Corporate Compliance & Legal Alert - May 2026

Spotlight on News

1. China issued the Interim Provisions on the Protection of the Basic Rights and Interests of Over-Age Workers.

On May 10, 2026, the Ministry of Human Resources and Social Security (MOHRSS) and other departments jointly issued the Interim Provisions on the Protection of the Basic Rights and Interests of Over-Age Workers (hereinafter referred to as the "Provisions"), effective July 1, 2026. The Provisions applies to workers who have reached the statutory retirement age (over-age workers) but are managed by and perform paid work for employers in China, as well as to the employers that hire them.

Article 6 of the Provisions requires a written work agreement covering terms, job content, workplace, hours, and social insurance, while the Provisions imposes binding rules on essential rights such as pay, rest, safety, and working conditions. Article 9 prohibits overtime for over-age workers while states that any necessary overtime shall be compensated with statutory overtime pay. Article 10 through 12 require clear agreement on pay rates, cycles, and methods, and guarantee that normal-work pay is no less than the local minimum wage. On social insurance, Article 15 mandates employer-paid work-related injury coverage (no individual contribution), with specific benefits to be detailed separately. Articles 16 and 17 address pension and medical insurance: existing benefits continue unaffected; those without may continue contributions individually or, by agreement, have the employer contribute and withhold the employee's share.

In terms of dispute resolution and supervision safeguards, Article 19 of the Provisions provides that conflicts over pay, rest, safety, or injury insurance follow labor arbitration rules, while other disputes may be submitted before people’s court. In addition, Article 20 allows over-age workers to file complaints with human resources authorities over wage payment violations.

As China’s first dedicated regulation protecting over-age workers’ rights, the Provisions partially fills a regulatory gap in line with national delayed-retirement policies. Employers should adjust their compliance practices accordingly.

2.         The SPC and SPP successively released typical cases, providing judicial guidance on corporate IP compliance.

At the end of April 2026, the Supreme People's Court (SPC) and the Supreme People's Procuratorate (SPP) successively released typical cases on intellectual property, highlighting a tough stance against unfair competition, trade secret infringement, patent and trademark violations, and other misconduct. A total of 20 typical cases across the two batches provide clear judicial guidance for corporate IP compliance.

Among the 10 cases released by the Supreme Court, several involve controversial issues such as semiconductor patent infringement, malicious poaching as unfair competition, data scraping, and trademark infringement from reselling refurbished products. For instance, in typical case No.2, a patent infringement lawsuit, the court clarified the rules for interpreting patent claims in the chip industry, reminding companies to design around existing patents and keep independent R&D records. In typical case No.5, an unfair competition case involving malicious poaching, the court held that knowingly recruiting an employee bound by a non-compete agreement through covert means may constitute unfair competition, urging employers to check candidates' non-compete obligations during hiring.

Among the 10 cases from the Supreme Procuratorate, trade secret and copyright violations were the most prevalent. In typical case No.3 (trade secret infringement), a former employee took a core formula and applied for a patent, thereby disclosing the secret, and was held criminally liable- serving as a warning for companies to establish robust confidentiality systems and sign clear agreements. In typical case No.4 (illegally providing trade secrets abroad), an employee disclosed procurement information during paid foreign consultations and was convicted of illegally providing trade secrets to a foreign entity, highlighting cross-border compliance risks.

The typical cases from the two supreme judicial authorities show that judicial enforcement against IP infringement is continuously escalating. It is recommended that companies strengthen their compliance systems in areas such as internal confidentiality, data governance, hiring practices, and cross-border risk management, proactively identify core technology and trade secret risks, and reduce legal exposure.

3.         The SPC released typical cases on combating crimes infringing on citizens' personal information and related offenses.

On May 8, 2026, the Supreme People's Court (SPC) released five typical cases on cracking down on crimes infringing on citizens' personal information and related offenses. These cases highlight the evolving characteristics and trends of such crimes, strengthen research and judicial consistency, and serve as warnings, educational tools, and guidance.

The five cases collectively reveal common patterns in personal information crimes and related offenses. Examples include: an outsourced service provider illegally obtaining and leaking patient privacy information while serving a hospital; an employee abusing access rights to obtain and sell citizens' personal information; offenders using encrypted communication tools and the dark web to illegally acquire massive amounts of personal information and receiving payments in virtual currencies to evade regulation; criminals implanting malware into an HPV vaccine appointment website to gain unauthorized access and steal over 290,000 appointment records, which were then used for targeted fraud; and, in another case, where offenders bypassed real-name authentication systems to illegally access academic credential verification platforms and resell

personal data in bulk. These cases cover the entire chain of offenses, from internal leaks and hacker theft to downstream fraud, demonstrating the judiciary's determination to crack down on personal information crimes and related offenses across the full chain and with severe measures.

Legislation Updates

1. China issued the Measures for the Administration of Medical Representatives, further tightening

On April 28, 2026, the National Medical Products Administration (NMPA) and other authorities jointly issued the Measures for the Administration of Medical Representatives (hereinafter referred to as the "Measures"), effective August 1, 2026, repealing the interim version that had been in force since December 1, 2020.

