Notice Periods, Non-Competes and Releases: Getting Your China Hire Out of Their Current Job Without Legal Risk

In China, an employee generally resigns by giving the current employer 30 days' written notice, or three days during probation, and the employer must then issue a termination certificate and transfer the personnel file and social insurance records within 15 days. The harder questions come from the contract: a training-cost service period can carry a capped penalty, and a non-compete can bind only senior managers, senior technical staff and others with confidentiality duties, for no more than two years after leaving. If your new hire knowingly joins in breach, the hiring company may share liability. Ask for the signed documents before you fix a start date, write conditions into the offer, and plan for slippage. Practice varies by city, and disputes go to labor arbitration.

Table of Contents

1. The Gap Between "Offer Accepted" and "First Day"
2. The Employee's Statutory Notice and the Acceptance-to-Start Timeline
3. What the Previous Employer Can and Cannot Demand
4. Service-Period and Training-Cost Agreements
5. Confidentiality and Non-Compete Clauses
6. Clause Type vs What the Law Allows vs What to Check
7. When the New Employer Shares the Risk
8. Offer-Letter Wording and Start-Date Slippage Planning
9. Red-Flag Situations
10. A Recruiter's Pre-Resignation Checklist
11. How Knit's EOR Service Handles This
12. Illustrative Scenario: Candidate A
13. Frequently Asked Questions
14. Glossary of Key Terms
15. About Knit
16. Related Reading

1. The Gap Between "Offer Accepted" and "First Day"

A signed offer feels like the finish line. For a candidate who still works for another employer in China, it is closer to the starting gun. Between acceptance and the first day sit a resignation, a handover, possibly a negotiation over a training bond, and sometimes a non-compete that nobody mentioned during interviews. Each of these can move your start date or, in the worst case, expose your company to a claim from the candidate's former employer.

This article is written for recruiters and foreign hiring managers who have an accepted candidate in mainland China and need to understand what the law lets the previous employer demand, what it does not, and what to check before you commit to a start date. It is a concept explainer, not a legal opinion. Where we quote legal text, we say which source we read.

A note on sources. The Labor Contract Law of the People's Republic of China is the main statute. We read the English reprint published by the Supreme People's Court of China (a 2015 web reprint, marked as a translation for reference only, where the Chinese version prevails) and the Chinese-language text posted on a PRC government site. We also read two Supreme People's Court judicial interpretations on labor disputes, and English-language pages from the Shanghai government. Neither the reprint nor the Chinese page we loaded shows a later amendment date, so confirm the current text with counsel before relying on any article number in a real case.

Three ideas run through everything below:

• Resignation is a right with a procedure. The employee does not need the old employer's permission to resign, but must follow the notice rule.
• Contract clauses are limited by statute. Employers in China cannot attach penalties to a resignation unless the law specifically allows them.
• Liability can travel. A new employer that recruits someone who is still bound elsewhere can be pulled into the dispute.

If you are still deciding how to hire in China at all, our guide to hiring in China and why companies use an EOR covers the basics. The rest of this article assumes the candidate has said yes.

2. The Employee's Statutory Notice and the Acceptance-to-Start Timeline

The notice rule

Article 37 of the Labor Contract Law gives the employee a right to terminate the contract. In the Chinese text, a worker who gives the employer 30 days' advance notice in writing may terminate the contract, and a worker still in the probation period may do so with three days' advance notice. The Shanghai government's English-language page on termination describes the same two periods in plain terms, "30 days in advance" in writing, and three days during the probationary period.

A few practical points follow from that wording:

• The notice should be written. A verbal "I'm leaving" does not start the 30-day clock in a way a labor arbitration committee will find easy to prove. Candidates should keep a dated copy, and ideally a record of delivery.
• The clock runs from notice, not from the offer. Recruiters sometimes assume the candidate can "give notice later" and still start quickly. The 30 days begin only when notice is given, so a candidate who waits a week to resign has added a week to your timeline.
• Probation is the short route. Three days applies only while the employee is still in the probation period under the current contract. A candidate who has finished probation, even by a week, is on the 30-day rule.
• Exceptions exist but are narrow. Article 38 lets a worker terminate on the employer's fault, for example unpaid wages, unpaid social insurance, or unsafe conditions, and for the most serious cases (violence, intimidation, forced labor, or dangerous work ordered against safety rules) without advance notice. We read this in the Supreme People's Court reprint of Articles 36 to 41. These grounds are about the employer's breach, not about a better offer elsewhere, and a candidate who claims one without evidence invites a dispute.
• Mutual agreement is another route. The Shanghai page notes that a contract can also end by agreement between the parties. A previous employer that wants the seat filled quickly, or that is on good terms with the candidate, may agree to an earlier last day. Get that agreement in writing.

