CHINA Law and Practice Contributed by: James Hu, Yingjie Kang, Huihui Li, Sherry Xu, Bivio Yu and Lisa Zhao, Fangda Partners
10.2 Employee Compensation Typically, employees in China are entitled to salary payments, statutory social insurance and housing fund contributions. Statutory social insurance contri - butions comprise basic pension, basic medical insur - ance, work-related injury insurance, unemployment insurance and maternity insurance. Other benefits include statutory annual leave and cer - tain benefits applicable to certain classes of work - ers. In addition, in tech and other start-up compa - nies, equity-incentive compensation has also become rather common through employee stock options and restricted share awards. Under PRC law, a change in the controlling investor or shareholder of an employer does not affect the validity or effectiveness of the employer’s employment con - tracts. Neither does it entitle employees to additional compensation as a matter of law unless employment is terminated, in which case severance based on law Generally speaking, unless there are changes to the employment relationship or arrangements following an acquisition, change-of-control or other invest - ment transaction, employees will not be entitled to additional rights or severance payments. However, if the employer wishes to terminate an employee, the employee will be entitled at minimum to the statuto - rily prescribed severance based on the duration of employment and, in most cases, 30 days’ prior written notice. The employee’s salary and benefits terminate as of the termination date unless both parties agree otherwise. and mutual consultation may apply. 10.3 Employment Protection The transfer of employment from one employing entity to a new entity requires mutual agreement between the employer and employee. In an asset or business sale, the employer and purchaser often offer employ - ees the opportunity to transfer employment to the pur - chaser. If the employee agrees to the transfer, either the employer (ie, the seller) will pay the transferred employee’s severance based on the employee’s ser - vice years, with the employee then being deemed a new hire of the purchaser, or the purchaser will recog -
nise the employee’s previously accumulated service years in the new employment contract. Employers deciding matters directly affecting the immediate interests of employees are required to comply with consultation and notification procedures prescribed in the labour laws. These consultation and notification procedures include seeking com - ments from the employee representatives’ congress or all employees, discussing the comments with the trade union or the representatives nominated by the employees, and notifying all employees of the final decision. 11. Intellectual Property and Data Protection 11.1 Intellectual Property Considerations for Approval of FDI In 2025, China continued to successively promulgate a series of policies, which distinctly showcase its evolving openness and receptiveness towards for - eign investment, specifically in bolstering the integra - tion of advanced intellectual property. Such policies, among others, include the Administrative Measures for Strategic Investment in Listed Companies by For - eign Investors. From the perspective of intellectual property, on 21 March 2025, the China National Intellectual Property Administration (CNIPA), together with other relevant authorities, issued the Opinions on Further Optimising the Business Environment in the Field of Intellectual Property. The document expressly supports eligible Technology and Innovation Support Centers (TISCs) in conducting international exchanges on public intel - lectual property information services. It also encour - ages high-level foreign institutions to establish a pres - ence in China and provide intellectual property-related services, reflecting China’s continued openness and commitment to fostering an internationalised, service- oriented IP ecosystem. In the field of Artificial Intelligence Generated Content (AIGC), the Interim Measures for the Administration of Generative Artificial Intelligence Services (the “Inter - im Measures”), which came into effect on 15 August
144 CHAMBERS.COM
Powered by FlippingBook