As an employee in Shanghai, you may have questions about extending, amending, and terminating employment contracts in various scenarios, including renewing fixed‑term agreements, modifying job duties or compensation, and ending the employment relationship. The answers below will help you clarify the legal framework, procedural steps, and the rights and obligations of both parties. 

1. Do employers have to pay compensation for not renewing a contract?

Under China's Labor Contract Law, when a fixed-term labor contract is terminated, the employer must pay economic compensation to the employee if it decides not to renew the contract, unless the employee refuses to renew the employer's offer with conditions equal to or better than the existing terms.

2. How to calculate the economic compensation?

As outlined in China's Labor Contract Law, economic compensation is based on an employee's length of service with the company. Employers must pay one month's wages for each full year of service.

For employees with service periods between six months and one year, the period is rounded up to one year. Those with less than six months of service are entitled to half a month's wages.

It should be noted that, when calculating the number of years for economic compensation, periods before Jan 1, 2008 — when the Labor Contract Law took effect — are not counted.

In addition, the monthly wage used in the calculation is the employee's average monthly income for the 12 months preceding the contract's termination or expiration.

3. If an employee is unable to perform their original job or any other job arranged by the employer after the medical treatment period ends, is the company required to pay financial compensation if it decides to terminate the employment contract?

Yes. According to China's Labor Contract Law, if an employee is unable to perform their original job or any other job arranged by the employer after the prescribed medical treatment period due to illness or a non-work-related injury, and the employer proposes to terminate the employment contract, the employer must pay financial compensation to the employee.

4. After the medical treatment period ends, does the company need to pay any additional fees besides financial compensation?

Yes. According to the Shanghai Municipality's Regulation on Labor Contracts, if an employer terminates the employment contract under Item 1, Paragraph 1, Article 32 of these regulations, which provides that "an employee is unable to perform their original job or any other job arranged by the employer after the medical treatment period due to illness or a non-work-related injury," the employer must provide not only the prescribed financial compensation but also pay a medical subsidy fee of no less than six months of the employee's salary.

5. Is it legal to dismiss a pregnant employee?

No. According to Article 27 of the Law of the People's Republic of China on the Protection of Women's Rights and Interests, employers are prohibited from reducing a female employee's wages, dismissing her, or unilaterally terminating her employment contract due to marriage, pregnancy, maternity leave, or breastfeeding.

In addition, the Labor Contract Law of the People's Republic of China, under Article 42, prohibits an employer from terminating a female employee's contract during her pregnancy, maternity leave, or the breastfeeding period, even if the grounds for termination are set out in Articles 40 and 41. If an employer unlawfully terminates a female employee's contract, the employer must compensate her with twice the standard financial compensation specified in Article 47.

According to the Special Provisions on Labor Protection for Female Employees, if a pregnant worker is unable to perform her usual duties, the employer must reduce her workload or assign her appropriate alternative tasks upon presentation of a medical certificate. Additionally, employers must ensure that pregnant employees have sufficient rest during working hours.

For employees in their seventh month of pregnancy or later, employers are prohibited from extending their working hours or assigning night shifts.

Additionally, time off for prenatal checkups is considered paid working time.

Sources: Official WeChat account of the Shanghai Municipal Bureau of Human Resources and Social Security at "shrsjwx", official WeChat account of the Ministry of Human Resources and Social Security (ID: "rsbwwx")

Updated July 29, 2026