Introduction

China is one of the most attractive markets for international business - but it is also one of the most tightly regulated when it comes to employment. Within China, provincial differences matter. Jiangsu Province, home to Suzhou, Nanjing, and a host of major industrial hubs, is a prime destination for foreign investment, particularly in manufacturing, tech, and life sciences. Yet companies often underestimate how regional application of national law - alongside local rules - can impact their employment risks.

With a workforce of over 85 million, Jiangsu’s labour landscape is complex. This article outlines key legal considerations for employers operating in Jiangsu, explains what’s different at a local level, and provides guidance on how to stay compliant while building a productive workforce.

Quick Tips

• Employment contracts must be written in Mandarin Chinese and registered within 30 days of hire.

• Jiangsu follows China’s national Labour Contract Law - but local policies influence implementation, especially regarding terminations and social insurance.

• Foreign employers must contribute to five mandatory insurances and one housing fund - and cities like Suzhou may have higher contribution rates.

• Severance pay in Jiangsu typically follows national guidelines, but disputes often hinge on local mediation practices.

• Employers in Suzhou and Nanjing must comply with local high-temperature leave rules during summer months.

National Law, Local Nuance

China’s Labour Contract Law applies nationwide, but its enforcement varies by region. Jiangsu authorities are known for strict inspections and a strong worker protection ethos. For example, employment contracts must be signed within one month of starting employment, or the employee becomes entitled to double salary. In Jiangsu, local HR bureaus actively monitor this and will not hesitate to fine non-compliant employers.

It’s also worth noting that while national law mandates certain rights, such as overtime limits and annual leave, local interpretation can be strict. In Suzhou, the local bureau has issued fines for employers using flexible working hours without proper approval - even when the same policy was accepted in other Chinese cities.

As a result, businesses should not assume what works in Beijing or Shanghai will pass muster in Jiangsu. Partner with a local expert who understands not just the letter of the law but how it’s enforced in practice.

Mandatory Contributions and Payroll

China’s social security framework requires employers to contribute to:

• Pension

• Medical insurance

• Unemployment insurance

• Maternity insurance

• Work-related injury insurance

• Housing Provident Fund

Rates vary by city. In Nanjing, employer contribution rates total approximately 30% of an employee’s salary, whereas Suzhou’s housing fund requirements are typically higher than average. Contributions must be made monthly via the local HR and Social Security Bureau. Missing a payment or underreporting wages can lead to audits, penalties, and reputational damage.

We recently supported a European client who acquired a local firm in Suzhou. Their first payroll run revealed inconsistent reporting practices and unpaid housing fund contributions for several employees. By intervening early, we worked with local authorities to rectify the issue and avoid fines - but it was a close call.

If you’re new to Jiangsu, get your payroll audited early. Local expectations are high, and small mistakes are rarely overlooked.

Termination in Jiangsu: Handle With Care

Terminating an employee in China always carries risk. In Jiangsu, employee protections are tightly enforced and most disputes end up in arbitration. Severance is based on one month’s salary for each year of service, but the calculation must include all compensation - including bonuses, allowances, and in-kind benefits.

A common pitfall is failing to document underperformance properly. In Nanjing, for instance, a client attempted to dismiss a probationary employee for performance issues without clear evidence. The employee won the dispute and received double severance, plus reinstatement.

If termination is unavoidable, ensure you’ve documented everything clearly. Use performance reviews, disciplinary procedures, and signed acknowledgements. And whenever possible, pursue mutual termination with compensation.

A Real Example: Suzhou Start-up, Global Standards

A US-based startup opened a regional R&D centre in Suzhou, hiring 20 staff within six months. Keen to build a collaborative culture, they applied their US employee handbook and onboarding process in China.

It backfired. Several clauses contradicted Chinese labour law (e.g. at-will employment, non-compete terms without compensation), and they missed the required registration of contracts. Within weeks, an employee complaint led to a site inspection.

We helped them pause hiring, revise contracts, draft compliant policies in Mandarin, and retrain managers on lawful disciplinary processes. They now run smooth HR operations and have avoided further regulatory issues.

Final Thoughts

Jiangsu is a powerhouse for international business - but only when employment law is handled properly. Contracts, contributions, onboarding, and exits all need careful localisation. Mistakes are expensive, but avoidable with the right support.

What’s next for your global people strategy?

Book a free compliance check-in or HR audit with ThinkGlobal HR. Whether you’re entering the Jiangsu market, scaling your China operations, or reviewing your regional HR setup, we can help. From local regulations to global systems, we bring practical clarity to international HR.