China’s Labor Law: Key Developments in 2024 and Trends to Watch in 2025

• China’s Labor Law landscape saw major reforms in 2024, including a phased increase in the retirement age, adjustments to pension contributions, and relaxed compliance requirements for cross-border HR data transfers, impacting workforce management and regulatory compliance.
• New regulations will introduce illness and disability benefits under the basic pension system, a flexible retirement system allowing earlier or delayed retirement, and increased public holidays affecting salary and overtime calculations.
• Businesses must adapt HR strategies to align with evolving labor laws, assess cost implications (e.g., wage expenses, and social security contributions), and ensure compliance with new workforce management regulations.

China’s labor law landscape underwent significant reforms in 2024, reflecting the government’s broader efforts to address demographic challenges, improve workforce sustainability, and streamline regulatory compliance. Key developments included the phased increase in the statutory retirement age, adjustments to pension contribution requirements, and the introduction of simplified rules for cross-border data transfers. These changes have had a direct impact on workforce management, social security policies, and compliance requirements for both domestic and foreign-invested enterprises.

As China moves into 2025, further reforms are expected, particularly in areas such as illness and disability benefits under the basic pension system, flexible retirement options, and updates to public holiday policies. Employers will need to adapt their HR strategies to stay compliant with evolving regulations while ensuring business continuity and employee welfare. This article provides a review of China’s major labor law developments in 2024 and an outlook on what to expect in 2025.

Key labor law developments in 2024

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In 2024, China introduced several notable employment law changes, reflecting the government’s priorities in several areas. Among the most significant updates were reforms to the statutory retirement age and new regulations on cross-border data transfers impacting multinational companies.

Incremental increase in the statutory retirement age

After years of deliberation, China officially initiated a phased reform of the statutory retirement age, marking a major shift in workforce planning. Under a decision enacted in September 2024, the retirement age will gradually increase over a 15-year period.

• For male employees, the statutory retirement age will rise from 60 to 63 years old
• For female employees, the adjustment depends on job type: those in non-managerial positions will see the retirement age increase from 50 to 55 years old, and those in managerial and technical roles will see an increase from 55 to 58 years old.

The implementation of this policy will follow an incremental approach. For instance, a female employee in a managerial role born in the early 1970s will see her retirement age increase by just one month, whereas those born in 1981 or later will need to work an additional three years before retiring.

Additionally, pension contribution requirements will change. By 2030, the minimum contribution period for receiving basic pensions will extend from 15 to 20 years, increasing gradually by six months per year. Employees who have met the minimum contribution period will have the option to retire up to three years earlier, provided they do not retire below the current statutory thresholds. Conversely, those who wish to continue working beyond the set retirement age may do so for up to three additional years, subject to an agreement with their employer.

Cross-border data transfers and HR compliance

Another key regulatory development in 2024 was the introduction of the Provisions on Facilitating and Regulating Cross-Border Data Flow, which took effect in March. These provisions address a longstanding concern for multinational employers—compliance with China’s stringent data protection laws when managing employee information across jurisdictions.

Under the new rules, HR-related personal data transfers are now subject to relaxed compliance requirements, provided they meet specific conditions. If an employer transfers an employee’s personal data abroad for legitimate human resources management purposes—such as payroll processing, talent mobility, or global workforce planning—the company is exempt from several burdensome obligations under the Personal Information Protection Law (PIPL). These exemptions include:

• The requirement to conduct a government security assessment for outbound personal data transfers.
• The need to sign a standard contract for cross-border data transfers with the employee.
• The obligation to obtain a certification for personal data protection compliance.

This regulatory shift aligns with China’s broader strategy to streamline compliance for businesses and support foreign investment. By reducing the administrative burden on companies managing multinational teams, the new rules provide greater flexibility for HR departments handling cross-border workforce operations. However, businesses must still ensure that any data transfer policies are aligned with other relevant laws, including cybersecurity and corporate governance regulations.

Public holidays and workforce management

The State Council released the official China Public Holiday 2025 schedule through its Circular of the General Office of the State Council on the Arrangement of Public Holidays in 2025 (see here for the official source) on November 12, 2024. Starting January 1, 2025, the total number of holidays for all citizens will increase by two days, with one additional day added to both the Spring Festival (Chinese New Year)and Labor Day.

