Knowledge

Tips for Foreigners to Work Legally in China

2020-03-17


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众所周知,中国正在成为全世界外国人才进行创新和创业的理想之地。科技部部长王志刚在第十七届中国国际人才交流大会开幕式上表示,2018年累计发放外国人才工作许可证33.6万份,在中国境内工作的外国人已超过95万人。近年来,通过采取更加实用的人才引进政策,中国在吸引国外人才方面取得了巨大成就,外国人才签证、工作许可和居留许可申请也大为方便。在这一背景下,本文对外国人在中国就业应当取得的相关签证、工作许可和居留许可的条件和程序作一个简要的介绍,并对在华工作的外国人在居留期间可能面临的诸如劳动合同、社保等问题也进行探讨。


It is well known that China is becoming an ideal place for innovation and entrepreneurship for foreign talents all over the world. China issued 336,000 work permits for foreign experts in 2018 and the number of the foreigners working in the territory of China totals over 950,000, Mr. Wang Zhigang, Minister of the Ministry of Science and Technology said at the Opening Ceremony of the 17th Conference on International Exchange of Professionals held on April 14th 2019 in Shenzhen. Meanwhile, great achievements have been made in attracting people from abroad in recent years by adopting more practical talent introduction policies and applications for visa and residence permits have also been much facilitated in China. It is undoubtedly important to understand what is required of foreigners who want to work in China and how to apply for the work and residence permits. In this context, this article is trying to give a brief introduction to the rules and procedures for visa and residence permits to China and also touch on some key and basic issues those foreigners working in China may face during their stay.


I.Required Permits


Before applying for the necessary permits, foreigners themselves and the business bodies which are about to give foreigners a job offer shall consider whether they comply with such compulsory provisions as stipulated in Administrative Provisions on Employment of Foreigners in China (Revision 2017,  "2017 Provisions") ("《外国人在中国就业管理规定》")(a) foreigners must have attained an age of 18 years or above, and are in good health; (b) foreigners must possess the requisite professional skill and the relevant work experience for the job; (c) foreigners should have no criminal record; (d) their Chinese employers are specific and definite; and (e) foreigners must hold a valid passport or its equivalent such as other international travel  document[1]. additionally Chinese employers shall not be individually-owned economic organizations and citizens[2] , and they cannot engage foreigners in cultural performances of a commercial nature[3] . Upon the satisfaction of those requirements above, both foreigners and their potential Chinese employers can move on to the following permits.


1.Notification Letter of Foreigner’s Work Permit in the People's Republic of China ("《中华人民共和国外国人工作许可通知》")and Z Visa


Before a foreigner enters China, his/her proposed Chinese employer is responsible for applying an employment permit, which is called a "Notification Letter of Foreigner's Work Permit in  the PRC" ("Notification Letter"), for its foreign employee through the Service System for Foreigners working in China online (http://www.safea.gov.cn). Employers shall fill in an Application Form for Employment ("Application Form") of Foreigners and submit the application to the competent authority, with soft copies of required documents according to Art 11[4] of the 2017 Provisions. After the preliminary review of the application by the authority above, hard copies of the required documents shall be submitted to the authority. When the decision to grant a permit is made, the Notification Letter will be generated online in the system and then sent to the Chinese Embassy or Consulate located in the foreigner's country, where the foreigner himself/herself shall apply for a Z visa with the Notification Letter printed and any other required materials[5].


2.Foreigner’s Work Permit in the PR("《中华人民共和国外国人工作许可证》")


Art 8 of the 2017 Provisions provides that foreigners seeking employment in China shall enter China with a Z visa and they cannot be employed until they obtain both the Foreigner's Work Permit in in the PR ("Work Permit") and Residence Permit for Foreigner in in the PR. Just as the procedure of applying for the Notification Letter, application for the Work Permit shall be carried out both online and offline by the Chinese employer within 15 days after its foreign employee enters China together with other required documents such as a "Registration Form for Employment of Foreigner", the Notification Letter, the passport with a Z visa of its foreign employee, the employment contract between them and the certificate of physical examination of the foreigner[6] . When the decision to grant a permit is made by the competent authority, the Work Permit will be issued to the foreigner. 


