Chinese legal presentations, employment of Foreigners in China

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A while back A friend of mine gave a series of legal presentations from his law firm for some foreigners doing business in the local area in China.
I received the cliff notes from the presentations so i thought I'd post the copies here in case anyone find some of the information interesting.
Eagle is a Chinese lawyer specialising in such areas as Foreign Direct Investment,Cross-border Merger&Acquisition,Private Equity, Overseas IPO, International Trade Dispute,Family Laws and other cases or projects involving foreign elements.
Please excuse any spelling or grammar problems as I'm not editing the documents as they are not my work.

A Summary of Legal Presentation on Employment of Foreigners in China

                                                                     By Eagle Yang

                                                                     Dec. 12th, 2010

1. Does the employment of foreigners in China apply to relevant Chinese laws?

As long as the foreigner has handled and obtained the Employment Certificate or Expert Certificate, the disputes arising therefrom shall apply to the such laws and regulations as Labor Law, Employment Contracts Law etc. However, this doesn’t mean that all the provisions specified in Labor Law, Employment Contracts Law can be applied to the employed foreigners, such as the social insurance provisions.


2.1. The handling of Employment Certificate and Residence Permit

2.1.1. The basic procedures of handling Employment Certificate

(1) Prior to entering into China, the employing unit shall handle the Employment License;

(2) The employing unit handles and obtains a letter of visa notification;

(3) The Foreigner brings the Employment License and the letter of visa notification to apply for working Visa (namely Z visa ) at the Chinese embassies or consulates;

(4) The foreigner after entry shall hold the employment visa and go to the designated hospital for conducting physical examination;

(5) The employing unit shall go to the Labor Bureau for handling the Employment Permit;

(6) The foreigner shall handle and obtain the Residence Permit.

2.1.2. The circumstances the foreign employee shall handle change formalities of Employment Permit

(1) Where the foreigner switches employers within the same area but stays in a job of the same nature,the change must be approved by the Labor Bureau and recorded in his Employment Permit.

(2) If the foreigner is to be employed outside  or switch employer within the same  area while taking up jobs of a different nature,he must go through formalities for a new Employment Permit.

2.1.3. The relations between Employment Contract and Employment Permit

The Employment Certificate shall rescind upon expiration of the term of the labour contract. If an extension is required, the said employing unit shall submit an application for extension of the employment term to the Labour Bureau within 30 days prior to the expiration of the original contract and,upon approval,shall carry out procedures for extension of the Employment Certificate.

An employing unit shall promptly report rescission of the labour contract to the labour bureau and public security bureau,return the employment certificate and residence permit, and proceed to the public security bureau to carry out procedures in respect of leaving China.

Therefore, where the employing unit terminates the employment contract prior to expiration of the contract, the foreigner can apply for the travelling visa so as to avoid from leaving China.

2.2. Application for Traveling Visa and Employment Residence Permit

2.2.1. Materials Necessary for Application of Traveling Visa

(1) Valid passport and its copy;

(2) Registration certificate of temporary residence;

(3) Filling out the visa and residence permit application form with a recent 2-inch photo;

(4) The economic certification that can guarantee he has sufficient living expenses while living in China

2.2.2. Notice for residence permit holder

(1) change of cause of residence or passport number, applying for a new one;

(2) change of place of residence or employing unit occurs, applying for the change registration.

(3) When moving from one city to another within China, applying for the change either in the place of departure or in the place of destination.

2.3 The Signing and provisions of the Employment Contract (the “EC”)

It is better that the foreign employee may require the employer to provide such contents as employment term, position, labor remuneration, insurance, working hours, rest and vacation, conditions on termination of EC, defaulting responsibilities etc. in the EC, esp. the provisions of insurance, conditions on termination of EC, defaulting responsibilities.

2.4. Working Hours, Rest and Vacations

2.4.1.Working hours

(1) Laborers shall work for no more than eight hours a day and or more than 44 hours a week on average.

(2) Overtime working hours shall not exceed 3 hours a day and 36 hours in a month.

(3) Remunerations for the work overtime and of holidays

(i) 150% of the normal wages for extended working hours;
(ii) 200% of the normal wages on days of rest; and

(iii) 300 per cent of the normal wages for statutory holidays.

2.4.2.Rest and Vacations

(1) at least one day off in a week.
(2) The employing unit shall arrange holidays for laborers during the following festivals:
(i) the New Year's Day;
(ii) the Spring Festival;
(iii) the International Labor Day;
(iv) the National Day; and
(v) other holidays stipulated by laws and regulations.
I advise the foreign employee can request the employing unit to provide the rest and holidays for the western festivals when signing the employment contract.

(3) The State practices a system of annual vacation with pay.

 2.5. Insurance

Since our country’s social insurance system has not embraced the foreigners, advising to provide the contents as for insurance coverage in the EC, e.g. coverage of commercial insurance.
2.6. Two Circumstances the Employer Can Claim Liquidated Damages

2.6.1. Special Training
If the Employee breaches the training agreement on the term of service, he shall pay liquidated damages to the Employer as agreed.

2.6.2. Confidentiality Agreement
If an Employee has a confidentiality obligation, the Employer shall pay financial compensation to the Employee during the term of the competition restriction and if the Employee breaches the competition restriction provisions, he shall pay liquidated damages.

