2025 Year in Review / 2026 Look Forward - PRC Employment Law

This article provides a brief summary of the key PRC employment law updates in 2025 and offers an outlook on the anticipated changes in 2026.

For the full version of this article, please click here.

• 1 January, two new statutory holidays were added, increasing the national total from 11 to 13 days. The Spring Festival holiday now includes Lunar New Year's Eve, and the Labor Day holiday was extended by one day.
• 1 January, the Interim Measures for the Disability Allowance under the Enterprise Employee Basic Pension Insurance took effect, providing support to insured employees who lose working capacity before retirement age.
• 1 July, the Administrative Measures for Work Capacity Appraisal took effect, establishing a standardized national framework for assessing work capacity impairment.
• 31 July, the Ministry of Human Resources and Social Security released the draft Provisional Regulations on the Protection of Basic Rights and Interests of Over-Age Employees for public comment, signaling the first dedicated effort to define and safeguard core labor rights for individuals working beyond the statutory retirement age.
• 20 August, the National Health Commission released the revised Technical Specifications for Occupational Health Surveillance (GBZ 188-2025). Key updates include coverage of over 19 new hazard factors and simplified medical conclusions.
• 1 September, the Supreme People's Court's Interpretation (II) on Labor Dispute Cases was published, providing guidance on: employer liability in complex structures; open-ended contracts; and non-compete clauses.
• 13 November, the Ministry of Human Resources and Social Security published the Opinions on Several Issues Concerning the Implementation of the Regulations on Work-Related Injury Insurance (III), clarifying key definitions like "workplace" to cover modern arrangements such as remote work.
• 16 December, the Supreme People's Court gave judgment in a landmark case holding that employers may lawfully dismiss employees for sexual harassment based on clear internal policies and credible evidence.

2026 Outlook

We anticipate that several developments and changes in employment law will take place in the PRC in 2026, including the following: 

• Enhancement to protect the rights and interests of employees engaged in new forms of employment (such as platform businesses), and to establish clearer labor standards and strengthen employer responsibilities across sectors;
• The implementation of the Technical Specifications for Occupational Health Surveillance (GBZ 188-2025);
• Strengthened enforcement to ensure that the right for employees to take annual leave is realized in practice; and
• Implementation of the Provisional Regulations on the Protection of Basic Rights and Interests of Over-Age Employees in the near future.

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2025 Year in Review / 2026 Look Forward - PRC Employment Law (Full Version)

This article provides a summary of the key PRC employment law updates in 2025 and offers an outlook on the anticipated changes in 2026.

January

Effective 1 January 2025, two additional statutory public holidays were added in accordance with the revised list of National Annual Holidays and Memorial Days, as announced by the State Council in November 2024. The number of statutory public holidays was increased from 11 days to 13 days. Specifically, the Spring Festival holiday was extended from three days to four days (with the Lunar New Year eve as the new addition), and the Labor Day holiday in May was increased from one day to two days. 

The Interim Measures for the Disability Allowance under the Enterprise Employee Basic Pension Insurance, aimed at providing financial support to insured employees who lose the ability to work due to illness or non-work injury before reaching the statutory retirement age, took effect on 1 January 2025. Successful applicants are eligible to receive an allowance from the basic pension insurance fund, with the amount and duration to be determined by their cumulative contribution years and proximity to retirement age. Contributions to the basic pension insurance fund are suspended during the allowance period, and are resumed when the employees return to work (and the allowance will cease).

These Measures establish a clear, unified national system that replaces varied local policies, and ensure that the relevant eligibility requirements and benefits are consistent across China. The allowance also offers financial stability to eligible individuals and their families, and supports China's pension reform by providing a safety net to employees who lose their ability to work before reaching the retirement age (which will be progressively increased). 

July

The Administrative Measures for Work Capacity Appraisal (Measures), effective 1 July 2025, introduced a standardised framework for assessing work capacity impairment due to occupational and non-occupational causes. Appraisal committees comprising representatives from various sectors, including human resources, health, and trade unions, have been established on municipal and provincial levels. The framework set out clear procedures and timelines for the application process, including, for example, the appointment of a randomly selected expert panel with a view to ensuring objectivity and adherence to national standards.

The Measures also incorporated safeguards for applicants, including recusal rules in the event of a conflict of interest and provisions for on-site assessments. Applicants who disagree with the initial conclusion may apply for a final provincial-level reappraisal within 15 days. Furthermore, if the applicant’s medical condition changes significantly, re-examinations can be requested after one year.

Overall, the Measures enhance transparency and efficiency for the work capacity appraisal process. They also specify consequences in the event of fraud or misconduct by institutions or experts. By standardizing the appraisal process, the Measures help protect employee rights, ensure benefits are accurately distributed, and safeguard social insurance funds.

On 31 July 2025, the Ministry of Human Resources and Social Security released the draft Provisional Regulations on the Protection of Basic Rights and Interests of Over-Age Employees for public comment – the first dedicated effort to define and safeguard core labor rights for individuals working beyond the statutory retirement age, including pay, rest period, occupational safety, and workplace injury insurance. The draft regulation mandates employers to sign written agreements with these employees and enroll them in work-related injury insurance, and establishes clear dispute resolution channels, such as labor arbitration and court appeals. This initiative aims to close a significant legal protection gap for this growing segment of the workforce and aligns with the national strategy to actively respond to its aging population.

