China Employment Law Updates 2025

Employers in China need to be ready to implement these latest regulations for their employees in 2025

In this article, we will delve into the 2025 Employment Legislation Changes for Employers in China. Let’s understand the key updates and amendments in the provincial as well as federal labor laws that are expected to impact employers across various sectors.

These amendments include areas such as illness and disability benefits within the basic pension framework, flexible retirement arrangements, and revisions to public holiday entitlements.

Here’s what employers need to know to stay compliant and adapt to the new regulations across China.

Public Holidays and Workforce Planning in 2025

On 12 November 2024, China’s State Council published the official 2025 public holiday calendar via a circular from the General Office. A key update starting 1 January 2025 is the increase in statutory holidays by two days, adding one extra day each to the Spring Festival (Chinese New Year) and Labour Day holidays.

While this change is a welcome benefit for employees, it also brings implications for employers, particularly in how they manage staff schedules, payroll, and overtime.

For workers under the standard working hours regime, the additional public holidays will not impact the number of salary calculation days per month. According to Article 51 of China’s Labour Law, public holidays are treated as fully paid working days. Therefore, when calculating wages, these days are included just like any regular workday.

Since daily and hourly wage calculations are unchanged, overtime pay formulas also remain consistent for these employees.

However, the situation is different for employees on a comprehensive working hours system.

Here, the additional two public holidays do affect total working hours, which in turn has an impact on wage calculations.

Revised comprehensive working hours figures for 2025:

Working days per year = 365 – 104 rest days – 13 holidays = 248 days
Monthly average working days = 248 ÷ 12 = 20.67 days
Annual working hours = 248 × 8 = 1,984 hours

This marks a reduction from the previous 2,000 annual working hours. As a result, any work beyond 1,984 hours must be compensated as overtime.

If employees are required to work on the two added public holidays, employers must pay 300% of the employee’s regular wage for those hours. (Note: Flexible working hours systems may have region-specific rules.)

Illness and Disability Benefits under Basic Pension Insurance

As of 1 January 2025, a new regulation titled the Interim Measures for Illness and Disability Benefits under the Basic Endowment Insurance for Enterprise Employees came into effect.

Under this framework, employees enrolled in the national pension insurance system who have been certified as fully disabled due to illness or non-occupational injuries are now eligible to receive monthly illness and disability benefits. These payments will continue until the individual reaches the statutory retirement age.

A notable feature of this regulation is that both the employee and employer are exempt from making further pension insurance contributions during the benefit period. For businesses, this may offer some relief in terms of reduced social insurance costs, particularly for long-term disability cases. As a result, employers are advised to factor in this potential cost change when reviewing their workforce budgets and insurance planning.

Gradual Adjustment to China’s Statutory Retirement Age

The State Council’s Measures for the Gradual Adjustment of the Statutory Retirement Age were officially released on 13 September 2024 and took effect from 1 January 2025.

As outlined in the Measures, the statutory retirement age will be progressively increased over a 15-year period. For female employees with an original retirement age of 50, the age will rise by one month every two months. For female employees in managerial roles and male employees, the increase will be one month every four months.

Over time, the retirement age will reach 63 years for men, 58 years for female managers, and 55 years for other female employees.

In addition to retirement age, contribution years to the basic pension insurance scheme will also play a key role in retirement eligibility. Starting 1 January 2030, the minimum contribution period required to qualify for monthly pension payments will increase from 15 years to 20 years, with six-month increments each year.

Flexible Retirement Options Introduced

Also in effect from January 2025, the newly introduced Flexible Retirement System gives employees more choice around their retirement timing, aligning with the broader reform of the national retirement framework.

Workers who have completed the minimum required pension contribution period are now permitted to retire up to three years earlier than the statutory age. Conversely, those reaching the official retirement age can now choose to delay retirement by up to three years.

However, early retirement cannot begin more than three years before the applicable retirement age, and it must not fall below the original statutory ages of 50 or 55 for women and 60 for men.

This change enables individuals to tailor their retirement timing based on personal and financial circumstances. However, for employers, the implications are more complex. Companies need to be ready to manage earlier-than-expected departures or extended tenures of senior staff. This may require revisions to employment agreements, retirement policies, and succession planning frameworks.

Organisations may also need to update internal systems to track eligibility windows and remain compliant with the new guidelines. Ultimately, this added flexibility could impact labour costs, workforce composition, and talent retention strategies, requiring proactive planning.

Compliance for Foreign-Invested Enterprises (FIEs)

Foreign-invested enterprises (FIEs) were required to update their organisational structures by 31 December 2024 to align with the Foreign Investment Law and relevant domestic laws such as the Company Law.

