China

Impact date: 31 July 2025 (date circular issued, no date yet for the Interim Regulations coming into force) On 31 July 2025, the PRC Ministry of Human Resources and Social Security issued a circular seeking public consultations on new legislation: the Interim Regulations on the Protection of Basic Rights and Interests of Older Workers (超龄劳动者基本权益保障暂行规定（公开征求意见稿）, “Interim Regulations”).

They arise from last year’s legislation on "Implementing a Gradual Delay of the Statutory Retirement Age”, which mandates that employers hiring workers beyond the statutory retirement age must ensure these workers receive basic rights, including labor remuneration, rest and vacation, labor safety and health, and work-related injury protection. The Interim Regulations define the scope of basic rights and protection levels for older workers for the first time and provide a legal basis for their rights protection. These basic rights include:

• Written agreement – Employers shall enter into a written agreement with older workers, which shall include working content, workplace, working hours, contract term, rest and vacation, labor remuneration, social insurance, labor protection, and occupational hazard protection
• Working hours - Employers shall reasonably arrange working hours, rest, and vacation for older workers, generally avoiding overtime. If overtime is necessary, employers must comply with the relevant rules regarding maximum overtime hours and compensation under PRC Employment Law
• Labor remuneration – The labor remuneration for older workers must not be less than the local minimum wage. If an employer fails to pay agreed labor remuneration, overtime pay, or does not comply with local minimum wage rules, the older worker may report the situation to competent human resources and social security authority. The authority will address the case according to PRC employment law provisions, which may include ordering rectification within a specified timeframe, imposing fines if the non-compliance is rectified
• Social security – Employers are obliged to pay work-related injury insurance for older workers, and these workers are eligible for work-related injury certification and labor capability assessments and are entitled to receive work-related injury benefits from Government and/or employer. For older workers who do not meet the required contribution years for basic pension and medical insurance and thus cannot access relevant entitlements, employers may, subject to agreement between the parties, pay these contributions for them in accordance with applicable regulations

Impact date: 1 September 2025 Following the enactment of the PRC Civil Code, the Supreme People’s Court began reviewing and consolidating earlier judicial interpretations related to labor disputes. In 2021, it issued the “Interpretation of the Supreme People’s Court on Issues Concerning the Application of Law in the Trial of Labor Dispute Cases (I)” (最高人民法院关于审理劳动争议案件适用法律问题的解释（一）, “Interpretation (I)”).

In response to emerging legal challenges—particularly regarding non-compete clauses, employee benefits, and social insurance—the Supreme People’s Court released the “Interpretation of the Supreme People’s Court on Issues Concerning the Application of Law in the Trial of Labor Dispute Cases (II)” (最高人民法院关于审理劳动争议案件适用法律问题的解释（二）, “Interpretation (II)”) on 31 July 2025, which takes effect on 1 September 2025. This new interpretation replaces and updates several prior provisions, including the repeal of Article 32(1) of Interpretation (I) and aims to unify judicial standards in light of evolving employment practices.

• The following entries below contain some of the key highlights from Interpretation (II).

Clarification of the meaning of “entering into two consecutive fixed-term contracts”

Article 10 clarifies when two consecutive fixed-term employment contracts are considered to have been entered into under Article 14.2(3) of the PRC Employment Contract Law (“ECL”). This matters because, once the condition is met, the employee has the right to request an open-ended (non-fixed term) contract after the second fixed-term contract ends. The employer must agree to this request unless there are legal grounds for termination under Articles 39 or 40(1) and (2) of the ECL.

One key scenario that has drawn attention is when an employer and employee agree to extend the first fixed-term contract for a total period of one year or more. If this extended period expires, it may be treated as two consecutive contracts, triggering the employee’s right to request an open-ended contract.

Previously, local courts and regulations in places like Beijing, Jiangsu and Shenzhen had their own rules:

• Beijing: If the first fix-term contract is extended, it is considered two consecutive contracts once the extension ends
• Jiangsu and Shenzhen: If the total extension exceeds six months, it counts as a renewal

Now, Interpretation (II) establishes a national standard: if the total extension period is less than one year, it does not count as two consecutive contracts. This provides employers with more flexibility, allowing them to extend a contract for up to one year without triggering the obligation to offer an open-ended contract.

Impact date: 1 September 2025 Continued employment following contract expiration

Article 11 states that if an employee continues working after their employment contract expires, and the employer does not object within one month, the law assumes the employer agrees to continue the employment. Specifically:

1. If the employee requests to renew the contract under the same terms, the court will support it
2. If the employee qualifies for an open-ended contract and requests one, the court will also support that
3. If the employer attempts to terminate the contract without legal grounds, the employee can claim unfair dismissal, and the employer may face legal consequences

Based on the above:

• After the first fixed-term contract ends:
• The employer has a one-month grace period to legally end the contract
• If the employer does not act within that month, the employee can request renewing the contract under the same terms
• The employer loses the right to terminate based solely on contract expiration
• After the second fixed-term contract ends:
• If the employee continues working and meets the legal conditions, they can request an open-ended contract
• The employer must agree unless there are valid legal grounds for termination
• If the employer terminates without legal grounds:
• It will be considered unfair dismissal
• The employee can request either reinstatement or compensation equal to twice the statutory severance pay

Impact date: 1 September 2025 Validity of non-compete clauses

Article 13 clarifies when non-compete clauses can be invalid, aiming to prevent employers from overusing or misusing such clauses. It sets clear limits on who can be subject to such restrictions and under what conditions. Specifically:

• If an employee does not know or have access to the employer’s trade secrets or confidential intellectual property and requests the court to declare the non-compete clause invalid, the court will support that request
• If the scope, location, or duration of the non-compete clause is unreasonably broad compared to the confidential information the employee actually had access to, the court may declare the excessive parts invalid

Article 14 confirms that non-compete clauses can be valid even during employment, not just after an employee leaves. Specifically:

• Employers and employees can agree to non-compete obligations that apply while the employee is still employed
• These clauses are valid even if no additional non-compete compensation is paid during the employment period
• If the employee violates the clause, the employer can claim liquidated damages (if agreed in the contract) and may also ask for the return of any compensation already paid

Impact date: 1 September 2025 No voluntary waiver of social insurance

According to Article 19:

• Any agreement between an employer and employee that waives the employer’s obligation to pay social insurance is invalid
• If an employer fails to pay social insurance, and the employee resigns as a result, the employee has the right to claim statutory severance pay, and the court will support that claim
• If the employer later makes back payments for previously missed social insurance contributions, it may request the employee to return any cash compensation that was paid in lieu of those contributions

Impact date: 1 September 2025 Abolishing the old rule on retired workers’ employment status

Previously, under Article 32 of Interpretation (I), if a person had retired and was receiving a pension, any work they did for an employer was treated as a “labor service relationship”—rather than a formal employment relationship. This meant they were not entitled to the same protections as regular employees, such as severance pay or social insurance.

Now, Article 21 of Interpretation (II) has abolished that rule. This change aligns with the Interim Regulations on the Protection of Basic Rights and Interests of Older Workers (Draft for Public Consultation) (超龄劳动者基本权益保障暂行规定（公开征求意见稿）).