Requirement for Foreign Employees to Work

Under PRC law, expatriates working in China must be in possession of a work permit and a residence permit (for employment purposes) otherwise their employment may be considered illegal. In cases of illegal employment, the employer and the foreign employee may be penalised by the authorities, and their relationship will not be protected by labour law.

To obtain a work permit and residence permit for a foreign employee, an employer must apply to the government for the notification of a work permit for the foreigner. With the notification of the work permit, the foreigner may apply for a work visa. After obtaining the work visa, the foreigner should apply for a work permit within 15 days of entering or reentering China. With the work permit, the foreign employee should apply for a residence permit within 30 days after entering or reentering China.

If the foreigner first entered China on another type of visa, such as a visit visa or tourist visa, he or she may go to Hong Kong to obtain a work visa (after obtaining the notification of the work permit). However, occasionally, the foreigner may need to return to his or her home country for the work visa due to China’s fluctuating immigration policies. Also, chief representatives and representatives of representative offices do not need to apply for the notification of a work permit, and can use representative certificates to directly apply for the work permit and the residence permit.

Work permits usually have a term of one year and never exceed five years even if certain conditions are satisfied. Residence permits usually have the same term as work permits. If the employer intends to continue to employ the foreigner after the expiration of the work permit and the residence permit, the employer must apply for a renewal of the permits at least 30 days before their expiration. The employment relationship automatically expires if the work permit or residence permit becomes invalid or is cancelled.

In addition, foreigners who come to China to perform special tasks in the areas of technology, scientific research, management or guidance with Chinese business partners or other reasons and stay in China less than 90 days (the “Short-term Work”) must apply to the relevant authorities for their approval letters, certificates of employment, invitation letters or confirmations of invitation and work visas. If they intend to perform the Short-term Work in China in excess of 30 days, they must apply for residence permits (for employment purposes). However, foreign employees who are dispatched to the branches, subsidiaries and representative offices in China by foreign companies and stay in China for fewer than 90 days, are not considered to be performing Short-term Work and shall apply for business  visas (M visas).

Does a Foreign Employer need to Establish or Work through a Local Entity to Hire an Employee?

The PRC labour laws and regulations will not be applicable to the employment relationship established between a foreign-registered employer and its employees. However, if the foreign company plans to recruit and have employees work in China, in order to avoid the risk of permanent establishment, foreign companies are usually required to incorporate subsidiary company or representative office in China. The subsidiary company incorporated in China can directly hire employees or retain employees seconded from foreign parent companies. A representative office established by a foreign employer is only allowed to hire Chinese employees through a local HR agent in China.

Limitations on Background Checks

According to PRC Labour Contract Law, employer is entitled to know an employee’s basic information, which directly relates to the employment contract and the employee is obligated to inform the employer of the said information truthfully. However, the background checks or application/interview questions shall not infringe employees’ privacy rights or equal employment rights; otherwise the employer could be liable to litigation pursuant to PRC Tort Law and other applicable laws.

For any personal information obtained through background checks, employers shall fulfill the requirements of the Civil Code to process such information. Pursuant to the Civil Code, the processing of personal information shall respect the following principles with the aim to be legitimate, just, necessary and not excessive. Moreover, employers are required to obtain consent from individuals for collecting personal information. In practice, to avoid potential disputes, it is advisable for employers to obtain the job applicant’s consent before implementing the background checks.

Restrictions on Application/Interview Questions

Issued by nine departments accorded top-level authority in China, the Circular Related to Further Action to Promote Employment for Women details the restrictions imposed on employers and human resource agents when engaging with female candidates during the recruitment process. When interviewing prospective female candidates, employers are explicitly restricted from raising questions about marital status or pregnancy status. The penalties for an employer’s breach of this restrictive rule include a fine up to RMB 50,000.