Key Recent Developments in China’s Employment Law: A China-U.S. Comparative Perspective for Multinational Employers

China’s regulatory landscape continues to evolve, presenting both challenges and opportunities for multinational employers. The legal framework places strong emphasis on employee protections, and its complexity is compounded by regional variations in local rules, interpretations, and enforcement practices.

This article highlights recent legal developments and includes comparisons to U.S. law to help multinational employers spot primary risks and understand how the two jurisdictions differ. This comparative perspective can help global teams understand China’s legal landscape and evaluate how it may impact broader employment strategies.

Statutory Retirement Reform and Protection for Workers Working Beyond Statutory Retirement Age

Chinese Legal Framework Overview and Why it Matters to Employers

China’s employment law is highly structured and protective of employee rights, with tenure playing a critical role in determining statutory entitlements such as severance. Employees typically begin on fixed-term contracts, which are renewable. However, after two consecutive fixed-term contracts or ten years of continuous service, employers are generally required to offer an open-term (indefinite) contract. This transition limits the employer’s ability to terminate the employee without cause. Once an employee is on an open-term contract, termination becomes even more legally challenging and financially burdensome.

Mandatory retirement ages offer a lawful and predictable exit mechanism. Under new reforms, China is gradually increasing the retirement age to 63 for men and to 55 or 58 for women, depending on their role. Employers may end employment at retirement age without triggering statutory severance obligations, making this an important tool for managing long-tenured employees.

Understanding these rules is essential for effective workforce planning and cost management. Contract progression and termination constraints directly influence how employers structure employment relationships, especially for senior or long-serving staff. These legal considerations may inform decisions around contract termination, succession planning, and post-retirement engagement. Strategic alignment with China’s framework helps mitigate risk and optimize long-term labor costs.

Key Developments

Effective January 1, 2025, China’s retirement reform introduced several notable changes, pursuant to the Decision of the Standing Committee of the National People’s Congress on Implementing the Gradual Raising of the Statutory Retirement Age. For example, the statutory retirement age will gradually increase over time—rising from 60 to 63 for men and from 50 or 55 to either 55 or 58 for women, depending on their job type. Another major aspect is the extension of the pension contribution period. Starting January 1, 2030, the minimum contribution period for pension eligibility will gradually increase from 15 to 20 years. The Interim Measures for Implementing a Flexible Retirement System, also effective January 1, 2025, provide detailed rules for early and deferred retirement under China’s gradual reform framework. These measures offer employers and employees more options for managing workforce transitions. Notably, individuals who reached the statutory retirement age before December 31, 2024, are exempt from these adjustments.

In connection with these reforms, China released the Draft Interim Provisions on the Protection of Basic Rights and Interests of Overage Workers in late July 2025. These provisions aim to strengthen protections for individuals working beyond the statutory retirement age (“overage workers”) and to curb abuse in labor arrangements involving retirees. The public comment period closed at the end of August, and the draft has not yet taken effect as of this writing.

The draft provisions clarify that employers in China who engage overage workers must comply with specific requirements if those individuals are under the employer’s labor management and are performing paid work. Employers must enter into a written labor engagement agreement with overage workers, clearly specifying terms such as job responsibilities, work location, working hours, agreement duration, rest and leave entitlements, compensation, social insurance, labor protections, working conditions, and occupational hazard prevention measures.     

If retaining key personnel beyond retirement age is critical to the employer, careful planning and management of older workers becomes essential—especially with respect to benefit entitlements and labor oversight.

Mandatory Retirement in the United States

Except for a narrow set of professions, U.S. law does not impose statutory retirement ages for private employees. Further, with certain exceptions, federal and state age discrimination laws prohibit employers from unilaterally imposing mandatory retirement ages. 

However, retirement may be contractually agreed upon only in specific, lawful contexts, such as voluntary retirement incentive programs that comply with the applicable laws, including the Age Discrimination in Employment Act (ADEA) and the Older Workers Benefit Protection Act (OWBPA). U.S. courts review such programs carefully to ensure that they are not used to discriminatorily target and remove workers aged 40 or older. 

Thus, while U.S. law recognizes at-will employment, employers may not discriminate against older workers. Accordingly, in considering retirement-related measures, multinational employers with U.S. workers should carefully consider applicable U.S. age discrimination laws. 

Public Holidays

Overview of Public Holidays in China and Implications of Holiday Work

China’s labor laws require employers to observe statutory public holidays, which are announced annually by the State Council. In 2025, employees are entitled to 13 days of official holidays. When employees work during these holidays, employers are generally required to pay 300% of the employee’s regular wage for those hours. Failure to comply with these compensation obligations may result in administrative penalties, employee claims, and reputational risk.