3.Residence Permit for Foreigner in in the PR ("《中华人民共和国外国人居留许可》")


Pursuant to Art 16 of the 2017 Provisions and Art 30 of Law of the PRC on Administration of Embarkation and Disembarkation, a foreigner who has obtained the Work Permit shall apply for the Residence Permit for Foreigner in in the PR with his/her Work Permit ("Residence Permit") in the Exit-Entry Administration Department of the public security authorities at his/her proposed place of residence within 30 days from the date of his/her entry. The validity period of an employment-type residence permit varies from 90 days to 5 years. It must be noted that the Residence Permit shall go through an annual inspection within the validity period in accordance with Art 26 of the 2017 Provisions.


The applications for the three permits above apply to the cases where the foreign employee is an ordinary person who comes to China for a job for the first time. Specially, for those subject to Art 9[7]  and Art 13[8]  of the 2017 Provisions or other relevant provisions, it is not necessary for their Chinese employers to apply for the Notification Letter or even the Work Permit. 


II. Labour Contract


For those who are legally qualified to work in China, there are also some issues they may come into during their work, which are discussed as follows. 


1.Term of the Labour Contract


The term of a labour contract may be fixed or flexible. According to Art 14 of the Labour Contract Law of the People's Republic of China ("Labour Contract Law") ("《中华人民共和国劳动合同法》"), there are several circumstances[9]  which are subject to a non-fixed-term labour contract, which means the date of the termination of the contract is not fixed. Among those circumstances, it is most common that a fixed-term labour contract has been concluded twice consecutively by an employer and its employee. However, pursuant to Art 17 and Art 18 of the 2017 Provisions, the term of the labour contract between the foreigner and its Chinese employer  shall not exceed 5 years, and upon its expiry, the foreigner’s Work Permit will be no longer valid. Therefore, it seems that it is illegal and impossible for the two parties to sign a non-fixed-term labour contract. 


In a case ZHIJUNLI v. Aishengya (China) Investment Co., Ltd (hereinafter referred to as "Aishengya Company"). [10]on a labour contract dispute which was heard by Shanghai No.2 Intermediate People's Court, ZHIJUNLI and Aishengya Company agreed on a pending expiry dateof the labor contract, but ZHIJUNLI's Work Permit expired on December 23, 2014. Hence, the court held that it was not improper for Aishengya Company to no longer process the Work Permit for ZHIJUNLI and took that date as the expiration and termination date of the labour contract between the two parties. Therefore, the labour contract which was terminated on-the same day when the Work Permit expired, was not unilaterally terminated by Aishengya Company, so Aishengya Company is not obliged to pay compensations to ZHIJUNLI for illegal termination of the labour contract.


Nevertheless, a case on a labour contract dispute tried by Beijing No.2 Intermediate Court seems totally different. In Tang Xiaobei v. Beijing Xinliji Vacuum Glass Technology Co., Ltd[11] . ( "Xinliji Company"), the court held that according to Art 26 of the Labour Contract Law, labour contracts that violate the mandatory provisions of laws or administrative regulations are invalid or partially invalid. In this case, the last labour contract concluded by Xinliji Company and Tang Xiaobei is a non-fixed-term labour contract. Although Tang Xiaobei’s Work permit expired and the agreement on the term of the contract between the two parties violates the relevant provisions of the 2017 Provisions, due to the fact that the 2017 Provisions belongs to ministerial rules made by the Departments of the State Council, which shall not override the Labour Contract Law legislated by the NPCSC, the non-fixed-term labour contract shall not be invalid because of violation of the 2017 Provisions. Besides, with reference to the 2017 Provisions, Xinliji Company shall apply for an extension of the Work Permit for Tang Xiaobei.


In our opinion, we are inclined to agree with Beijing No.2 Intermediate People’s Court that laws override ministerial rules and it is not necessarily invalid for employers to conclude a non-fixed-term labour contract with its foreign employees. However, under the circumstance of great differences in the judicial practice among local courts, we advise that foreigners entering China for jobs know about in advance whether there are special provisions or rules on the matter by local authorities in the place of work. If not, they should sign a labour contract with a term up to five years in accordance with the 2017 Provisions to avoid potential disputes and risks of losing a lawsuit.