We did not find, in the texts we read, any provision letting the employer extend the 30 days unilaterally. That does not mean an employer will not try. Some candidates report pressure to "stay until a replacement is found." Whether such pressure has legal force depends on the contract and the facts, which is a question for PRC counsel, not for a recruiter.

Timeline from acceptance to start, using statutory periods only

The table below maps the sequence using only periods that appear in the statute or the judicial interpretations we read. It contains no vendor timeline, and real cases add days for handover discussions, paperwork and holidays.

As a planning shortcut, many recruiters quote "about one month plus a few days" to hiring managers. That is shorthand, not a legal rule, and it breaks the moment a non-compete or a service-period dispute appears.

3. What the Previous Employer Can and Cannot Demand

What the employer can reasonably ask for

The law expects an orderly exit. Article 50 says the worker hands over work matters as the parties agree, and that any statutory compensation is paid once handover is complete. In practice, the previous employer may legitimately ask the candidate to:

• document open projects and pass on files, passwords and customer contacts;
• return company property such as laptops, access cards and documents;
• attend reasonable handover meetings during the notice period;
• confirm in writing any confidentiality duties that survive the end of employment.

None of these is unusual, and a candidate who cooperates tends to leave faster and with a cleaner reference.

What the employer cannot do

Several limits matter to recruiters.

Hold the candidate's documents or demand money. Article 9 of the Labor Contract Law, as we read it in the Supreme People's Court reprint, bars an employer from retaining a worker's identity card or other certificates, from requiring a guarantee, and from collecting money from the worker in other forms. An employer that says "you cannot leave until you pay a deposit" should prompt a call to counsel.

Impose penalties the statute does not allow. Article 25 says an employer shall not agree with a worker that the worker pays a penalty for breach of contract, except in the situations in Articles 22 and 23. Those two articles cover training-related service periods and non-competes, discussed below. A clause that charges an employee a flat fee "for resigning early" outside those two categories runs into Article 25.

Refuse to issue the termination certificate. Article 50 requires the employer to issue a certificate of revocation or termination at the time the contract ends. Article 89, which we read in the Supreme People's Court reprint of Articles 89 to 98, lets the labor administrative department order an employer that does not issue the certificate to correct the omission, and makes the employer liable for compensation if the worker suffers harm as a result. For your purposes the certificate is the key "release" document, because a new employer and its social insurance and housing fund administrators will typically ask for proof that the prior relationship ended.

Stall the file and social insurance transfer. Article 50 sets 15 days for the employer to complete the transfer formalities. Delay can create practical problems for the new employer's registration, so build the 15 days into your onboarding plan.

"Release" is a business word, not a statutory one

Recruiters often ask for "a release letter" from the previous employer. The statutes we read do not use that term. What the law provides is a written termination certificate, completed handover, and, where relevant, an agreement about any non-compete or service-period obligations. In practice a candidate may also hold a signed mutual termination agreement or a written waiver of a non-compete. Treat these as documents you request, not rights you assume. Whether a particular city's authorities require anything beyond the certificate for social insurance or housing fund transfers is local practice, so ask the candidate and your local team.

Housing fund transfers follow local rules that we did not verify at the national level. If your offer depends on a smooth housing fund transfer, confirm the procedure with the relevant local authority or counsel.

4. Service-Period and Training-Cost Agreements

Many candidates in China carry a training bond. The law allows these, but narrowly.

