China: 2026, Looking Ahead

As we step into the year 2025, several legislative developments have either come into effect or are set to take effect in China.

1. Legislative Developments

New Regulations for Employers within the Scope of Public Security Administration Punishments

The Public Security Administration Punishments Law of the People’s Republic of China (2025 Revision) (the “Law”) was announced on 17 June 2025, and will take effect on 1 January 2026. This is the first major overhaul of this Law in the nearly two decades since 1 March 2006. This revision adopted a few adjustments on the rights and liabilities of employers.

According to Article 47, for people who force other person to work by violence, threat or other means, the maximum fines will be increased based on the severity of the violation—from RMB 1,000 (for serious cases) and RMB 500 (for minor cases) to RMB 2,000 and RMB 1,000 respectively based on the severity of the violation.

In addition to imposing stricter penalties on employers, the Law also provides updated provisions regarding personal information protection. The Article 56 stipulates that whoever commits the conduct of illegally obtaining, providing, using and selling others’ information will be detained.

Additionally, the revised law introduces a system for sealing records of public security violations (for example, drug-use records, gambling records, etc.). Under this system, except in the cases where state authorities are in need or relevant entities make inquiries in accordance with state provisions, an individual’s record of violation of public security administration shall not be provided to or made public to any entity or individual. Sealing such records will reduce discrimination and lower the chance of reoffending, while exerting an impact on employers’ background checks and their right to learn employees or candidates’ public security administration violation records.

 

Revision of the Code of Corporate Governance for Listed Companies

The China Securities Regulatory Commission issued revisions to the Code of Corporate Governance for Listed Companies (the “Code”) on 17 October, which will take effect on 1 January 2026. The Code further strengthens the conduct requirements for directors, senior management, controlling shareholders and de facto controllers, aiming to improve corporate governance among listed firms.

The Code continues to focus on the directors’ and executives’ qualification review mechanism, and introduces a new post-resignation review system, stipulating that directors and executives shall not be exempted from assuming uninterrupted liabilities after resignation and that the handover of work should be completed.

Compared to the current version, the Code refines the remuneration management system, elaborates the duty of loyalty and diligence and sets out requirements with respect to remuneration structure, assessment, payment, information disclosure, and other aspects.

 

Regulations on Chinese Employees in Foreign Diplomatic Missions

The Regulations on Chinese Citizens Employed by Foreign Diplomatic and Consular Missions (the “Regulations”) were issued on 15 September 2025, and will take effect on 1 January 2026. These regulations are designed to facilitate the recruitment process while safeguarding the legal rights and interests of Chinese employees.

According to the Regulations, the Ministry of Foreign Affairs is to take full charge of guiding and coordinating the nationwide management of Chinese employees, while relevant departments are respectively responsible for the corresponding work related to the administration of Chinese employees within their administrative regions.

The Regulations specify that the foreign diplomatic and consular missions shall hire prospective employees through the platform established by the Ministry of Foreign Affairs of China. Such missions shall sign service agreements with local agencies, clarifying the rights and interests of employees. In addition, local agencies shall enter into employment contracts with employees, specifying their job responsibilities, remuneration, and other relevant terms.

 

Innovation in China’s VAT Legislation

The Value-Added Tax Law of the People’s Republic of China (the “VAT Law”) was passed at a session of the Standing Committee of the National People’s Congress in December 2025, and will take effect on 1 January 2026. This VAT Law represents the first comprehensive legislative codification of the value-added tax system in China, transitioning the current provisional regulations into formal statutory law.

It is confirmed that, pursuant to the Article 6 of the VAT Law, the provision of services by employees to their employers or organizations from which they obtain wages or salaries is not recognized as a taxable transaction and therefore not subject to value-added taxes.

 

Gradual Expansion of the Occupational Injury Insurance Program for flexible workforce

To supporting the emerging flexible and mobile workforce in recent years, the Ministry of Human Resources and Social Security and other nine departments announced an expansion of the pilot programs for occupational injury insurance for new forms of employment on 8 May 2025 (the “Pilot Program”).

This Pilot Program outlines that in 2026, the occupational injury insurance for flexible workforce will be rolled out across all 31 provinces and the Xinjiang Production and Construction Corps. It will also cover the platform enterprise engaged in the fields of transportation, instant delivery, and intra-city logistics.

Launched in July 2022, this Pilot Program reflects government’s recognition of the growing flexible workforce sector, and the significance attached to protecting the legitimate rights and interests of workers in new forms of employment.

 

Gradual Expansion of Cooperative Medical Institution Coverage for Cross-provincial Direct Settlement

On 17 April 2025, the Ministry of Human Resources and Social Security, the Ministry of Finance, and the National Health Commission jointly issued the Notice on the Nationwide Implementation of Cross-provincial Direct Settlement for Work-related Injury Medical Expenses (the “Notice”).

The Notice sets out a three-phase implementation plan for designated medical institutions providing such services. By the end of 2026, the coverage rate is expected to reach 50% in former pilot areas and exceed 30% in newly included regions. By the conclusion of the 15th Five-Year Plan period, nearly all Grade A tertiary designated medical institutions nationwide are planned to offer this service.

In parallel, efforts will be made to extend direct settlement to rehabilitation institutions and assistive device providers. The goal is for over 50% of such institutions to support the service by the end of 2026, achieving full coverage by the end of the 15^th Five-Year Plan period.

