Hiring practices in China

Requirement for Foreign Employees to Work

A work permit and a residence permit for employment purposes are required for foreign employees to work legally in China.

Under PRC law, expatriates working in China must be in possession of a work permit and a residence permit (for employment purposes) otherwise the 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 employment 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 re-entering China. With the work permit, the foreign employee should apply for a residence permit within 30 days after entering or re-entering China.

If the foreigner has entered China on another type of visa, such as a visit visa or tourist visa, he or she may be eligible to apply for a work permit directly within China if he or she is classified as a foreign high-end talent (Category A) or falls in other categories where application for work permit directly within China is allowed. For other categories of foreign workers who do not meet the in-country application conditions, the foreigner should exit China and apply for a Z work visa at a Chinese embassy or consulate abroad (including in their home country or a third country), using the Notification of Work Permit obtained by the employer. For chief representatives and representatives of representative offices of foreign enterprises in China, they may be exempt from the work permit notification requirement and may apply directly for the work permit and residence permit using their representative certificates.

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. If the work permit or residence permit becomes invalid or is cancelled, the foreign employee loses the legal basis to work in China, terminating the employment relationship automatically.

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?

A local entity is necessary for foreign employers to hire employees in China. They can incorporate a subsidiary company to directly hire employees or establish a representative office to hire Chinese employees through a local HR agent.

The PRC employment 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 a 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 required to hire Chinese employees through a local HR agent in China.

Limitations on Background Checks

The background check shall not infringe employees’ privacy rights or equal employment rights. It is advisable to obtain the job applicant’s consent for employers to conduct background checks.

According to the PRC Employment Contract Law, an 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 the PRC Civil Code, the Personal Information Protection Law (“PIPL”) and other applicable laws.

For any personal information obtained through background checks, employers shall fulfil the requirements of the PRC Civil Code and PIPL to process such information. Pursuant to the PRC Civil Code and PIPL, the processing of personal information shall follow the principles of legitimacy, justice, necessity, and non-excessiveness. 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 background checks.

Restrictions on Application/Interview Questions

When interviewing prospective female candidates, employers are explicitly restricted from raising questions about marital status or pregnancy status.

Issued by nine departments accorded top-level authority in China, the Circular on Further Regulating Recruitment Activities to Promote Equal 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 of up to RMB 50,000.