The Measures consist of 6 chapters and 35 articles, covering marketing authorization holder (hereinafter referred to as the "MAH") management, filing administration, academic promotion, supervision, and other areas. It clarifies MAHs' responsibilities for access management, filing review, and conduct supervision of medical representatives, refines healthcare institution reception rules, defines regulatory authorities' duties, and establishes a full-chain compliance system.

On compliance for MAHs and their agents: Article 11 prohibits MAHs from hiring or authorizing medical representatives with bribery records or who fail to meet qualification requirements. It also bans assigning sales tasks or requiring payment collection and invoice processing. Article 12 requires professional organizations engaged by MAHs to follow the same rules, barring them from hiring non-compliant reps, tolerating bribery, or conducting improper promotions.

On conduct of medical representatives: Article 24 sets out nine prohibitions. Representatives must promote only within authorized drug categories, therapeutic areas, and territories. They are forbidden from promoting without proper filing or healthcare institution consent, undertaking sales tasks, tracking prescriptions, or disguising benefits as donations or sponsorships. Providing kickbacks, misleading clinical medication use, concealing adverse reaction information, or illegally collecting patient data is also prohibited.

2. Shanghai Municipal Tax Service issued the Announcement on the Declaration of Social Insurance Contribution Bases for Employers for the 2026 Social Insurance Year.

On April 24, 2026, the Shanghai Municipal Tax Service of the State Taxation Administration issued the Announcement on the Declaration of Social Insurance Contribution Bases for Employers for the 2026 Social Insurance Year (hereinafter referred to as the "Announcement"). It requires employers to declare social insurance contribution bases for all active employees for the 2026 social insurance year (July 2026 to June 2027) during the period from May 1 to June 25, 2026.

Regarding the calculation method, employers must declare the average monthly wage of employees for the previous calendar year (January 1 to December 31, 2025). For employees who worked less than a full year, the average wage is calculated by dividing total wages by actual months worked. For new hires in 2026, the wage for the first full month of employment is used. For employees with Grade 1 to 4 work-related disabilities, the disability subsidy serves as the base. The wage base follows the rules of the National Bureau of Statistics and other relevant regulations. Declarations can be made via e-Tax, social insurance client software, or tax service halls.

Notably, Article 5 of the Announcement requires that declared contribution bases be confirmed by employees' signatures, with relevant documents sealed and retained for future inspection. Employers must also regularly disclose social insurance payment information to employees for supervision. However, the Announcement does not provide further details on the specific procedures for signature confirmation or the legal consequences for failing to obtain such signatures, leaving these issues to be clarified in future rules.

Case Study

1.         Typical Case released by Beijing Third Intermediate People's Court: the court rejected the employer's denial of non-compete compensation on the ground that the employee fell outside the statutory scope, after the employees had fulfilled their obligations.

• Facts

On October 12, 2020, Li signed a labor contract with a company as a customer service specialist in the operations department. Li's duties included assisting end users with inquiries, providing feedback and solutions, and answering questions via phone, email, and online platforms. The contract also required Li to keep all related IP and information confidential and provided that, unless the company agreed otherwise in writing, Li would be subject to a two-year non-compete obligation after contract termination, with monthly compensation equal to one-third of Li's final monthly basic salary. Li later resigned for personal reasons on May 31, 2021.

Li initiated arbitration, asserting that no new employment had been undertaken and demanding non- compete compensation. The company argued that Li’s position did not fall within the statutory scope of employees subject to non-compete restrictions and claimed it never intended to enforce the obligation, therefore no compensation should be payable.

•  Judge’s Viewpoint

The key dispute in this case was whether the company should pay Li non-compete economic compensation, after Li had performed the agreed restrictions. Article 13 of the Supreme People's Court's Interpretation (II) of Issues Concerning the Application of Law in the Trial of Labor Dispute Cases provides that if an employee has no knowledge of or access to the employer's trade secrets or confidential IP-related information, and requests that the non-compete clause be held invalid, the people's court shall support such request. However, the provision does not grant employers the right to later deny the validity of such clauses on the same basis.

The court further criticized the practice of excessively broad use of non-compete clauses, observing that some employers improperly expand their application, creating unnecessary restrictions on employee mobility. The court emphasized that where an employee has already complied with agreed non-compete obligations, an employer’s subsequent refusal to pay compensation on the ground that the employee was not a statutory non-compete subject violates the principle of good faith.

In this case, the Beijing Third Intermediate People's Court ultimately held that the non-compete clause reflected the genuine intentions of both parties, did not violate any mandatory legal provisions, and was therefore valid and binding. Because Li had already fulfilled the agreed non-compete obligations, the company was required to pay the corresponding compensation. The appellate court accordingly overturned the erroneous finding made by the first-instance court.