Under Article 22 of the Labor Contract Law, an employer that pays for specialized technical training may agree with the worker on a service period. If the worker breaks the service-period agreement, the worker pays a penalty as agreed, but the sum may not exceed the training expenses the employer provided. The Supreme People's Court reprint states: "The sum of the penalty may not exceed the training expenses paid by the employing unit." The same article also addresses the portion of training cost that corresponds to the unserved part of the service period, and says a service-period agreement may not reduce the worker's pay increases under the employer's normal pay-adjustment mechanism.

What does this mean for your hire?

• It is not every training course. The article refers to specialized technical training funded by the employer. Routine onboarding, a short internal workshop or general orientation does not obviously qualify. If the former employer claims a "training bond" for ordinary job instruction, that is a question for counsel.
• The cap matters. A clause demanding twice the training cost, or a flat sum unrelated to actual expense, is exposed under Article 22 and Article 25.
• Receipts matter. A reasonable review asks whether the employer actually paid the training fee, how much, and whether the candidate can see supporting records.
• Who pays is a commercial choice. Some hiring companies agree to reimburse a documented, lawful service-period penalty as part of a sign-on package. If you consider that, put the cap, the documentation requirement and the payment mechanism in writing, and have counsel review it. Whether a given reimbursement has tax consequences is a question for a licensed tax advisor.

The Supreme People's Court's 2025 interpretation, which we read in Chinese, also addresses disputes over service-period agreements, and the page we reviewed lists Article 12 in that context. We could not extract the full wording, so we do not rely on it here. Ask counsel how courts in the candidate's city currently apply it.

A service-period claim is a financial claim against the candidate. It does not, in the texts we read, give the employer a right to stop the candidate from resigning on notice. That distinction is useful in negotiation: the previous employer may seek repayment, but the notice rule still governs when the candidate can leave.

5. Confidentiality and Non-Compete Clauses

This is where most start-date surprises come from.

Who can be bound

Article 23 allows an employer and a worker to agree on confidentiality obligations covering business secrets and intellectual-property-related matters. For a worker who owes a confidentiality duty, the employer may agree a non-compete clause in the contract or in a confidentiality agreement, and must agree to pay the worker economic compensation on a monthly basis during the restriction period after the contract ends.

Article 24 narrows the pool. Persons bound by a non-compete are limited to the employer's senior managers, senior technical personnel and others with confidentiality obligations. The Shanghai government's English-language page on non-compete compensation standards, published in April 2025 and attributed to the Ministry of Human Resources and Social Security's official WeChat account, repeats that non-compete clauses apply only to senior management, senior technical personnel and other employees with confidentiality obligations.

How long, where and for what

Article 24 caps the restriction at two years after termination. It also says the scope, geographic area and term are agreed between the parties and must comply with law. The Supreme People's Court's 2025 interpretation (II) on labor disputes, which we read in Chinese on the court's website, adds two points in Chinese-language text:

• If the worker never learned of or had access to the employer's trade secrets or IP-related confidential matters, the court will support a request to declare the non-compete clause not effective.
• If the clause's scope, region or term does not match the confidential information the worker actually knew, the court will support a request to declare the excessive portion void.

In practice, this means a blanket "no work in the industry, anywhere in China, for two years" clause for a junior employee with no access to trade secrets is exposed. It does not mean the candidate can ignore it. Until an arbitration committee or court says so, the clause is the candidate's contract.

Monthly compensation and what happens if it is not paid

Article 23 requires monthly economic compensation during the restriction period. The Shanghai page states that a non-compete must include economic compensation to be enforceable, and that if the contract does not state an amount, the employer must pay monthly compensation of 30 percent of the worker's average monthly salary over the 12 months before termination, with a floor at the local minimum wage if 30 percent falls below it. Because that page is a government-portal summary and does not reproduce the rule's source text, we treat the percentage as reported, not as a verified statutory citation, and recommend confirming it with counsel or the local human resources and social security bureau.

On non-payment, the Supreme People's Court's Interpretation (I) of labor dispute cases (document No. 26 of 2020, effective January 1, 2021) is clear in the Chinese text we read. Where the contract or a confidentiality agreement provides for a non-compete and compensation, and the employer, for its own reasons, fails to pay the agreed compensation for three months after the contract ends, the court will support the worker's request to cancel the non-compete (Article 38). The Shanghai page describes the same rule as three consecutive months. The same interpretation says that during the restriction period the court will support an employer's request to end the non-compete agreement, and that in that case the court will support the worker's request for an extra three months of compensation (Article 39).

