New Regulations on Over-Age Employees to Take Effect July 1

Effective July 1, 2026, new regulations will require employers in China to extend key wage-and-hour protections to retirees who continue working, including minimum wage, work-related injury insurance coverage, overtime pay at standard rates, observance of public holidays and rest days, and a 36-hour monthly overtime cap. The regulations do not alter automatic contract termination at statutory retirement nor cover mutually agreed formal extensions of retirement age, but they do expand protections for those continuing to work under employer management.  

The declining birth rate, ageing population, and shrinking workforce has served as a catalyst for the Chinese government to take action and implement a series of regulations to provide additional benefits and protections to employees. The most recent initiative takes the form of the Interim Provisions on the Protection of the Basic Rights and Interests of Over-Age Workers (the Regulations), which will take effect on July 1.

The Ministry of Human Resources and Social Security jointly issued these Regulations with other government agencies. The Regulations do not change the current practice of allowing employment contracts to terminate automatically when employees reach the statutory retirement age, however, they do introduce stronger protections for retirees or “over-age” employees who continue working.

DEFINITION OF OVER-AGE EMPLOYEES

Article 2 of the Regulations defines over-age employees as individuals who have reached the statutory retirement age, regardless of whether they have completed the retirement formalities, or those who have retired early under applicable laws and regulations. The Regulations only apply where such employees remain under the management of the employing entity and perform paid work arranged by the employer.

Importantly, Article 23 clarifies that employees who have formally extended their statutory retirement age by mutual agreement with the employer, in line with relevant laws and regulations, are not covered by these Regulations. Rather, they remain “employees” who are covered by the applicable employment laws and regulations.

EMPLOYER RESPONSIBILITIES

Under the current regime, many retirees or employees who have passed the statutory retirement age enter into service agreements governed by the Civil Law, which does not provide for minimum wage, overtime benefits or restrictions, or written agreements. Employers have limited statutory requirements and considerable flexibility in structuring these service agreements with individuals past the statutory retirement age.

Once these Regulations take effect, employers may face higher compliance costs for hiring individuals beyond the statutory retirement age. Employers must sign written agreements with this group, contribute to the work-related injury insurance scheme for this group, ensure they work in appropriate roles from a health and safety perspective, pay them no less than the statutory minimum wage, and comply with overtime and other wage-and-hour requirements.

In our experience, many multinational employers retaining white collar workers after retirement age are unlikely to be impacted by these changes under their existing practices, particularly as many of these employers provide commercial injury insurance for their retirees.

The primary area of potential change for many employers will be overtime. The Regulations explicitly state that over-age employees are entitled to public holidays and rest days, and employers should generally avoid assigning them overtime work. (In general, overtime is incurred for any work after either eight hours/day or 40 hours/week.)

If overtime is required, employers must compensate this population at the same rate applicable to full-time employees. Employers must also observe the daily cap on overtime of three hours and monthly cap of 36 hours. Importantly, the Regulations provide that over-age workers may file complaints with the labor bureau for an employer’s noncompliance with any of the Regulations’ requirements.

Whether the flexible working hours system (a working hours system that provides exceptions to the regular eight-hour workday or 40-hour workweek) can be applied to over‑age workers—particularly if they worked under the flexible working hours system before reaching the retirement age—remains a key issue to monitor, especially given that many multinational companies rehire this group into senior management positions.

The Regulations neither explicitly prohibit nor expressly permit the application of the flexible working hours system to over‑age workers, leaving the issue ambiguous and subject to further clarification through future regulations or agency guidance.

DISPUTE RESOLUTION

The Regulations further provide enhanced protection for over‑age workers by clarifying that many disputes may be resolved through the same dispute resolution mechanism that is applicable to employees.

Article 19 provides that disputes concerning remuneration, rest and holidays, work safety and health, and work‑related injury insurance coverage must follow the standard employee-employer dispute resolution process, beginning with labor arbitration before proceeding to court. This framework signals that the relationship between employers and over‑age workers will more closely resemble an employment relationship rather than a pure civil service arrangement under the civil law.

Moreover, given that labor arbitration commissions in practice tend to favor employees’ claims, channeling such disputes through labor arbitration as a mandatory first step strengthens the protection of over‑age workers’ interests and places them in a more advantageous position. This development further underscores the importance of compliance with the new Regulations.

NEXT STEPS

Employers and HR teams should identify employees nearing or past the statutory retirement age, review their current agreements and template agreement for engaging over-age employees, review commercial and work-related injury insurance coverage, reassess overtime practices, and budget for higher compliance costs.

Notably, the Regulations are silent regarding whether this population is entitled to annual leave or whether statutory rules regarding noncompete obligations, such as minimum noncompete consideration levels, apply to this group.

For now, these matters remain subject to agreement between the employer and the over-age employee, but companies should closely monitor judicial developments as future rulings may clarify these unsettled issues.