- China is not an at-will jurisdiction: an employer may terminate only on statutory grounds, with severance in most scenarios — plan exits at hiring time, not termination time.
- A written employment contract must be signed within one month of the start date; miss it and the employee can claim double wages for up to eleven months (Employment Contract Law art. 82).
- Probation is capped by contract length (up to six months for contracts of three years or more) and can be used once per employee; dismissal during probation still needs a reason.
- Expatriates need a work permit and residence permit before working — a business visa is not a work visa; permits are tiered (A/B/C) by qualifications, and Shanghai runs comparatively friendly channels for senior talent.
- Social insurance applies to local employees and, as a rule, to foreign employees too, unless a bilateral totalisation agreement exempts specific items — check your executive's home country.
- The employee handbook is your termination evidence base: adopt it through the democratic consultation and publication procedure or discipline-based dismissals may fail for that reason alone.
Bringing your people in: work and residence permits 外籍员工许可
A foreign national working in mainland China needs, in sequence: a work permit notification obtained by the employer, a Z (work) visa to enter, then conversion into the work permit and a work-type residence permit after arrival. Working on a business (M) visa is illegal employment for both the individual and the company. The unified work-permit system grades applicants A (high-end talent — fast lanes, relaxed limits), B (professionals — the standard route, points- and degree-based) and C (temporary or seasonal). Criteria and local implementation evolve; Shanghai's channels for senior executives, high-salary talent and graduates of recognised universities are among the country's most workable, and the Oriental Hub zone now offers a separate visa-free path for short-term business activities — useful for negotiations and training, but it is not a work permit and does not authorise onshore employment.
Permits attach to the employing entity: change of employer means a permit change, and a representative office chief representative runs on a parallel registration track. For the executive's own questions — family visas, housing, personal tax — see our Expats desk.
Hiring local staff: the contract is not optional 本地用工
The Employment Contract Law is employee-protective by design, and its first trap is procedural: a written contract must be concluded within one month of the employee starting work. From month two, an employee without a written contract earns double wages, for up to eleven months — one of the most commonly litigated (and most easily avoided) claims in China. After two consecutive fixed-term contracts, the employee can generally require an open-term contract; treat renewal decisions as seriously as hiring decisions.
Probation must fit the contract term (one month maximum for contracts under one year; two months under three years; six months for three years or open-term), may be agreed only once with the same employee, and carries reduced-but-not-free dismissal standards: the employer must still show the employee failed to meet lawful, communicated recruitment conditions. Non-compete covenants are limited to senior and secrecy-bound personnel and require monthly compensation after departure — our Employment desk (Chinese) covers the 2025 judicial-interpretation refinements in depth.
Payroll, social insurance and the real cost of a hire 社保与用工成本
On top of gross salary, employers contribute to five social insurances (pension, medical, unemployment, work injury, maternity) and the housing fund, at municipal rates applied to capped bases — in Shanghai the combined employer burden is commonly a substantial fraction of salary, so budget total employment cost, not headline pay. Foreign employees are, as a rule, within the social insurance system; bilateral totalisation agreements (Germany, Japan, South Korea and others) exempt enumerated items for posted staff — verify the specific agreement and local practice for each expatriate, subject to current regulations. Individual income tax is withheld monthly by the employer; expatriate packages (housing, tuition) sit within a shifting preferential regime that should be checked at offer stage.
Termination: the rule foreign HQs find hardest to believe 解除规则
There is no at-will termination. An employer may end an employment relationship only through: mutual agreement (severance follows if employer-initiated); fault-based dismissal (serious rule violations, fraud, criminal liability — no severance, but the employer bears the burden of proof and the rulebook must have passed the democratic-procedure test); no-fault termination with 30 days' notice or pay in lieu (incompetence after training or transfer, medical incapacity, frustration of circumstances — severance applies); or economic layoff under statutory procedure. Statutory severance is one month's salary per year of service (the "N" in the N / N+1 / 2N shorthand); unlawful termination costs double (2N). Certain employees — pregnant, on medical leave, near retirement with long service — enjoy dismissal protection entirely.
The practical playbook for foreign employers is boring and effective: adopt the handbook properly, document performance, calculate the exit cost before acting, and prefer negotiated separations with signed releases. The arithmetic and case law are set out in our Chinese-language research at the Employment desk; for disputes that do reach arbitration, see Dispute Resolution.
- Labour Law of the PRC 《劳动法》 —— the general statutory floor on working hours, wages and labour protection; supports 本地用工 and 社保与用工成本.
- Employment Contract Law of the PRC, arts. 10, 19, 24, 82 《劳动合同法》 —— the written-contract requirement and its penalty, probation limits and post-employment non-competition; supports 本地用工.
- Employment Contract Law of the PRC, arts. 36–47, 87 《劳动合同法》 —— the statutory grounds for ending an employment contract, severance and the consequence of unlawful dismissal; supports 解除规则.
- Social Insurance Law 《社会保险法》 —— mandatory social insurance participation and contributions; supports 社保与用工成本.
- Rules for the Administration of Employment of Foreigners in China 《外国人在中国就业管理规定》 —— work permit and employment requirements for foreign nationals; supports 外籍员工许可.
- Interim Measures for Participation in Social Insurance by Foreigners Employed in China 《在中国境内就业的外国人参加社会保险暂行办法》 —— social insurance for expatriate hires; supports 社保与用工成本 and 外籍员工许可.
Validity note 效力提示：Rules cited as in force at the review date; municipal rates and permit practice vary by city and over time — the current official text prevails.
This page is general legal information, not legal advice on any specific matter. 本页为一般性法律信息，不构成对具体个案的法律意见。