The 2025 interpretation sits alongside it. We read that the 2025 text repeals one article of Interpretation (I) and does not list Articles 38 or 39 among the repealed items on the page we reviewed. We could not confirm from the page alone whether every provision of Interpretation (I) remains unchanged, so verify the current version with counsel.

If the worker breaches a valid non-compete

Article 23 says a worker who breaches a non-compete pays the agreed penalty. Article 90 adds that a worker who violates a confidentiality duty or non-compete in the contract, causing the employer loss, is liable for compensation. The 2025 interpretation states that where a worker breaches a valid non-compete, the court will support an employer's request that the worker return compensation already paid and pay the agreed penalty. Interpretation (I) says that after the worker pays the penalty, the court will support the employer's demand that the worker keep complying with the non-compete (Article 40). In other words, paying the penalty does not buy freedom.

Confidentiality duties are separate from the non-compete

A candidate may have no non-compete and still owe confidentiality obligations. Starting a new job does not erase them. Make sure your offer letter and onboarding instructions tell the new hire not to bring or use former-employer documents, source code, customer lists or data. That protects the candidate and your company.

6. Clause Type vs What the Law Allows vs What to Check

Use this table when you review the documents a candidate shares. It summarizes the provisions discussed above and is a screening tool, not legal advice.

7. When the New Employer Shares the Risk

Recruiters tend to think of a non-compete as the candidate's problem. The statute says otherwise in at least one situation.

Article 91 of the Labor Contract Law, as we read it in both the English reprint and the Chinese text, provides that an employing unit that recruits a worker whose labor contract with another employer has not been revoked or terminated, and thereby causes the other employer loss, bears joint and several liability for compensation. The article refers to a contract that has not yet been revoked or ended. The text we read does not use the word "knowingly," and it does not by its terms address a worker whose contract has ended but who remains bound by a post-employment non-compete. Other bodies of law may apply in a non-compete dispute, and we did not verify them for this article. That is a reason to ask counsel, not a reason to relax.

Two practical consequences follow:

1. Do not let the candidate work for you before the old contract ends. Starting early "informally," consulting, or doing trial projects while still employed exposes both sides. Article 39 also lets an employer terminate for cause where a worker holds a second job that seriously affects the first, or refuses to correct it after the employer raises it. We read that article in the Supreme People's Court reprint. A candidate who is dismissed for cause may lose their resignation timeline and take on a dispute your company now has to live with.
2. Document what you knew and what you asked. If a former employer later alleges a breach, a clear record that you requested the contract, asked for the termination certificate, and told the candidate not to bring confidential material helps show that your company acted carefully. It does not guarantee an outcome.

Article 90 is the mirror image. A candidate who breaches a non-compete or resigns in violation of the law and causes the former employer loss must compensate that employer. If your offer pays for the candidate's legal costs or reimburses a penalty, check with counsel before you promise it.

Direct hiring without a local entity adds another layer, because the hiring company must also run the employment relationship properly once the candidate starts. Our guides on direct contracting compliance for remote hires in China and on hiring in China before setting up an entity explain those risks.

8. Offer-Letter Wording and Start-Date Slippage Planning

What the offer should say

A good offer letter for a China hire who is still employed makes the start date conditional and makes clear that the company does not want the candidate to break any valid obligation. The sections below are examples of purpose, not template language, and your counsel should draft the final text.

Two cautions on drafting. First, a condition that sounds like a threat ("you must resign by Friday or the offer is withdrawn") can put pressure on the candidate to resign before they have seen the non-compete. Second, do not promise to indemnify the candidate for any claim without legal review, because the scope of what a promise like that covers, and whether it is enforceable, depends on the facts and the governing law. If your company will employ the candidate through an EOR, the contract the candidate signs will be with the EOR as legal employer, so align the offer letter with that contract. We describe that arrangement in our guide to what an employer of record is.

Planning for start-date slippage

Start dates move. Plan for it from the beginning rather than treating a delay as a failure.