2.Social Insurance and Provident Fund


In terms of social insurance for foreign employees in China, Art 97 of the Social Insurance Law of the People's Republic of China ("《中华人民共和国社会保险法》")provides that foreigners who are employed in China shall participate in social insurance in accordance with the laws and regulations. Besides, the Ministry of Human Resources and Social Security has promulgated the Interim Measures for the Participation in Social Insurance of Foreigners Employed in China ( "Interim Measures") ("《在中国境内就业的外国人参加社会保险暂行办法》")in 2011, which means that it is the Chinese employers' duty to engage their foreign employees in social insurance, the premiums of which shall be paid monthly by both the two parties according to the laws and regulations, thereafter the foreigners can enjoy the social insurance benefits from a special account when satisfying some prescribed conditions. Pursuant to Art 4 of the Interim Measures, employers shall conduct the registration of social insurance for the foreigners employed within 30 days. If the employers fail to do so or fail to pay for the social insurance premiums that infringes lawful rights and interests of their foreign employees, the foreigners can turn to the local social insurance administrative authority, local insurance premiums collecting agency or judicial authority for help[12]


In particular, if the foreigner leaves China before reaching the age qualified for the social insurance benefits, his/her individual social insurance account will be maintained in case that he/she would be employed in China again. But when it comes to the situations that a foreigner himself/herself apply for termination of the social insurance relationship[13]  or he/she is dead[14], the balance in his/her social insurance account may be paid to him/her in a lump sum or inherited according to the laws and regulations.


Unlike the social insurance, the provident fund does not fall within the scope of mandatory participation. For foreigners possessing a permanent residence, there is no clear or compulsory provisions or policies in this regard so far. Despite the fact that Measures for Foreigners with Permanent Residence Permit to Enjoy Relevant Treatment in China ("人社部发〔2012〕53外国人在中国永久居留享有相关待遇的办法》") provides that a foreigner with his/her permanent residence permit enjoys the right to participate in the provident fund, rules or policies on provident fund for foreign employees vary from place to place. However, they have one thing in common that foreigners' participation in provident fund follows the principle of voluntariness. Take Guangzhou and Shenzhen as examples. Art 2 of the Measures for Individual Voluntary Deposit and Use of Housing Provident Fund in Guangzhou ("《广州市个人自愿缴存使用住房公积金办法》") clearly stipulates that foreign employees who voluntarily participate in housing provident fund are limited to foreigners with a permanent residence permit in China. In this situation, foreign employees who have not obtained permanent residence permit may neither fall within the scope of compulsory deposit nor voluntary deposit of provident fund. In addition, Art 4 also clearly stipulates that those voluntarily participating in provident fund shall open an account himself/herself in his/her own name to deposit provident fund, sign an agreement with Guangzhou Housing Provident Fund Management Center and reach an agreement on the amount of deposit, mode of deposit, rights and obligations of both parties. Therefore, according to this provision, foreign employees can voluntarily deposit the provident fund through opening a personal account by their own, but not by their employers. While in Shenzhen, according to Art 2 and Art 42 of Regulations on the Management of Deposit of Housing Provident Fund in Shenzhen ("《深圳市住房公积金缴存管理规定》"), as long as a foreigner has a legal labour relationship with a Chinese employer, he/she can deposit the provident fund no matter whether he/she has obtained permanent residence rights. Furthermore, Art 16 stipulates that it is the employer's duty to go through the necessary formalities for opening the account of provident fund for its foreign employees. In spite of those differences, we consider that because there are no uniform criteria for the deposit of provident fund for foreigners and the provident fund mainly comes from their personal income, foreign employees may deposit or make use of the provident fund according to their own needs and requirements by local authorities. For instance, it is much better for people to purchase commercial housing through provident fund loans  than commercial loans in China, because the interest rates of the former loans is lower than the latter ones,which greatly reduces the financial burden of the buyers. Therefore, if foreign employees with a general financial condition have a demand for purchasing a house or an apartment in China, their participation in the provident fund would be a good choice.


3.Individual Income Tax


It is relatively clear that the Individual Income Tax Law of the People's Republic of China (2018 Revision,  "Individual Income Tax Law") ("《中华人民共和国个人所得税法》") applies to the individual income tax assumed by foreign employees. According to Art 9(1) and Art 10 of the Individual Income Tax Law, the income earner shall be the taxpayer, and his/her employer that pays the income shall be the withholding agent. If a taxpayer obtains his/her taxable income without a withholding agent, he/she shall file his/her own tax declaration to the competent authorities according to law. Therefore, the individual income tax on the wages, salaries and other labour remunerations earned by foreign employees shall be levied ,withheld and remitted by their employers, which means that what the foreigners obtained are after-tax income. It should be noted that in case of labour disputes between foreign employees and their employers, when the foreigners file a complaint to the labour arbitration commissions or courts and request their employers to bear the economic compensations (if applicable), the compensations shall be calculated on the basis of pre-tax salaries.