2.         Typical Case released by Guangzhou Intermediate People's Court: employee's failure to report spousal employment conflict at same employer, as required, constitutes a serious violation of company rules, and employer may terminate the contract.

• Facts

Fan joined Company A and later married Wang, who was Fan's immediate supervisor. Company A's employee handbook provided that if an employee and a related person (including a spouse) are both employed by the company, the situation must be reported; otherwise, failure to do so constitutes serious misconduct and could result in immediate termination. Fan signed a letter of commitment agreeing to comply with the handbook. However, during employment, Fan did not proactively report the marital relationship with Wang. Subsequently, Company A discovered the marriage and further found that Wang had used Wang’s authority to repeatedly increase Fan's bonus level. Therefore, the company terminated Fan's contract based on the handbook. Fan challenged the termination, arguing that Fan had been unaware of the relevant handbook provision and that Wang had already resigned from the company by the time of termination. Fan therefore claimed the dismissal was unlawful and sought compensation.

•  Judge’s Viewpoint

The court held that, first, Fan had signed the letter of commitment and was aware of the handbook's contents, and the company had also fulfilled its notification obligation through internal posting. Thus, the handbook was binding on Fan. Second, when Fan and Wang registered their marriage, both were employed by Company A. Under the employee handbook, this situation was a mandatory reporting matter, and failure to report constituted a serious violation of company rules, giving Company A the right to terminate the contract immediately. Even though Wang had already left the company, Fan's conduct had already violated the employee handbook. Accordingly, Company A's termination complied with Article 39 of the Labor Contract Law and the employee handbook, and Fan's claim for compensation was dismissed.

The case highlights that honesty and good faith are fundamental principles of workplace discipline. Employees are expected to be faithful to their duties and not deliberately conceal major information

related to their work. The ruling also reflects the courts’ effort to balance employers’ legitimate management rights with employee protections, while promoting lawful corporate governance and a fair, trustworthy workplace environment.

3.         Shenzhen Court Ruled: insufficient social insurance contributions do not amount to "failure to pay as required by law" under the Labor Contract Law. A worker terminating on this basis and seeking compensation is not entitled.

• Facts

Jiang joined Company B as a salesperson on November 22, 2021. The parties signed a labor contract effective from November 22, 2021 to November 22, 2022, but no renewal was executed after expiration. On March 6, 2024, Jiang resigned, claiming constructive dismissal on the ground that the company had failed to pay social insurance in full and as required by law. Jiang then filed for arbitration, seeking, among other things, economic compensation for termination. The Shenzhen Longgang Labor Arbitration Commission awarded Jiang compensation for failure to sign a written contract but denied Jiang's claim for economic compensation. Jiang disagreed and therefore brought a lawsuit before the Shenzhen Longgang District People's Court.

•  Judge’s Viewpoint

The court held that, Company B had already set up a social insurance account for Jiang with all required types of coverage. The only issue was a low contribution base, which does not constitute "failure to pay social insurance for workers in accordance with the law." The court further emphasized that social insurance authorities are empowered to supervise contributions, verify compliance, and order employers to make supplemental payments where necessary. Because the law already provides administrative remedies to protect employees’ social insurance rights, including mandatory recovery mechanisms, Jiang’s rights could still be remedied through the relevant administrative channels. Accordingly, Jiang's ground for constructive dismissal cannot be sustained, and the claim for economic compensation was denied.

Introduction of Llinks Corporate Compliance Practice

Llinks provides clients with efficient solutions and pragmatic corporate compliance advice based on clients’ business needs. Our services include: providing daily corporate compliance advice and training; designing strategies and plans for mass layoffs and participating in on-site negotiations; assisting in solving personnel replacement in mergers and acquisitions, and providing on-site support and crisis management for strikes and other collective action; representing clients in labor arbitrations and litigations involving terminations of employment contracts, bonus payments, etc.; advising on issues of white-collar crime, anti-corruption and anti-bribery, anti-discrimination, personal information protection, protection of trade secrets and non-competition obligation, equity incentives, and senior-level employee dismissals, etc.

Awards and Honors:

• In 2024, 2025 and 2026, Patrick Gu was recommended as a Ranked Lawyer in the Greater China Region Guide by Chambers and Partners.
• In 2023, 2025 and 2026, Patrick Gu was recommended for Regulatory and Compliance, Labor and Employment by The Legal 500 Greater China Ranking.
• In 2024, Patrick Gu was recommended for Labor and Employment by The Legal 500 Greater China
• In 2023, Patrick Gu was recommended as a Leading Lawyer by The Legal
• In 2023, Llinks Law Offices received the Labor & Employment PRC Firms of the Year award from The Legal
• In 2021, 2020 and 2019, Patrick Gu was consecutively recommended as a Leading Labor Lawyer by China Law &
• In 2023, 2022, 2021, 2020 and 2019, Patrick Gu was consecutively recommended as a Top-Tier Labor Lawyer by
• In 2020, Llinks Law Offices received the Best Law Firm for Client Service (China Awards) from Chambers and

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