• Quote a range, not a day. Tell the hiring manager the earliest lawful start and a realistic outer date. The 30-day notice is the floor, not the average.
• Add buffer for the 15-day transfer period. Even if the candidate can start work after the notice period ends, certain registrations may depend on the termination certificate and the file and social insurance transfer.
• Build the payroll calendar around the confirmed start. Do not issue equipment, accounts or access until you have the certificate or a written confirmation from counsel.
• Keep the candidate engaged. Notice periods are long. A candidate who hears nothing for four weeks may take a counteroffer. A short weekly check-in, a plan for the first month and an introduction to the team keep the relationship warm without creating work that overlaps with the old job.
• Decide your tolerance in advance. If the candidate's non-compete, service-period penalty or release negotiation will move the date by more than a set number of weeks, who decides whether to wait, renegotiate the role or move on? Agree that before the offer goes out.
• Hold a fallback. For critical roles, keep your second-choice candidate warm until the first has delivered a termination certificate.

Also remember public holidays and local administrative calendars. Our bilingual HR support guide explains why having someone who reads Chinese-language documents and speaks to local authorities matters when paperwork stalls.

9. Red-Flag Situations

These situations deserve a pause and, usually, a call to PRC counsel before you set or confirm a start date.

10. A Recruiter's Pre-Resignation Checklist

Run through this list before the candidate gives notice. Most items take a day or two and can save weeks.

1. Ask for the documents. Current employment contract, any addendum, training or service-period agreement, confidentiality agreement and any non-compete. Ask for complete copies, not summaries.
2. Confirm probation status. Does the contract say the probation has ended? The three-day notice applies only inside probation.
3. Check for a non-compete. If one exists, read the persons covered, the duration, the scope, the region, the monthly compensation and whether it has been paid during employment.
4. Check for a training bond. If one exists, ask for evidence of the training expense and the unserved period. Remember the cap in Article 22.
5. Assess role overlap. Ask the hiring manager whether your role competes with the former employer. A candidate moving from competitor to competitor deserves more care than one moving across industries.
6. Have PRC counsel review any non-compete or bond. A short review before the offer is firmer than a long dispute after.
7. Write the offer with conditions. Use the elements in section 8, adapted by counsel.
8. Tell the candidate how to resign. Written notice, dated, kept with proof of delivery. No rush to resign before the documents are reviewed.
9. Set the start date from the notice date. Add 30 days (or 3 days in probation) and then your buffer for the 15-day transfer period.
10. Agree a confidentiality instruction. Tell the candidate in writing not to bring or use former-employer material.
11. Plan the termination certificate. Ask the candidate to request it on the last day and send a copy.
12. Check the file and social insurance transfer. Confirm how the candidate's city handles it, and whether your onboarding depends on it.
13. Decide on counteroffer handling. If the old employer counters, what will you do?
14. Keep notes. Record what you asked for and what you received. Those notes matter if a dispute arises.
15. Remember local variation. Practice differs by city and by arbitration committee. Treat any national summary as a starting point.

For a deeper view of how social insurance bases are set once the hire starts, see our explainer on what counts as wages for China social insurance.

11. How Knit's EOR Service Handles This

Knit People is an Employer of Record provider with a China operations hub in Shenzhen. In an EOR arrangement, the EOR becomes the legal employer of the candidate in China. It issues the employment contract, runs payroll and social insurance and manages the employment relationship on the client's behalf, while the client directs the day-to-day work. Our complete China EOR guide walks through that structure, and our EOR services page describes the service.

For a candidate who is still employed elsewhere, the useful points are these:

• The contract is issued by the legal employer. The conditional start date and the delivery of release documents can be aligned with the employment contract before onboarding begins.
• A conversation before the offer helps. Talking to Knit's team before the offer letter goes out lets you line up the offer, the start date and the onboarding sequence.
• Limits matter. An EOR cannot cure a candidate's existing obligations. If a valid non-compete bars the role, a different contracting structure does not remove that. We recommend PRC counsel for any specific non-compete or service-period question, and Knit's local team can help you coordinate that.

Knit also offers headhunting and recruitment, background checks, work visa support and other services, which some clients use around hiring. Whether any of these suit a particular role is a conversation for the contact page.