4.Economic Compensations


Generally, according to Art 46 of the Labour Contract Law, under certain circumstances, an employer shall pay economic compensation to its employees[15] . But for foreigners, the 2017 Provisions merely proclaims that the working hours, rest and leaves, labour safety and health for foreigners employed in China[16], as well as the labour disputes between employer and their foreign employees shall comply with the Labour Law or relevant provisions. Whether foreign employees can claim the economic compensations from their employers is still controversial. What if the two parties reach an agreement in their labour contract that the employers shall or shall not pay economic compensations in certain situations? It seems that we can only find the answers by focusing on some judicial cases tried by courts of high hierarchy or even on guiding cases from the Supreme People’s Court for reference.


In CORBETT DAIMON JOHN v. Guangzhou Star River Hotel Co. Ltd. (hereinafter referred to as "Star River Hotel") [17] , Guangdong Higher People's Court agreed with the first trial court, namely, the People's Court of Panyu District in Guangzhou on that although Art 22 of the 2017 Provisions does not explicitly involve the issue of termination of a labour contract, economic compensations and damages, it does not mean that the provisions of the Labour Law or the Labour Contract Law shall not apply to those issues. In addition, the employer can neither dissolve or terminate the labour contract with its employee, nor can it agree with the its employee in the labour contract to dissolve or terminate the contract under circumstances that are not stipulated by laws or administrative regulations. In other words, an employment contract that violates the compulsory provisions of laws and administrative regulations shall be null and void. Therefore, "the termination clause in the labour contract between Star River Hotel and CORBETT DAIMON JOHN shall be invalid, and Star River Hotel dissolved the contract based on this clause constituted an illegal act. Hence, the employee has factual and legal grounds to claim for economic compensations, which shall be supported by the court." 


Besides, Shanghai Higher People’s Court has issued the Answers to Several Issues Relating to Trial of Labour Dispute Cases ("沪高法民一(2006)17上海市高级人民法院关于审理劳动争议案件若干问题的解答》") as a guidance. Under Art 2 hereof, apart from the items provided in Art 22 and Art 23 of the 2017 Provisions mentioned above, other labour rights and obligations agreed upon or performed by foreigners and their Chinese employers may be determined by the labour dispute settlement bodies based on the written labour contracts, other forms of agreements between the two parties and the content of actual performance by the two parties.


As far as we are concerned, for private rights, all is permissible unless prohibited. The legislative purpose of labour laws is to protect the legitimate rights and interests of workers. As more and more foreigners are employed in China, giving equal protection to the rights of foreign and domestic workers is of great significance in urging foreigners and their Chinese employers to strictly abide by Chinese laws and regulations, enhancing China's international image and accelerating the internationalization process of China's economic development. Hence, we believe that foreign employees are subject to economic compensations specified in the Labour Contract Law.


III. Payment for Returning to Work during Epidemic


China is a participant in and a beneficiary of technological globalization. It is also a contributor and a leader in promoting broader innovation and cooperation. It is deeply convinced that there is an increasingly growing number of foreigners eagerly seeking to come to China to work and even build their lives in China. For one thing, they shall obey Chinese laws and regulations and work legally in China. For another, it is also important to safeguard their legitimate rights and interests while they are working and living in China. As an increasing number of foreigners are employed in China, it is of great and positive significance to protect the equal rights of them and the domestic workers and to build a more harmonious labour relationship between foreigners and their domestic employers, which will eventually help to enhance China's international image and to accelerate its internationalization. 


Notes: 

[1]See Art 7 of the 2017 Provisions.

[2]See Art 33 of the 2017 Provisions.

[3]See Art 6 of the 2017 Provisions.

[4]The documents include, without limitation, curriculum, proof of the qualification for the job and proof of health status of the proposed foreign employee, and his/her Chinese employer’s letter of intent of employment and a report on reason for hiring a foreigner employee.

[5]See Art 14 of the 2017 Provisions.

[6]See Art 15 of the 2017 Provisions.

[7]Art 9 of the 2017 Provisions provides, “Foreigners who satisfy any of the following criteria may be exempted from applying for an employment permit and an employment pass: (1) foreign specialised technical and managerial personnel engaged with direct funding from the Chinese government and foreign personnel holding senior technical professional titles or special skill credentials recognised by authoritative technical or managerial departments or professional or industry associations in their own country or internationally who are engaged with

funding from Chinese government authorities and institution s, who hold a Foreign Expert Certificate issued by the State Administration of Foreign Experts Affairs; (2) foreign workers with specialised skills whose work in offshore petroleum operations does not require them to go ashore in China and who hold a "Work Permit for Foreign Personnel Engaging in Offshore Petroleum Operations in the People's Republic of China"; (3) foreigners holding a "Temporary Permit for Commercial Performances" and approved by the Ministry of Culture to carry out cultural performances of a commercial nature.”