2. Local Regulations

A number of local regulations across China also come into force on 1 January 2026, covering various labour and social security issues. Here are some key developments:

 

Jiangsu Province

The Jiangsu Provincial Department of Human Resources and Social Security, together with the Provincial Health Commission and the Provincial Federation of Trade Unions, jointly issued the Measures for the Administration of Work Capacity Appraisal in Jiangsu Province (the “Measures”) The Measures, composed of 49 provisions in 9 chapters, shall take effect on 1 January 2026.

One prominent highlight of the Measures is the expansion of their scope to cover both work capacity appraisal for employees with work-related injuries and the appraisal of labour capacity loss for personnel disabled due to illness or non-work-related causes, integrating the scope of application of two separate regulatory frameworks for work capacity appraisal in Jiangsu previously.

To streamline the appraisal process, the Measures has made targeted optimizations to shorten the waiting time for applicants. Notably, the time limit for delivering the appraisal conclusion has been shortened from 20 days to 15 days, enabling eligible employees to access relevant insurance benefits more quickly and protecting applicants’ legitimate rights.

 

Xiamen Special Economic Zone

Adopted at the 31st meeting of the Standing Committee of the 16th Xiamen Municipal People’s Congress on August 26, 2025, the Provisions on the Protection of Labour Rights and Interests of Online Food Delivery Riders in the Xiamen Special Economic Zone (the “Provisions”) will come into force on 1 January 2026. These provisions facilitate the management of online food delivery riders, a group engaged in a new form of employment and stipulate the rights and obligations of both riders and platform operators.

The Provisions mandates enterprises to sign employment contracts or written agreements with riders, disclose regulations and algorithm rules (e.g., order distribution, rewards/punishments), and to consult with trade unions and rider representatives when formulating or adjusting rules. The enterprises are also requested to establish a remuneration ledger accessible to riders, to be kept for at least three years with details such as working hours, orders, and deductions. Violations, such as failing to sign agreements, pay occupational injury insurance, or provide required employment information may result in fines ranging from RMB 2,000 to RMB 20,000, along with orders for correction.

 

Ningxia Hui Autonomous Region

To regulate the labour dispatch industry and strengthen supervision based on credit, the Department of Human Resources and Social Security of Ningxia Hui Autonomous Region issued the Measures for the Credit Rating Evaluation of Labour Dispatch Units in Ningxia Hui Autonomous Region (the “Measures”) on 9 October 2025, which will be implemented from 1 January 2026 to 31 December 2030.

Applicable to labour dispatch units with labour dispatch operation permits, the Measures classifies credit ratings into five levels from high to low: A+ (Excellent), A (Good), B (Qualified), C (Below Average), and D (Poor), and relevant department shall carry out the evaluation every two years. The results will be shared with relevant departments through credit information platforms. Units rated A level and above will be given incentives such as preferential policies for employment and entrepreneurship, while those rated C level and below will face punishments such as enhanced supervision and interviews with responsible persons, etc.

 

Guizhou Province

The Guizhou Provincial Trade Union Regulations (the “Revision”) were revised and adopted and shall take effect on 1 January 2026. The Regulations, aim to further strengthen the role of trade unions in safeguarding employees’ rights and promoting harmonious labour relations.

The Revision significantly updates the previous Guizhou Provincial Trade Union Regulations to reflect modern labour relations. Key changes include expanding the Revision’ coverage to explicitly include social organisations as employers and strengthening protections for workers in new forms of employment, such as platform-based workers, including their right to unionise. The revision also standardizes the establishment, terms, and staffing of grassroots unions and introduces a system for professionalised union staff. It enhances union roles in democratic management, collective bargaining, and labour law supervision through a tiered oversight mechanism.  Additionally, the Revision broaden union services to cover mental health support and improve the management of union funds and assets. Overall, the revised regulations are more comprehensive and structured.

3. Legislative Drafts

In addition to the aforementioned legislative updates and local regulations, there are also draft consultation papers that were released in 2025. Although they have not been finalised, employers can keep an eye on the following issues in 2026.

 

Protection of rights of people working past retirement age

The Ministry of Human Resources and Social Security, together with other four central departments, jointly released the Interim Provisions on the Protection of Basic Rights and Interests of Over-Age Employees (the “Interim Provisions”). The Interim Provisions, which focuses on individuals who re‑enter the workforce after reaching the statutory retirement age, will be open for public consultation until 31 August 2025.

It is China’s first document clarifying the working rights and benefits of elderly employees beyond the statutory retirement age. Under this proposal, employers are mandated to pay over-age employees work-related injury insurance and prohibited from assigning these employees to high-risk jobs. The employees shall be paid at least the local minimum wage. Additionally, over‑age employees who have not completed the minimum contribution period for basic endowment insurance or basic medical insurance are permitted to continue making voluntary contributions.

 

Draft Regulations on Mediation and Arbitration of Labour and Personnel Disputes

The Department of Justice of Anhui Province and the Department of Human Resources and Social Security of Anhui Province successively released the Draft Regulations on Mediation and Arbitration of Labour and Personnel Disputes of Anhui Province (the “Draft”) in July 2025 to the public for opinions, aiming to improve the mechanism for handling labour and personnel disputes in the province and safeguard the legitimate rights and interests of both parties involved.

Alongside standardising the mediation and arbitration procedure for labour and personnel disputes, the Draft mandates the establishment of a multi-dimensional and coordinated mediation system and strengthening the diversified handling of such disputes, aiming at improving the efficiency and quality of dispute settlement.  Specifically, it calls for building a “one-stop” multi-joint mediation work model for labour disputes in new forms of employment. This aims to enable both traditional employees and those in flexible employment to resolve labour and personnel disputes more efficiently.