12. Illustrative Scenario: Candidate A

Illustrative scenario (hypothetical, not a real client). The facts below are invented to show how the steps fit together.

Assumptions. A US software company wants to hire Candidate A, a senior backend engineer in a mid-size mainland city, through an EOR. Candidate A accepts the offer on a Monday. Candidate A's current contract has finished probation. The contract contains a confidentiality clause and a 12-month non-compete with a stated monthly compensation. Candidate A also signed a training-service agreement after the current employer paid for a technical certification. The new role builds a product in a different market segment from the current employer's.

Step 1: Documents first. Before Candidate A resigns, the recruiter asks for copies of the contract, the training agreement and the non-compete. The recruiter also asks the hiring manager how the new product relates to the current employer's business.

Step 2: Counsel review. PRC counsel reviews the documents. The non-compete is within the two-year maximum. Candidate A is a senior technical person, so the category is plausible. Counsel's view is that the new product does not compete with the former employer's products, but flags the risk that the former employer may see it differently. The training agreement shows a service period and a penalty. Counsel asks for the training invoice to check the penalty against the amount actually paid.

Step 3: Offer conditions. The offer letter says the start date depends on Candidate A's lawful exit, asks for the termination certificate, and tells Candidate A not to bring former-employer material. It does not promise to cover any penalty.

Step 4: Notice. Candidate A delivers written notice on Wednesday. Because probation has ended, the 30-day period applies. The earliest lawful exit date, absent agreement, is 30 days after the notice date. The recruiter tells the hiring manager that the start date is "about five weeks from acceptance, subject to documents," not "30 days."

Step 5: A snag. The former employer's HR says it will not issue the termination certificate until Candidate A repays a "training fee" that is higher than the invoice. Counsel advises that Article 22 caps the penalty at the training expense paid, that Article 50 requires the certificate at termination, and that the dispute over the amount is a separate matter. Candidate A, through counsel, pays the documented amount under written reservation and obtains the certificate. Whether paying under reservation is the right move in a real case is a legal judgment, not a recruiter's.

Step 6: Non-compete letter. The former employer sends a reminder of the non-compete. Counsel replies that the new role is outside the former employer's market. The new employer keeps a record of its diligence. No claim follows in this hypothetical.

Step 7: Start. Candidate A starts after the certificate arrives and the file transfer is in progress. The hiring manager's original date was a week earlier, so the company's tolerance for slippage mattered.

What this shows. The documents came first, the notice was written, the penalty was tested against the statute, and the start date was a range. Real cases vary, and a different set of facts, such as a direct competitor or unpaid non-compete compensation, would have led to a different path.

13. Frequently Asked Questions

Can my candidate leave their current job in China without the employer's permission?

‍Yes, in general. Under Article 37 of the Labor Contract Law, a worker may terminate the contract by giving 30 days' written notice, or three days during probation. The employer's consent is not the legal test. The employer may still claim damages or penalties where the contract or law allows them, so review the documents first.

Does the 30-day notice period apply to everyone?

‍Generally yes, for resignation under Article 37, except that probation shortens it to three days. Different rules apply where the employer is at fault, as in Article 38. Contracts may also say more about handover. If the candidate's contract says something different, ask counsel which term prevails.

What is the "release" document my candidate should bring?

‍The statutory document is the termination certificate, which the employer must issue when the contract ends (Article 50). A mutual termination agreement or a written waiver of a non-compete may also be useful. "Release letter" is a business term, not a statutory one, so be specific about what you are asking the candidate to obtain.

Can the former employer charge my candidate a penalty for resigning?

‍Only in limited cases. Article 25 bars penalties for breach of contract except the training service-period penalty in Article 22 and the non-compete penalty in Article 23. A training-related penalty cannot exceed the training expenses the employer paid. Any other flat fee for early resignation is open to challenge, ideally with counsel's help.

Who can be bound by a non-compete in China?

‍Article 24 limits non-competes to senior managers, senior technical personnel and other persons with confidentiality obligations. The restriction cannot run longer than two years after termination. A clause covering a junior employee with no access to confidential information is vulnerable, and the 2025 Supreme People's Court interpretation supports narrowing clauses that outrun what the worker knew.

What if the former employer never paid the non-compete compensation?

