Employment Contracts in China: Types, Required Clauses and Signing Checklist

TL;DR

• A written employment contract should be signed when the employment relationship starts. Letting an employee work for more than one month without one can create statutory double-wage exposure and, if the gap continues, further consequences.
• Chinese law recognizes fixed-term, open-ended and project-completion contracts. The right choice depends on the role, expected duration and the employee's service history; it is not simply the template the employer prefers.
• The contract must contain the statutory core terms, but foreign employers also need workable language on compensation, bonus, work location, working time, confidentiality, intellectual property, policies and bilingual interpretation.

If you are preparing a China employment template or first local hire, talk to ChinaBizPro before the start date so the offer, contract, payroll setup and workplace policies can be reviewed together.

A contract is more than an offer letter

An offer letter records the proposed commercial terms, but it does not normally replace the written employment contract required under Chinese labor law. The employment relationship is established when the employee starts work, even if the paperwork is unfinished. The safest operating rule is therefore to complete the contract before or on the first working day.

If employment continues for more than one month without a written contract, the employer may face additional wage liability; a longer gap can create further consequences. A late signature should be handled with advice rather than backdated.

The contract also sits inside a wider hiring system. The China hiring guide for foreign companies explains how the employing entity, payroll, individual income tax, social insurance, working time and workplace rules connect.

The three statutory contract types

Contract type	Typical use	Points to review before choosing it
Fixed-term	Employment with an agreed start and end date.	Renewal history, business need, termination at expiry and whether the employee may be entitled to an open-ended contract.
Open-ended	Employment with no agreed expiry date. It is not lifetime employment; statutory termination rules still apply.	Mandatory offer circumstances, prior service, restructuring plans and evidence needed for any later termination.
Completion of a defined task	Employment ending when a clearly defined assignment is completed.	Whether the task and completion event are objectively identifiable and suitable for this contract type.

Do not use a sequence of short fixed terms merely to preserve flexibility. Under the Labor Contract Law, an open-ended contract can become relevant in circumstances including long continuous service and certain renewal histories. The exact analysis depends on the employee's record, local practice and whether a statutory exception applies.

Required clauses checklist

The written contract should contain the statutory information and operational terms needed to run the relationship. At minimum, check that it addresses:

• The employer's legal name, address and legal representative or principal person in charge.
• The employee's name, address and valid identity-document details.
• The contract term and commencement date.
• Job content and work location.
• Working hours, rest and leave arrangements.
• Compensation, including the payment method and timing.
• Social insurance.
• Labor protection, working conditions and occupational-hazard protection where applicable.
• Other items required by law for the role or location.

The employer identity must be the registered China employing entity, not simply the overseas parent, brand or business unit. The Chinese company name, unified social credit code and signing authority should match its corporate records. The post-registration checklist is useful when the entity is still opening bank, tax, fapiao and employment accounts.

Clauses foreign employers should draft carefully

Compensation and variable pay

State the fixed salary, normal payment date and whether amounts are gross or net of employee taxes and contributions. Define the basis for allowances, commission and bonus instead of relying on a global plan that the China entity cannot operate.

The offer letter, contract, bonus plan, payroll register and bank payment should tell the same story.

Job duties and work location

Use a job description that is specific enough to identify the role but does not freeze every daily task. A broad clause allowing the employer to change any role, city or salary unilaterally may not provide the flexibility expected. Material changes should normally be documented and agreed through an appropriate amendment process.

Working time, leave and overtime

Identify the applicable working-time system. Flexible or comprehensive working-hour systems may require approval and are not automatic for every manager. The contract should work with the attendance, leave and overtime rules in the employee handbook rather than trying to reproduce every process.

Probation

Probation is regulated and cannot be added freely. Its permitted maximum depends on the contract term, it may be agreed only once with the same employee, and probation salary is subject to statutory limits. The contract should also connect the probation assessment to a clear role description and documented performance standards.

