a missing written contract means double wages. Foreign employers discover these rules in labor arbitration — we'd rather you discover them in an onboarding memo.
Building a compliant China workforce
- Employment contracts — bilingual, localised contracts with enforceable probation, confidentiality and training-bond clauses
- Employee handbooks — the legal foundation for discipline and termination; properly adopted through democratic consultation procedures
- Compensation structure — social insurance and housing fund compliance, bonuses, commissions, equity incentives for PRC staff
- Non-competes — enforceable only with monthly post-termination compensation; we structure them so you pay only for what you need
Managing exits
- Performance management and lawful unilateral termination
- Negotiated separations and mutual termination agreements
- Mass layoff procedures and economic redundancy
- Labor arbitration and court representation
Foreign employees
Work permits (Category A/B/C), residence permits, secondment structures and the employment implications of using a PEO/EOR before your entity exists.
Frequently asked questions
How much does it cost to terminate an employee in China?
Statutory severance is one month's salary per year of service (capped at 3× local average wage for high earners). Termination without lawful grounds doubles this. A negotiated mutual termination at N+1 or N+2 is often cheaper than a contested arbitration, even when you would likely win.
Can we hire in China without a local entity?
Not directly — only Chinese-registered entities can employ PRC staff. Interim options include engaging staff through a licensed labor-dispatch/EOR provider or as independent contractors (with misclassification risk we will assess). Most clients use an EOR while their WFOE is in formation.