This increase in public holidays may affect the salary calculation and overtime payment for some employees, requiring employers to adjust their workforce management strategies.

This increase in public holidays may affect salary calculations and overtime payments for some employees, requiring employers to adjust their workforce management strategies.

For employees on a standard working hours system, the addition of two public holidays will not affect the monthly salary calculation days, so the salary calculation method remains unchanged. This is because Article 51 of the Labor Law stipulates that public holidays are paid as normal working days, meaning that when calculating daily and hourly wages, public holidays are not excluded.

• Monthly salary calculation days = (365 days – 104 rest days) ÷ 12 = 21.75 days
• Daily wage = monthly salary ÷ 21.75 days
• Hourly wage = monthly salary ÷ (21.75 days × 8 hours)
• Additionally, for overtime pay, since it is based on daily and hourly wages, and the calculation formulas for these wages remain unchanged, the overtime pay calculation formula also remains unchanged.

For employees on a comprehensive working hours system, the increase in public holidays will affect working hours and thus impact salary calculations.

• Working days: (365 days – 104 rest days – 13 public holidays) = 248 days
• Monthly working days: 248 days ÷ 12 months = 20.67 days/month
• Annual working hours: 248 days × 8 hours = 1,984 hours
• Starting January 1, 2025, the monthly working days will change from 20.83 days to 20.67 days, and the annual working hours will decrease from 2,000 hours to 1,984 hours. Any work exceeding 1,984 hours will require overtime pay.

Additionally, if employees are required to work on the two additional public holidays, employers must pay 300 percent of the regular wage (employees under the flexible working hour system are subject to regional variances) .

Businesses in labor-intensive industries may face higher wage expenses accordingly. Employers should assess how these changes will affect their productivity and cost structures and prepare for potential adjustments in staffing levels and overtime scheduling.

Integration of foreigner’s work permit with social security card

The Ministry of Human Resources and Social Security has announced that effective December 1, 2024, the Foreigner’s Work Permit will be integrated into the social security card. This integration will streamline processes by embedding work permit information directly into the social security card, offering enhanced convenience for foreign nationals working and residing in China.

On November 25, the official Foreigner’s Work Permit application portal issued a notice confirming that the system upgrade to support this integration will be conducted from November 29 to December 1.

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The social security card serves multiple functions, including identity verification, information recording, self-service inquiries, and medical expense settlement. It also supports financial applications such as cash withdrawals, transfers, and payments.

With the integration of the Foreigner’s Work Permit, the new card will streamline processes for foreign nationals working in China and eliminate the need to carry multiple documents. For government agencies, the integrated card will enhance information sharing and centralized management, leading to increased administrative efficiency and improved service delivery.

HR regulatory outlook for 2025

Looking ahead to 2025, China’s employment law landscape will experience some notable updates, though no sweeping changes are expected. However, several key regulations will impact businesses operating in the country, with the following developments coming into effect, as illustrated below.

Illness and disability benefits under basic pension insurance

One of the significant regulatory shifts will be the introduction of the Interim Measures for Illness and Disability Benefits under the Basic Endowment Insurance for Enterprise Employees, which will come into force on January 1, 2025. This regulation enables employees who have participated in the basic pension scheme and are deemed completely disabled due to illness or non-work-related injuries to apply for monthly illness and disability benefits. The allowance can be received until the employee reaches the official retirement age.

An important aspect of the regulation is the exemption from ongoing pension insurance contributions during the period when employees are receiving these benefits. This shift may impact employers’ cost structures, particularly in terms of social insurance contributions, as they will no longer need to pay pension contributions for disabled employees on benefits. Employers should consider this potential cost reduction in their workforce planning and budget forecasting.

Flexible retirement system

Starting January 1, 2025, the Flexible Retirement System will offer employees greater flexibility in deciding when they retire, in line with the ongoing retirement age reform. Employees who meet the minimum pension contribution period will be able to retire up to three years earlier than the statutory retirement age. Alternatively, employees who are already at retirement age may opt to delay their retirement by up to three years. This change is designed to give employees more control over their retirement planning.