August

On 20 August  2025, the National Health Commission of the PRC released the updated Technical Specifications for Occupational Health Surveillance (GBZ 188-2025), which will take effect on 1 August 2026.  

The updates strengthen occupational health surveillance standards in China and include:

1. Expanded coverage: More than 19 new hazard factors and job types would be subject to occupational health surveillance, including, for example, toluene, bromopropane, low temperatures, lasers, tick-borne encephalitis virus, repetitive or forceful wrist tasks for manufacturing work and emergency rescue work; 
2. Simplified medical conclusions: The ambiguous conclusion of "re-examination" will be removed. Conclusions will be limited to four clear outcomes: no abnormality detected, suspected occupational disease, occupational contraindication, or other diseases/abnormalities; and
3. Strengthened checks: Emergency health examinations are required after acute exposure to specific chemicals (e.g., lead, arsenic), and pre-departure health checks are mandated for employees exposed to certain toxic substances.

September

On 1 September 2025, the Interpretation (II) of the Supreme People's Court of Issues Concerning the Application of Law In the Trial of Labor Dispute Cases (Interpretation II), published by China’s Supreme People's Court, took effect.  Interpretation II responded to the recent developments in employment arrangements and practices, addressed practical challenges in labor dispute cases, and sought to harmonize different practices across China.

Key provisions include: 

1. Clarification of employment responsibility in complex structures: Interpretation II adopted a "piercing" principle to identify the actual entity liable as the employer in cases involving subcontracting, labor dispatch, and mixed employment across affiliated companies. 
2. Refined rules on open-ended labor contracts: Interpretation II clarified the circumstances in which an employee is considered to have completed "two consecutive fixed-term contracts" (which would entitle them to convert into an open-ended/permanent contract with the employer), including any negotiated extension or automatic renewal of a fixed-term contract, where the additional period exceeds one year. 
3. Regulation of non-compete agreements: Interpretation II specified that a non-compete clause is not binding if the employee has no access to trade secrets or confidential information. Even when such access exists, the scope, geography and duration of the non-compete clause must be reasonable and proportionate to the protected information.
4. Guidance on contract continuation and termination: Interpretation II specified the circumstances in which reinstatement should not be ordered by the court as a remedy in an unlawful dismissal case – for example, when the employee has reached retirement age, the employer has gone bankrupt, or the employee has started a new job.

November

On 13 November 2025, the Ministry of Human Resources and Social Security issued the Opinions on Several Issues Concerning the Implementation of the Regulations on Work-Related Injury Insurance (III) (Opinions).

The Opinions refined the core standards for recognizing work-related injuries, and had specifically clarified the definitions of "working hours," "workplace," and "work-related causes" to reflect modern work arrangements, including work-from-home arrangements. They also clarified that injuries that occur during legally compliant remote working arrangements may be recognized as work-related. At the same time, the Opinions set out clear limits on employer liability — for example, by setting specific evidentiary requirements for injuries that occur during commutes. 

By offering more uniform and detailed operational standards, the Opinions are expected to reduce disputes and regional inconsistencies and improve the predictability and efficiency of the injury recognition system.

December

On 16 December 2025, China's Supreme People's Court released a typical case on workplace sexual harassment, as part of its fourth batch of cases exemplifying core socialist values.

In this case, the employee was terminated by the company following an internal investigation which concluded that he had sexually harassed female colleagues on multiple occasions. Both the court and the labor arbitration panel rejected the employee’s unlawful dismissal claim, and upheld the employer’s decision to dismiss him. In particular, the court found that the employee’s conduct constituted a serious breach of the company's employee handbook, which had expressly prohibited sexual harassment in the workplace and categorized it as a severe workplace violation that could result in dismissal.  

The Supreme People's Court emphasized that sexual harassment violates victims' rights, undermines a safe and civilized workplace, runs counter to core socialist values, and is expressly prohibited by the Civil Code.

This case confirms that employers may lawfully terminate employees for acts of sexual harassment, if the decision is based on clear internal policies and supported by credible evidence, in order to protect employee rights and maintain a respectful workplace.

2026 Outlook

We anticipate several developments and changes in employment law in the PRC in 2026. For example: 

• The Ministry of Human Resources and Social Security is advancing measures to protect the rights and interests of employees engaged in new forms of employment (such as platform businesses), and to establish clearer labor standards and strengthen employer responsibilities across sectors (e.g., delivery, transport, and ride-hailing services). This initiative addresses key challenges faced by employees engaged in new forms of employment, such as income instability and insufficient social protection, by focusing on reasonable working hours, fair remuneration, and access to social insurance.
• The Technical Specifications for Occupational Health Surveillance (GBZ 188-2025) will take effect on 1 August 2026 (please see above for further details).
• Updates to the Regulations on Paid Annual Leave for Employees are expected in 2026. The revisions seek to ensure that the right for employees to take annual leave is realized in practice, not just on paper, by strengthening enforcement mechanisms and increasing employer accountability. Key proposals under discussion include restricting or removing provisions that allow employees to voluntarily forgo annual leave in exchange for monetary compensation, and reinforcing the requirement that employee must take actual time off. 
• We also expect the adoption and/or implementation of the draft Provisional Regulations on the Protection of Basic Rights and Interests of Over-Age Employees, which had been published by the Government in July 2025 for public comment (please see above for further details), in the near future.