China: Supreme People’s Court Issued their Interpretation (II) on Several Issues Concerning the Application of Law in the Trial of Labour Dispute Cases
On August 1, 2025, the Supreme People’s Court held a press conference at its All-Media Press Centre to formally release the Interpretation (II) of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Labour Dispute Cases (the “Interpretation II”), together with six illustrative cases. The Interpretation II was adopted by the Adjudication Committee of the Supreme People’s Court at its 1,942nd meeting on February 17, 2025, and will enter into force on September 1, 2025.
The Interpretation II consolidates four prior labour dispute rules and introduces unified standards for contentious areas including non-compete clauses, social insurance, and ambiguous employment relationships. It aims to balance worker protections with employer flexibility, emphasizing employment stability while promoting fair labour practices. Notably, it clarifies thresholds for indefinite-term contracts and invalidates overly broad non-compete restrictions, while reinforcing employer obligations for social insurance contributions.
The document establishes three core principles: prioritizing employment stability, safeguarding workers’ fundamental rights, and ensuring equitable treatment. It introduces specific rules for subcontracting and affiliated entities, holding primary employers accountable, and clarifies how to determine employment relationships in the absence of written contracts. Additionally, it addresses foreign workers, post-contract employment continuations, and health examination requirements, reflecting the Court’s nuanced approach to modern labour challenges.
The Interpretation II responds to rising labour disputes and stricter compliance demands, offering employers clearer guidance while strengthening worker protections. The Court plans to support implementation through training and case databases, ensuring consistent application nationwide. This update marks a significant shift in China’s labour relations framework, emphasizing both stability and adaptability in a changing economic landscape.
Key Action Points
The Interpretation II aims to unify adjudication standards and protect employees’ interests. However, certain areas require further clarification, particularly regarding the validity determination of non-compete agreements and exceptional social insurance contribution circumstances. Moreover, enterprises will face substantial compliance pressure during the transitional period. Compliance management shall be prioritized – all aspects including non-compete agreements and social insurance contributions require thorough review to avoid crossing legal boundaries.