Confidentiality, intellectual property and non-compete

Confidentiality and intellectual-property clauses should identify protected information, work product, permitted use, return obligations and continuing duties. A post-employment non-compete is not a standard clause for every employee. It should be limited to eligible personnel, define scope and duration, and account for the statutory compensation framework.

Handbook and policies

Incorporate workplace rules by a clear reference. Rules directly affecting employees' material interests may require an employee consultation and communication process, with evidence of adoption and delivery.

Language and precedence

A bilingual contract is practical for a foreign-invested company, but both versions must express the same obligations. State how inconsistencies will be handled and ensure the Chinese version is professionally reviewed. A literal translation of an overseas agreement often imports concepts that do not fit Chinese law.

Seven-step signing process

1. Confirm the employer and role

Verify that the China entity is the intended employer, the role fits its operations and the authorized signatory or company-chop process is clear.

2. Approve one compensation record

Document fixed salary, bonus design, allowances, benefits, working location and employer cost. Resolve discrepancies before issuing the offer.

3. Select the contract type

Consider the expected duration, service history, prior contracts and completion event. Record why the selected type fits the role.

4. Localize the template

Adjust mandatory terms, working-time language, leave, payroll, data, confidentiality and policy references for the employee's work city and role.

5. Check special arrangements

Review probation, non-compete, foreign-national work authorization, part-time status, occupational hazards and any regulated position separately.

6. Sign before work starts

Have the employer and employee sign or apply the approved company chop, give the employee a copy and preserve proof of delivery. Do not backdate.

7. Reconcile onboarding

After setup, confirm that the payroll record, IIT withholding, social-insurance information, bank account, start date and contract terms are aligned.

Employment document pack

The contract should be retained with the documents that explain and support it:

• Approved job description and hiring request.
• Offer letter and compensation approval.
• Signed contract and any amendments.
• Necessary employee identification.
• Handbook receipt, privacy notice, confidentiality and IP documents.
• Working-time approval where a special system applies.
• Payroll, IIT, social-insurance and housing-fund onboarding evidence.
• Work-permit and residence documents for foreign nationals.
• Performance, salary-change, leave and disciplinary records created during employment.

Restrict access to the personnel file. HR data should not be copied into unrestricted shared folders merely because payroll and management both need selected information.

Common drafting and signing mistakes

1. Treating the offer letter or an overseas agreement as the Chinese written employment contract.
2. Allowing work to begin and planning to sign after the first payroll run.
3. Naming the overseas parent as employer while the China entity manages and pays the employee.
4. Using repeated short fixed terms without checking open-ended contract rights.
5. Writing an unlimited right to change role, city, salary or working hours.
6. Leaving bonus, allowance and gross-versus-net treatment inconsistent across documents.
7. Adding probation or non-compete language without checking statutory limits.
8. Referring to a global handbook that was never localized, adopted or communicated in China.
9. Producing English and Chinese versions with different termination, compensation or dispute terms.
10. Backdating a late contract instead of assessing and resolving the actual exposure.

Frequently asked questions

Must every employee have a written contract?

For a standard employment relationship, the employer should conclude a written employment contract when the relationship is established. Special categories such as qualifying part-time work have distinct rules, so the actual arrangement should be classified before using a different form.

Is an open-ended contract permanent employment?

No. It has no agreed expiry date, but the relationship can still end through lawful resignation, mutual termination, statutory employer termination or other legally recognized routes. The employer still needs a valid basis, procedure and evidence.

Can the contract be English only?

The employee must understand the terms, and local authorities or tribunals may need to review them. A carefully aligned Chinese or bilingual contract is normally more practical for a China employer than an English-only overseas template.

Official references

• Labor Contract Law of the People's Republic of China
• National Database of Laws and Regulations
• Qianhai Cooperation Zone People's Court: Employment Risk Guide for Foreign-Invested Enterprises