With increasing foreign investments and mergers and acquisitions activities in China over the last few years, employees’ relocation has become a very important issue for foreign companies entering or expanding their business in China. The legislation that governs the labor relationship in China is the PRC Labor Law, which came into effect on 1 January 1995. Various ministries may publish their own regulation and each province can issue its own directives, e.g. the Shanghai Labor Contract Regulations for Shanghai city.
Overview of the PRC Labor Law
The PRC Labor Law applies to all enterprises, individual economic organizations established within Chinese territory and the employees with whom they have formed contractual relations (Article 2, PRC Labor Law). As to the form of the employment contract, it should be governed by PRC Labor Law, in written form and in Chinese. A foreign language version of the employment contract can also be prepared, but it must be consistent with the Chinese version and the Chinese version will always prevail if there are inconsistencies.
Rules for Foreign Employees
The Administrative Regulations on the Employment of Foreigners in the PRC, promulgated on 22 Jan 1996, govern the employment of foreign nationals in China. For holders of Hong Kong, Taiwan and Macau travel documents working in China, they are governed by separate regulations, known as Provisions on the Administration of the Employment of Hong Kong, Macau and Taiwan Residents in the Mainland.
All foreign nationals wishing to work in China must hold a visa for entry. After entering China, they must obtain an Employment Permit and a Residence Certificate. Any foreign national employed in China must :-
be at least 18 years of age and in good health;
have the requisite professional qualifications and experience;
have no criminal record;
have a confirmed/definite employer; and
hold a valid passport or travel document.
When applying for the work visa, the onus is not just on the employee. The employer must apply to be licensed to employ that individual.
The employer must lodge an Application Form for Foreigner’s Employment in China together with the following documents :-
the foreign employee’s resume;
a letter of intent concerning the appointment;
reasons for the proposed recruitment – the employer must prove that a special need exists or there are special requirements for which there are no suitable domestic applicants to fill the position;
the foreign employee’s qualifications relevant to the position;
health certificate of the foreigner.
For any Hong Kong, Taiwan and Macau resident working in China, in order to apply for an employment approval, he or she :-
has to be between 18 to 60 years of age and in good health;
hold a valid travel document.
The employer has to lodge a prescribed form of application and attach :-
the employer’s registration certificate;
a letter of intent concerning the appointment; and
health certificate of the employee.
If there are labor disputes arising between the employer and the foreign employee or the Hong Kong, Taiwan or Macau resident, they should be handled in accordance with the PRC Labor Law. Article 79 of the PRC Labor Law provides that where a labor dispute takes place, the parties involved may apply to the labor dispute mediation committee of their unit for mediation; if mediation fails and one of the parties requests arbitration, that party may apply for arbitration. If one of the parties is not satisfied with the arbitration results, he may bring the case to the People’s Court.
Representative Office v. Wholly Foreign Owned Enterprise
Under the PRC Labor Law, foreign representative offices are required to hire staff through authorized labor service agencies such as FESCO. Direct private hiring is prohibited. As for wholly foreign owned enterprises (WFOE), they may recruit employees directly or through local employment service centres.
Any foreigner who enters or travels to China illegally or without the valid entry permit may be subject to penalties, such as warnings, fines or detention.
If you are uncertain about your rights or obligations under an employment contract or relationship, lawyers in our Employment Department will be happy to assist you with any inquiries you may have regarding employment or data privacy issues in China or Hong Kong.
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