Preparing for Chinese New Year 2026: Workforce Management and Business Continuity

Chinese New Year 2026 is set to once again test business continuity across China, as workforce mobility, payroll complexity, and operational disruptions converge around the holiday period. Beyond factory shutdowns and extended leave, companies face heightened risks related to employee turnover, compliance, and post-holiday resumption delays. This article outlines key workforce and operational considerations to help businesses plan and mitigate disruption.

Chinese New Year remains the single most disruptive period in the China business calendar, not because it is unexpected, but because its impact is often underestimated. As the Spring Festival approaches in 2026, companies once again face a compressed window in which workforce availability, production schedules, cash flow planning, and compliance obligations all intersect. For many businesses, the weeks surrounding the holiday can determine whether operations resume smoothly or face prolonged disruption.

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Beyond the well-known factory shutdowns and extended employee leave, the Chinese New Year continues to be a peak period for labor mobility, payroll complexity, and operational risk. Decisions made in advance, such as how annual bonuses are structured, overtime is calculated, and post-holiday staffing gaps are managed, can have lasting implications for employee retention and business continuity well into the first quarter.

This article examines the key workforce and operational considerations companies should address ahead of the Chinese New Year 2026. From payroll compliance and bonus taxation to workplace security and contingency planning, we outline practical measures to help businesses mitigate risk, maintain operational stability, and strengthen workforce engagement before, during, and after the holiday period.

Chinese New Year 2026 Calendar

The 2026 Chinese New Year will run from February 15 to 23, spanning nine days. February 14, 2026 (Saturday) and February 28, 2026 (Sunday) are designated as workdays to compensate for the long Spring Festival break.

Note that although the statutory New Year holiday lasts for only nine days, the “New Year period” in the context of travel and holidaymaking extends well beyond these official dates. Typically, this period begins one to two weeks before the official holiday and lasts for approximately a week afterward. This extended timeframe is due to individuals taking additional annual leave to prolong their break or to avoid peak travel periods.

In 2026, the Ministry of Transportation estimates that the Spring Festival travel rush, often described as the largest annual human migration, will span from February 2 to March 13, totaling 40 days.

Overtime payment for hours worked during the CNY

To ensure the smooth operation of production and sales activities during the Chinese New Year holiday, many companies need to adjust employee leave schedules and establish duty rosters. Adequate staffing during the holiday period is essential for daily operations and handling emergencies. When requiring employees to work during the holiday, compliance with overtime payment regulations is critical.

Under Chinese labor laws and regulations, overtime payment rates vary depending on the type of rest days and the working hour system implemented.

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Under the standard working hour system, for work performed on an official public holiday (i.e., Feb 16 – 19 in the case of CNY 2026), not less than 300 percent of the normal wage shall be paid; for work on weekend or an adjusted rest day (i.e., Feb 15, Feb 20 – 23 in the case of CNY 2026), and where such rest days cannot be postponed and taken at another time, not less than 200 percent of the normal wage shall be paid.

Under the comprehensive working hour system, for work performed on public holidays, not less than 300 percent of the normal wage shall be paid. However, no rest day is outlined under this system, so that for work performed on those adjusted working days and weekends, no overtime payments are available.

Under the non-fixed work hour system, there are differences in overtime regulations across different regions. For instance, in Beijing, employees under the non-fixed work hour system are not entitled to overtime pay for hours worked on public holidays. However, in Shanghai, these hours are considered overtime, and employers are required to pay compensation of up to 300 percent of the normal wage.

For adjusted working days on weekends, no overtime payment is due.

Annual bonus and tax implications

In China, many companies will provide employees with a one-time end-of-year bonus before or around the CNY holiday. One of the most common ways that companies calculate the bonus amount is the “13th-month bonus,” wherein the company pays an additional month’s salary around the CNY holiday. However, companies can implement their own bonus system as they see fit.

Annual bonuses in China are subject to individual income tax (IIT). Currently, IIT on bonuses can be calculated in one of two ways:

• Method 1: Calculated and paid separately on the annual one-time bonus.
• Method 2: Calculated and paid on the annual one-time bonus combined with the employee’s total annual income.

The first method is considered preferential treatment as it may decrease the tax burden for some taxpayers. This method will be applicable until the end of 2027. For a full breakdown of how these two methods work, see our article on the Preferential Tax Treatment for Annual One-Time Bonus.

In general, for employees with low basic salaries, it may be more beneficial to combine their annual bonuses with their basic salary to calculate the total IIT (under Method 2) because various deductions could be employed to reduce the tax burden. Meanwhile, for employees with comparatively high basic salaries, Method 1 can potentially reduce the tax burden.

Employee retention during the Chinese New Year

Chinese New Year is a peak period for employee turnover, as many people consider changing jobs or career paths. This trend is partly driven by employees’ desire to stay in their current positions long enough to receive their annual bonuses. However, the cultural significance of the holiday also plays a role, as the Chinese New Year symbolizes new beginnings, prompting individuals to seek fresh starts. Additionally, higher resignation rates during this time create more opportunities for job seekers. Consequently, the period following the Chinese New Year can be particularly stressful for HR teams, who must manage a surge in vacancies.