Those that failed to make these adjustments by the deadline are now facing operational restrictions. The authorities have begun suspending the processing of registration-related matters—including expansions and new branch registrations—until companies meet compliance requirements.

Additionally, China’s updated Company Law has introduced important changes to corporate governance. Notably, limited liability companies (LLCs) with over 300 employees must now include employee representatives on their board of directors, unless they already have a board of supervisors that includes employee representatives.

While the legal basis is in place, detailed implementation guidelines from the authorities are still pending. This means businesses may encounter some uncertainty as they interpret and implement the changes.

Given the evolving landscape, foreign-invested companies should proactively review their internal governance structures and stay alert to new guidance at both national and local levels to avoid disruptions.

Updates to Occupational Diseases List

Effective 1 August 2025, China’s Occupational Diseases Catalogue will be updated to include musculoskeletal disorders and mental health conditions. This marks a shift toward a more comprehensive understanding of workplace-related health risks.

For employers, this will require revisions to workplace safety measures, especially in sectors with high physical or psychological demands. Companies may need to implement ergonomic improvements, mental health resources, and training for health and safety personnel. These updates could also lead to increased compliance obligations and related costs, making it crucial for HR and risk management teams to start planning now.

Trial Implementation of Work Injury Insurance Measures in Shaanxi Province

As of 1 January 2025, the Trial Measures for the Participation of Employed Individuals Beyond Statutory Retirement Age and Interns in Work Injury Insurance in Shaanxi Province have officially taken effect and are scheduled to remain in force for a two-year period.

Under these Measures, employers in Shaanxi Province now have the option to voluntarily enroll both interns and workers who are past the statutory retirement age in the provincial work injury insurance scheme.

The Measures provide detailed information regarding eligibility requirements, contribution calculations, required documentation, and other practical implementation standards to support employers in adopting this policy.

Other upcoming legislative developments to watch in 2025

Beyond the laws and regulations already enacted, several draft measures and proposed amendments released in 2024 remain under review.

Although not yet finalized, employers should monitor the following developments closely in 2025:

Draft Amendments to the Law on the Prevention and Control of Infectious Diseases

Following the release of the first draft amendment in October 2023, a second draft was issued for public consultation on 13 September 2024.

One key provision that remains unchanged in the second draft—Article 65—continues the expanded employer obligations originally proposed in the first draft (Article 66).

While the current law (Article 41, Paragraph 2) only prohibits employers from suspending salary payments during employee quarantine, the draft amendment goes further: it explicitly requires employers to maintain the employment relationship and provide wages in accordance with applicable laws when employees are unable to work due to certain mandated public health measures.

It also introduces the possibility for employers to access state-provided support or subsidies under these circumstances.

Draft Measures on Labour Capacity Assessment

On 12 October 2024, China’s Ministry of Human Resources and Social Security released a revised draft of the Measures for the Administration of Work Capacity Assessment for public feedback.

The draft aims to address three main challenges:

Unifying assessment standards across injuries caused by work, illness, or non-work-related incidents;
Improving internal systems for better oversight and risk management;
Simplifying procedures to make the process more efficient.

Of particular relevance to employers and employees is the broadened eligibility scope—the proposed changes would extend assessments to include not only work-related injuries but also disabilities arising from illness or non-work-related injuries. It also introduces standardized application conditions and procedures for all types of cases and improves efficiency through digitized services and reduced documentation requirements.

Planned Revisions to Social Insurance Laws and New Pension Legislation

In an article titled “Deepening the Reform of the Social Security System”, published on 20 December 2024, the Ministry of Human Resources and Social Security outlined future legislative priorities.

According to the article, the ministry intends to pursue revisions to the Social Insurance Law, the Unemployment Insurance Regulations, and the Work Injury Insurance Regulations. It also plans to draft a new Basic Pension Insurance Law, aimed at building a more comprehensive and cohesive legal framework for China’s social security system. These changes are designed to ensure that future reforms are firmly grounded in law, providing clearer legal protections and a more stable environment for implementation.

How Beyond Borders HR Can Help You

These 2025 employment legislation changes for China can be challenging for employers to process independently. Beyond Borders HR, a global HR consulting firm, stands ready to assist businesses in understanding and implementing these changes effectively.

With our extensive expertise in global HR practices, we ensure that your organization stays compliant with the evolving regulatory landscape. Reach out to Beyond Borders HR for tailored solutions, expert guidance, and seamless integration of these legislative updates into your HR policies and practices.

China Employment Law Updates 2025