2.7.Invalidity, Termination and Ending of Employment Contracts

2.7.1 Circumstances on Invalidity of the EC

(1) A party uses means contrary to the other party’s true intent to conclude an EC;
(2) The Employer disclaims its legal liability or denies the Employee his rights; or
(3) Mandatory provisions of laws or administrative statutes are violated.
2.7.2. Circumstances on Termination of the EC

(1)through mutual consultations.
Two circumstances enjoyed by employees:
(2)An Employee may terminate his employment contract upon 30 days’ prior written notice to his Employer.

(3)A Employee may terminate his employment contract if his Employer:

(i) Fails to provide the labor protection or working conditions;

(ii) Fails to pay labor compensation in full and on time;
(iii) Has rules and regulations that violate laws or regulations, thereby harming the Employee’s rights and interests;

Two circumstances enjoyed by employer:
(4) An Employer may terminate an EC if the Employee:
(i) Is proved during the probation period not to satisfy the conditions for employment;
(ii) Materially breaches the Employer’s rules and regulations;
(iii) causing substantial damage to the Employer;
(iv) Has his criminal liability pursued.
(5) An Employer may terminate an EC upon 30 days’ prior written notice or one month’s wage, if:
(i) after the set period of medical care, the Employee can engage neither in his original work nor in other work;
(ii) The Employee is incompetent; or
(iii) A major change in the objective circumstances.
2.7.3. Exception Circumstances
An Employer may not terminate an EC pursuant to (4)(5)above if the Employee:
(1) Has been confirmed as having lost or partially lost his capacity to work;
(2) The set period of medical care has not expired;
(3) Is a female employee in her pregnancy, confinement or nursing period;
2.8.Severance Pay and Payment of Damages
2.8.1.Circumstances the employer shall pay severance
Where the employer terminates the EC in the following forms:
(1) illegally;
(2) by an agreement after consultations;
(3) upon 30 days’ prior written notice;
(4) due to its reduction of workforce;
(5) due to normal expiration;
(6) it is declared bankrupt or has its business license revoked
2.8.2. Criteria of severance pay
based on the rate of one month’s wage for each full year worked.
2.8.3. Circumstances the employer shall pay damages
(i) Employer terminates an employment contract in violation of laws;
(ii) The employer shall pay damage at twice the rate of the severance pay.
2.9.Means of Dispute Settlement and its Procedures

 2.9.1. Mediation
Where a labor dispute arises, either party can apply for mediation to a mediation institute.
2.9.2. Application for arbitration
Where the parties are not willing to mediate, the mediation fails or the mediation agreement is reached but not performed, an application for arbitration may be made to the labor dispute arbitration commission.
(1) Arbitration Jurisdiction over Foreign related labor disputes
By Chongqing Municipal Labor Dispute Arbitration Commission.
 (2) Burden of Proof
The parties have the responsibility to give evidence for their own claim.
Proposals: Strong sense of evidence collection is extremely important for an employee.
(3) Time limit of Arbitration
One year calculated from the date having known the infringement of rights.
2.9. 3. Bring a lawsuit to the court
Where there is objection to the arbitral award, litigation may be initiated to a people's court except some few circumstances that the arbitral award is the final award.
Note: The arbitration procedure for a labor dispute case is prerequisite.

3.Notices of Foreigner’s Employment in China and Suggestions
3.1. The foreign employee shall obtain the Employment Certificate and keep its validity
Note: The valid employment certificate is the prerequisite condition for obtainment of protection of labor laws.
3.2. Paying more attention to the provisions of the EC
Additional clauses for protection of rights and interests shall be embraced in the EC.
(1) Insurance treatment
The foreign employee can ask the employing unit for coverage of commercial insurance.
(2) Conditions on termination of EC
To provide the conditions on termination in the EC.
(3) Defaulting responsibilities
To provide the circumstances the employer shall bear defaulting responsibilities in the EC.
 (4) Vacations for important western festivals.
To provide days off on the important western festivals in the EC.
3.3. Consulting with lawyers to examine and revise the contract so as to protect your rights and interest in a large extent.
3.4. Where disputes arise, consulting with lawyers so as to provide timely legal advice and resolutions to the disputes.
« Last Edit: January 27, 2011, 06:30:09 PM by jpd01 »
"I don't understand what I did wrong except live a life that everyone is jealous of." Charlie Sheen.



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Re: Chinese legal presentations, employment of Foreigners in China
« Reply #1 on: January 28, 2011, 12:07:16 AM »
Good stuff psd.

This info should be moved to the Library Links section as a sticky.
Knowledge is knowing that a tomato is a fruit; wisdom is knowing not to put it in a fruit salad. - B. O'Driscoll.
TIC is knowing that, in China, your fruit salad WILL come with cherry tomatoes AND all slathered in mayo. - old34.



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Re: Chinese legal presentations, employment of Foreigners in China
« Reply #2 on: January 28, 2011, 03:59:43 AM »
Thanks, happy to have it moved to the library  bfbfbfbfbf
He did a series of lectures last year concerning foreigners and Chinese law, I couldn't attend all of them but the ones I could were very informative.
"I don't understand what I did wrong except live a life that everyone is jealous of." Charlie Sheen.


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Re: Chinese legal presentations, employment of Foreigners in China
« Reply #3 on: February 17, 2011, 10:33:16 PM »
Yeah, I was kinda thinking the same thing. This may well be a Library post. Thanks, JPD. bjbjbjbjbj
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we're building the corrupt, incompetent, baijiu-swilling buttheads of tomorrow!" (Raoul F. Duke)

Re: Chinese legal presentations, employment of Foreigners in China
« Reply #4 on: February 22, 2011, 03:08:43 AM »
I'm saving a copy!
For you to insult me, first I must value your opinion