[8]Art 13 of the 2017 Provisions provides, “Foreigners who satisfy any of the following criteria may be exempted from applying for an employment permit, and upon entering China they may present their Z visa and the relevant certificates to apply for an employment pass directly: (1) foreigners engaged to work in China under Sino-foreign cooperative exchange projects implemented pursuant to agreements or conventions entered into by the Chinese government with foreign governments or international organisations; or (2) chief representatives and representatives of permanent representative offices in China of foreign enterprises.

[9]Art 14 of the Labour Contract Law provides, “Upon negotiation and consensus between the employer and the worker, a non-fixed-term labour contract may be concluded. Under anyof the following circumstances, a worker may propose or agree to renewal or conclusion of labour contract; except where a worker proposes for the conclusion of a fixed-term labour contract, a non-fixed-term labour contract shall be concluded: (1) the worker has worked for the employer for a period of 10 years consecutively; (2) when the employer first implemented the labour contract system or when a new labour contract is concluded upon restructuring of a State owned enterprise, the worker has worked for the employer for a period of 10 years consecutively and will attain his/her statutory retirement age in less than 10 years' time; or (3) where a fixed- term labour contract has been concluded twice consecutively and the worker who does not fall under any of the categories stipulated in Article 39 and item (1) and item (2) of Article 40 renews his/her labour contract. Where an employer fails to conclude a written contract with a worker after one year has lapsed since the date of commencement of work, the employer and the worker shall be deemed to have concluded a non- fixed-term labour contract.

[10]上海市第二中级人民法院,2015)沪二中民三(民)终字第1523号ZHIJUNL与爱生雅(中国)投资有限公司劳动合同纠纷二审民事判决书

[11]北京市第二中级人民法院,(2018)京02民终1661号TANG XIAO BEI与北京新立基真空玻璃技术有限公司劳动争议二审民事判决书

[12]See Art 8 of the Interim Measures.

[13]See Art 5 of the Interim Measures.

[14]See Art 6 of the Interim Measures.

[15]Art 46 of the Labour Contract Law provides, “Under any of the following circumstances, the employer shall make economic damages to the worker: (1) the worker has rescinded the labour contract pursuant to the provisions of Article 38; (2) the employer has proposed rescission of labour contract to the worker pursuant to the provisions of Article 36 and has negotiated and agreed with the worker on rescission of labour contract; (3) the employer has rescinded the labour contract pursuant to the provisions of Article 40; (4) the employer has rescinded the labour contract pursuant to the provisions of the first paragraph of Article 41; (5) except where an employer proposes to renew a labour contract by maintaining or raising the provisions of the labour contract and the worker is not agreeable to the renewal, a fixed-term labour contract shall be terminated pursuant to the provisions of item (1) of Article 44; (6) the labour contract is terminated pursuant to the provisions of item (4) or item (5) of Article 44; or (7) any other circumstances stipulated by the laws and administrative regulations.

[16]See Art 22 of the 2017 Provisions.

[17]广东省高级人民法院,(2018)粤民再267号CORBETT DAIMON JOHN与广州市星河湾酒店有限公司劳动争议再审民事判决书.


Authors:

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YAN Min

                       

Partner/Associate



         

YAN Min, Partner of DeHeng Law Offices (Guangzhou); Mr. Yan's principal areas of practice are securities and capital markets, mergers and acquisitions, corporate investments and financings and PE funds. .        

Email:yanmin8@dehenglaw.com         


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NIE Tian

                       

Trainee Associate



         

NIE Tian, Trainee Associate of DeHeng Law Offices (Guangzhou); Ms. Nie mainly focuses on securities and capital markets, PE funds and dealing with foreign-related legal matters.                

Email:nietian@dehenglaw.com         


Disclaimer:



This article was written by the lawyer of DeHeng Law Offices. It represents only the opinions of the authors and should not in any way be considered as formal legal opinions or advice given by  DeHeng Law Offices or its lawyers. If any part of these articles is reproduced or quoted, please indicate the source.


声明:

本文由德恒律师事务所律师原创,仅代表作者本人观点,不得视为德恒律师事务所或其律师出具的正式法律意见或建议。如需转载或引用本文的任何内容,请注明出处。

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