‍Interpretation (I) from the Supreme People's Court says that if the employer, for its own reasons, fails to pay the agreed compensation for three months after the contract ends, the court will support the worker's request to cancel the non-compete. Do not rely on this before counsel checks the facts, including why payment stopped and what the contract says.

Can my company be liable if we hire someone who breaches a non-compete?

‍Possibly. Article 91 makes an employer that recruits a worker whose contract with another employer has not been revoked or terminated jointly liable for the other employer's resulting loss. That article speaks to unterminated contracts, and other law may apply to post-employment non-competes. Ask PRC counsel to assess any case where the candidate is bound.

Can the candidate start working for us part-time before the notice period ends?

‍We recommend against it. Overlapping work exposes the candidate to dismissal for cause under Article 39 where a second job seriously affects the first or the worker refuses to correct it, and exposes your company under Article 91. Wait for the termination certificate, or get counsel's written view before any overlap.

How long does the file and social insurance transfer take?

‍Article 50 requires the former employer to complete the transfer formalities within 15 days after the contract ends. Actual processing can differ by city, so ask the candidate and your local team how it works locally and build in buffer.

Where do disputes about all this go?

‍Labor disputes in China typically start with labor arbitration before reaching the courts. Practice varies by city and by arbitration committee, including how each treats non-compete scope and unpaid compensation. Keep written records, avoid informal side arrangements, and engage PRC counsel early for any specific dispute.

14. Glossary of Key Terms

Labor Contract Law: The national PRC statute governing employment contracts, in force from 2008 and cited here in the version posted by the Supreme People's Court and a PRC government site.

Notice period (resignation): The advance written notice an employee gives before terminating the contract: 30 days generally, three days during probation (Article 37).

Probation period: An initial period within the employment contract during which a shorter resignation notice applies.

Termination certificate: The document the employer must issue when a contract is revoked or terminated (Article 50).

Handover: The transfer of work matters from the departing employee to the employer, as agreed by the parties (Article 50).

Personnel file and social insurance transfer: The formalities the former employer must complete within 15 days of termination (Article 50).

Service period: An agreed period of continued employment tied to employer-funded specialized training (Article 22).

Liquidated damages (penalty): An agreed sum payable on breach; permitted in China only in the training and non-compete cases the statute names (Articles 22, 23, 25).

Confidentiality obligation: A duty not to disclose business secrets or IP-related confidential matters (Article 23).

Non-compete (competition restriction): A post-employment restriction on joining a competitor or starting a competing business, limited by person, duration and compensation (Articles 23 and 24).

Economic compensation (non-compete): Monthly payments from the employer during the restriction period.

Joint and several liability: A legal position where each liable party may be required to pay the whole claim (Article 91).

Labor arbitration: The tribunal process through which most employment disputes in China begin.

Employer of Record (EOR): A provider that acts as the legal employer of a worker on behalf of a client company, handling contracts, payroll and statutory obligations.

15. About Knit

Knit People was founded in Canada in 2015 and has about 11 years of experience in global employment services. It serves more than 4,000 clients across 172 countries and regions, has processed over USD 600 million in annual payroll, operates 60+ owned entities, and runs a China operations hub in Shenzhen (MSB license No. M23187879). Its services include Employer of Record, PEO, Global Payroll and Contractor of Record, plus headhunting and recruitment, background checks, entity registration, global tax, insurance and work visa support. To discuss a China hire, visit the Knit People contact page or read about Knit's Employer of Record services.

16. Related Reading

• Hiring in China: What to Know and Why Use an EOR
• The Complete China Employer of Record Guide for 2026
• Why Companies Use an EOR Before Setting Up a Legal Entity in China
• China Remote Hiring Compliance: Direct Contracting and EOR Guide

This article provides general educational information about employment-related rules in mainland China as understood in October 2026. Laws, judicial interpretations, rates and local practice change and differ by city and by arbitration committee. Our summaries rely on a 2015 English reprint and Chinese-language government pages, and may not reflect later amendments. Nothing here is legal, tax or immigration advice, or a guarantee of any outcome. Before acting on a specific candidate, contract or dispute, confirm the position with Knit's local team or licensed PRC employment counsel and tax advisors.