New national rules, effective 1 July 2026, give workers who continue working after China’s mandatory retirement age a set of statutory protections for the first time. For employers that rehire retiring staff or rely on older workers in frontline roles, the most significant change is that these workers are now entitled to overtime pay on the same basis as ordinary employees.
Background: retirement in China ends the employment relationship
In many countries, “retirement” simply describes a personal decision to stop working, or a point at which a person can begin drawing a state pension. It does not change the legal status of anyone who keeps working: an older worker remains an employee with full employment protection.
China is different. PRC labour law operates a system of mandatory retirement. When an employee reaches the statutory retirement age (or starts to receive a basic pension), the labour contract terminates by operation of law. Anyone who continues to work after that point is no longer an “employee” under PRC labour law, and the employment protections in the Labour Law and the Labour Contract Law (including the rules on overtime pay, unfair dismissal and severance) cease to apply. Historically, these arrangements have been treated as civil “labour service” relationships, leaving the worker’s rights largely to the terms of the contract and leaving considerable uncertainty for both sides.
The Interim Provisions on the Protection of the Basic Rights and Interests of Over-Age Workers, which took effect nationwide on 1 July 2026, create a middle category for these individuals (referred to in the Interim Provisions as “over-age workers”). They do not become employees again, but they now benefit from a core set of mandatory protections that employers cannot contract out of.
Who is affected, and how common is this?
China is gradually raising its statutory retirement ages from 1 January 2025, so the point at which a worker becomes “over-age” is being extended. Workers whose retirement is deferred under this national policy remain employees and continue to be fully covered by labour law. Even so, the Interim Provisions remain relevant to a sizeable workforce, particularly because women in many roles still retire comparatively early and because early retirees are also covered.
In practice, employers most commonly engage workers past retirement age in the following situations:
- Retaining retiring staff. Companies frequently keep on retiring engineers, technical specialists, finance or quality personnel and senior managers whose knowledge is hard to replace, often to support succession and handover.
- Frontline and service roles. Sectors facing labour shortages, such as property management, security, cleaning, catering, logistics, retail and manufacturing, regularly rely on older workers, often on shift patterns with long hours.
- Advisory and part-time roles. Retired professionals are engaged as advisers, trainers or consultants on a part-time or project basis.
The Interim Provisions apply where the individual has exceeded the statutory retirement age (whether or not they are receiving a pension), or has taken early retirement, and in either case is subject to the employer’s labour management and performs remunerated work arranged by the employer. Genuinely independent arrangements, such as a retiree delivering work results under a project contract without being subject to the employer’s management, remain governed by the PRC Civil Code and fall outside the Interim Provisions.
The key change: overtime limits and overtime pay
The most significant practical change is that statutory overtime rules now apply to over-age workers. Employers should generally not arrange overtime for them, but where they do, the overtime limits and overtime pay requirements of the PRC Labour Law must be observed, namely:
- Overtime limits: generally, no more than three hours per working day and 36 hours per month, subject to consultation with the trade union and the worker; and
- Overtime pay: at least 150% of normal wages for extended hours on working days, 200% for work on rest days where compensatory time off cannot be arranged, and 300% for work on statutory holidays.
Previously, unless the parties agreed otherwise, a retired worker generally had no statutory claim to overtime pay. Employers that rely on retirees in shift-based roles (for example, security guards or production workers working extended shifts) should expect this change to have a direct cost impact and may face back-pay claims if schedules and pay are not adjusted. Over-age workers can file complaints with the labour authorities where overtime is arranged in breach of labour law, and disputes over remuneration and working hours must now go through labour arbitration, the same low-cost, worker-friendly forum used for employee disputes.
Other points worth noting
- Work-related injury insurance. Employers must provide labour protection (including protection against occupational hazard) and enroll over-age workers in work-related injury insurance and bear the premiums. Many localities already permitted or required this, so for many employers the Interim Provisions confirm existing practice. A separate work-related injury protection scheme for over-age workers is still to be formulated, so local implementation should be monitored.
- Paid leave remains unclear. The Interim Provisions do not say whether over-age workers are entitled to paid annual leave or other statutory paid leave. The prevailing view is that they are entitled only to normal rest days and public holidays, but guidance from labour authorities and tribunals should be watched.
- Termination flexibility depends on the agreement. The agreement with an over-age worker may be terminated on expiry, on completion of the agreed task, by mutual agreement, or on any termination event the parties have agreed, and there is no obligation to offer an open-ended agreement. This is broadly consistent with the prior position, but the flexibility is only available if a suitable agreement is in place. Where an employee simply continues working after reaching retirement age under the old labour contract, that contract will not contain bespoke termination events.
The remaining requirements are unlikely to require significant changes for most established employers. A written agreement is required (covering term, duties, hours, pay, social insurance, working conditions, etc.), but there is no double-wage penalty for failing to sign one. Remuneration must be agreed, be no lower than the local minimum wage and be paid in cash at least monthly. Employers must also match positions and workload to the worker’s physical condition and must not assign work that endangers physical or mental health or dangerous operations. The Interim Provisions do not set out specific criteria for this general duty. Social insurance arrangements are largely unaffected: workers already receiving pensions are unaffected, while those who have not met the minimum contribution period may continue contributing individually or, by agreement, through the employer.
What should employers do now?
- Identify the population. Map all individuals working past retirement age or after early retirement, including those engaged through “consultancy” arrangements, and assess whether they are in fact subject to labour management.
- Review working hours and pay. Check rosters, overtime records and payroll for over-age workers, ensure pay is not below the minimum wage, and adjust schedules or budgets to comply with the overtime caps and premium rates.
- Put a retirement transition process in place. When an employer wants to retain an employee past retirement age, terminate the labour contract formally and sign a new over-age worker agreement with appropriate termination events, rather than allowing the employee to continue under the old contract.
- Confirm injury insurance. Ensure each over-age worker is enrolled in work-related injury insurance and that premiums are paid, and check local enrolment procedures.
- Document role suitability. For physically demanding, night-shift or hazardous roles, consider periodic health checks and a documented assessment of fitness for the role, which can help demonstrate compliance with the general health and safety duty.
- Update templates. Prepare a standard over-age worker agreement reflecting the Interim Provisions for use in new engagements.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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