To mitigate these risks, employers can implement a clear policy for communicating holiday schedules and managing overtime, time tracking, and related procedures. Where feasible, adjusting workloads in advance can help reduce the need for holiday work.

Key Developments

Effective January 1, 2025, the amended Measures for National Holidays and Memorial Day Leave took effect. Primary changes include an extension of the Spring Festival holiday from three to four days, covering Chinese New Year's Eve through the third day of the new year. The Labor Day holiday has also been extended from one to two days, now observed on May 1 and 2. As a result, the total number of statutory holidays nationwide has increased to 13 days. The revision also introduces a new provision allowing for coordinated leave arrangements, encouraging the integration of statutory holidays with paid annual leave to create longer, more continuous breaks. Except in special circumstances, the number of consecutive working days before or after a holiday should generally not exceed six.

Public Holidays in the United States

The United States observes certain public holidays. However, while most U.S. employers observe at least some of those public holidays, there is no federal law requiring that private employers observe those holidays or, if they do, that their employees be paid for those days (with the exception of certain employees paid on a “salary basis”). Moreover, if an employee does work on a holiday, there is no mandated premium pay for such work under federal law. While most states follow federal law on this issue, a few states require employers to allow employees to be excused from work on certain holidays, or to be compensated at a premium rate for work performed on those holidays. 

However, many U.S. employers agree on special holiday pay provisions with employees or unions. Thus, the observance of holidays and associated pay is primarily a matter of contract in the United States. Accordingly, multinational employers with U.S. workers should consider handling holidays in a jurisdiction-specific manner, as opposed to part of a global policy. 

Post-Employment Non-Compete Covenants 

Overview of Post-Employment Non-Competes in China 

Post-employment non-compete agreements are intended to protect employers’ legitimate business interests, particularly trade secrets and confidential information, by restricting a former employee’s ability to work for competitors or engage in similar business activities after leaving the company. Under Chinese law, such covenants are permitted but subject to strict limitations.

Non-compete obligations may only be imposed on senior managers, senior technical personnel, and employees with confidentiality obligations. To be enforceable, the agreement must be reasonable in scope, duration (not exceeding two years), and geographic coverage. Employers must also pay monthly compensation during the non-compete period.

In practice, employers may consider alternatives to non-compete agreements, such as robust confidentiality clauses or intellectual property protections. These alternatives can help safeguard business interests while avoiding the legal and financial risks associated with non-compete enforcement.

Key Developments

Chinese courts are increasingly scrutinizing non-compete agreements for scope, duration, and applicability, especially when applied to employees whose roles do not justify such restrictions. In August 2025, China’s Supreme People’s Court issued Judicial Interpretation II, which took effect on September 1, 2025. The Interpretation clarified that non-compete clauses are only enforceable if the employee had actual access to trade secrets or confidential information. 

The Interpretation also confirms that non-compete obligations during employment are valid and do not require separate compensation, provided they are reasonable and clearly defined. However, it is crucial to avoid overreach, as excessive restrictions may be deemed abusive and unenforceable.

In addition, as of September 4, 2025, the General Office of the Ministry of Human Resources and Social Security released the “Compliance Guidelines for Enterprises Implementing Non-Compete Agreements,” which aim to guide employers in the lawful and compliant implementation of non-compete agreements in a way that balances the protection of corporate trade secrets with employees’ rights to employment and career choice.

Non-Competes in the United States

Generally, post-employment restrictive covenants in the United States are likely enforceable if they are narrowly tailored as to time, geographic scope and prohibited activity, and also have a legitimate business purpose, such as the protection of trade secrets, confidential information, or customer relationships. Whether or not a covenant is enforceable is a fact-specific inquiry and is often litigated before U.S. courts. 

There have been many recent federal and state legislative efforts to diminish the enforceability of, or even outright ban, restrictive covenants. Indeed, non-competes are not enforceable at all in some states, including California. Other states, such as Maryland, prohibit non-competes for low-earning workers.     

Subject to these jurisdiction-specific legal restrictions and prohibitions, U.S. employers typically enter into post-employment restrictive covenants at the start of employment or upon promotion, when additional consideration is provided, or at termination, as part of separation agreements. 

Main Takeaways

China and the United States differ significantly in how they approach employer and employee rights, and labor enforcement. The fundamental rules (both national and sub-national), principles, systems, and cultures are so distinct that direct comparisons can be challenging. The examples discussed above—such as China’s evolving framework around statutory retirement, protections for overage workers, expanded public holiday entitlements, and stricter scrutiny of non-compete agreements—are used merely as illustration. 

What is appropriate and enforceable in one jurisdiction may not be viable in the other. Strategic alignment with local law not only helps reduce legal risk but also supports fair and sustainable employment practices across global operations.