Since 2024, many employees prioritized job security over rapid advancement, particularly in large cities where hiring competition intensified, and layoffs in certain sectors reshaped expectations. This trend has not reversed heading into 2026.

That said, mobility has not disappeared but simply become more segmented. Employees with skills aligned to growth areas, particularly AI, digital transformation, and advanced manufacturing, remain more willing to change jobs, often seeking roles that offer both higher compensation and stronger development trajectories. For these candidates, the market still rewards movement, albeit with greater scrutiny on employer credibility and role substance.

As a result, businesses must carefully assess their position within their industry and the broader economic environment to develop effective employee retention strategies.

In situations where financial incentives are limited, companies can implement various long-term strategies to enhance employee satisfaction and loyalty. Key retention strategies include:

• Fostering a positive work environment: Cultivating a supportive and engaging workplace culture helps improve employee morale and loyalty during challenging times.
• Promoting work-life balance: Encouraging a healthy work-life balance can alleviate stress, particularly during periods of economic strain. Companies should carefully manage workloads and set realistic performance expectations to prevent burnout.
• Career development and job stability: Offering employees opportunities for career growth and ensuring job stability are critical to retaining talent. Training and upskilling initiatives not only demonstrate a commitment to employees’ development but also enhance overall productivity.
• Flexible work arrangements: Providing flexible or hybrid work options can significantly reduce stress, especially for employees who benefit from a change in their work environment. Whether through remote work, flexible hours, or compressed work schedules, accommodating individual preferences enhances job satisfaction and reduces stress from rigid work structures.

Ensuring security

As employees immerse themselves in the festive spirit before and after the Chinese New Year holiday, businesses must prioritize safety to ensure smooth operations and prevent accidents. The days surrounding the holiday can be a period of complacency, so companies, particularly those in manufacturing, need to focus on preemptive safety measures and post-holiday motivation to maintain productivity and avoid safety incidents.

Key safety measures to implement include:

• Comprehensive safety inspections: Conduct thorough checks of office spaces, warehouses, and production lines, paying special attention to fire, theft, and water-related risks.
• Emergency response plans: Ensure that a robust emergency plan is in place for the holiday period, outlining procedures for handling unexpected events, and ensuring that key contacts are available for immediate response.
• Equipment maintenance: Carry out necessary maintenance on critical equipment to ensure smooth operations post-holiday. Any equipment that requires attention should be inspected, cleaned, and tested before production resumes.
• Security awareness and education: Reinforce safety protocols with employees, ensuring they understand the importance of adhering to safety standards before, during, and after the holiday. This includes fire prevention, theft prevention, and the safe handling of hazardous materials.
• Duty shifts and emergency drills: Organize shift schedules for employees working during the holiday, ensuring that the required staff are available for security and safety checks. Conduct emergency drills and provide professional skills training to enhance readiness in case of unforeseen situations.
• Hazardous materials management: Before the holiday, companies should minimize the volume of hazardous materials on-site, either returning them to suppliers or reducing stock to the minimum necessary. Businesses that continue operations should strictly control the storage of flammable and explosive materials.
• Post-Holiday safety review: Before employees return to regular duties, companies should conduct a safety meeting to re-emphasize safety protocols, followed by a thorough inspection of the premises, including testing machinery and equipment to ensure they are safe and fully operational.

By implementing these preventive and proactive safety measures, businesses can ensure that employees return from the holiday with a clear understanding of their responsibilities, while minimizing the risk of safety incidents during and after the Chinese New Year period.

Financial and logistical preparations

In addition, proper financial and logistical planning is crucial to ensuring smooth operations and minimizing disruptions during the Chinese New Year period:

• Sales forecasting and inventory management: Accurate sales forecasts based on historical data and current market trends are essential for predicting demand during the Chinese New Year and the period immediately following. Businesses should plan and prepare inventory accordingly, taking into account potential production shutdowns and logistic delays due to the holiday. This will help prevent stockouts and ensure that customers’ needs are met even if factories close or shipping services are limited.
• Cash flow management: Maintaining adequate liquidity is also critical during the holiday season. Companies should ensure they have sufficient working capital to cover operational expenses, including emergency costs that may arise during the holiday. A review of cash flow projections can help identify potential cash shortages, enabling businesses to secure necessary funds before the break.
• Inventory procurement and material reserves: Ahead of the holiday season, businesses should stockpile essential materials and supplies based on expected demand. This includes raw materials, office supplies, and seasonal items such as decorations and promotional goods. Ensuring that necessary resources are in place before the holiday will help businesses operate smoothly, even if supply chains are disrupted.

By taking these key steps in financial and logistical planning, businesses can ensure they are well-prepared for both the operational challenges of the Chinese New Year and the financial demands of the holiday season. Proper forecasting, inventory management, and preparation for employee needs will contribute to a seamless holiday experience and strong performance in the months following.

Our specialized HR teams enhance clients’ internal capabilities by leveraging crucial local labor law expertise and knowledge of employment procedures and best practices. To arrange a consultation, please contact China@dezshira.com.

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