For employers, this new system will require adjustments in employment contracts and workforce planning. Companies must ensure they are prepared for the possibility that employees may retire earlier or continue working beyond the expected retirement age. This could impact labor costs and talent management strategies, as employers may need to adjust compensation and benefits packages to accommodate a more flexible workforce. Additionally, keeping track of these options will be essential for ensuring compliance with the regulations.

Disability pension allowances

The Interim Measures for Disability Pension Allowances, effective from January 1, 2025, will provide clearer guidelines for employees unable to work due to illness or non-work-related injuries before reaching retirement age. Employees qualifying for this allowance will be entitled to receive monthly disability pensions based on their contribution history until they reach retirement age.

Similar to the illness and disability benefits mentioned earlier, employees receiving these allowances will also be exempt from making ongoing pension contributions during the period they are receiving benefits.

This measure will provide greater consistency across local practices and create a more unified approach to handling disability-related claims. Employers will need to factor in the potential long-term financial impact of supporting employees receiving these allowances and adjust their payroll systems to accommodate these changes.

Foreign-invested companies’ compliance

Since January 1, 2020, the Foreign Investment Law (FIL) has become a guiding document governing foreign investment. In accordance with Article 31 of the FIL, the organizational form, governing structure, and operating rules of FIEs shall adhere to the provisions of the Company Law of the People’s Republic of China, the Partnership Enterprise Law, and other applicable laws, similar to the treatment of enterprises established by domestic investors. However, FIEs established under these laws before January 1, 2020, may retain their original organizational structures for five years.

Accordingly, December 31, 2024 is the final deadline for FIEs to adjust their governing structure and organizational form as required by the FIL. After this deadline, the market supervision and regulation department will suspend the processing of all registration matters applied by FIEs and publicize the relevant circumstances. This could significantly impact companies seeking to expand, register new branches, or make other operational changes, as they will not be able to complete such processes until they are in full compliance with the revised organizational requirements.

Moreover, China’s New Company Law has introduced significant adjustments to the regulation of corporate governance structures. Specifically for LLCs, it offers shareholders considerable flexibility in selecting the company’s governance framework. For example, the New Company Law mandates that LLCs with more than 300 employees must include employee representatives on their board of directors unless the company has already established a board of supervisors and there are employee representatives in it. While the legal framework for these new requirements is clear, State Council and State Administration for Market Regulation have not yet issued detailed implementation regulations regarding the specifics. Employers should approach the changes with caution, as the lack of detailed guidelines means that there is some uncertainty regarding how the implementation will occur in practice.

In the interim, foreign-invested companies should closely monitor national and local policy developments to stay updated on any further clarifications or adjustments to the regulations. Employers are advised to begin preparing by reviewing their organizational structures and determining whether they meet the new requirements.

Occupational diseases catalogue

A revised Occupational Diseases Catalogue will come into effect on August 1, 2025, adding musculoskeletal disorders and mental health conditions to the list of recognized occupational diseases. This update reflects a more modern understanding of workplace health risks, acknowledging the physical and psychological challenges that workers may face in contemporary work environments.

For employers, this means revising health and safety protocols to accommodate newly recognized diseases. Companies in affected industries will need to ensure that their workplace safety policies align with these new classifications, which may include ergonomic adjustments and mental health support programs for employees. This shift is expected to influence workplace health management strategies and could lead to increased compliance costs as employers update their procedures and provide additional training for health and safety officers.

Broader 2025 outlook

While 2025 is not expected to bring sweeping regulatory changes, several important adjustments will continue to evolve. The gradual increase in the retirement age, which began in 2024, will have a lasting impact on the workforce. Employers should be prepared for higher labor costs as older employees remain employed longer, while the flexibility in retirement options may encourage greater employee retention.

Additionally, the cross-border data transfer regulations implemented in 2024 will further ease the compliance burden for multinational companies, making it easier for foreign businesses to operate in China. These adjustments reflect China’s broader push to reduce regulatory hurdles for international businesses, creating a more open business environment.

Employers should proactively address these changes in their workforce management and operational strategies to ensure they are well-positioned for the evolving regulatory environment in 2025.

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