Working in China as a foreign national is a great experience for many. However, when employment issues arise, it can quickly become a nightmare. Over the years, I have noticed that the misunderstandings and questions are recurring. Thus, I created this series “Working Abroad in China” which explores and discusses some key matters foreign employees should know. Previous articles already discussed the basics, contract clauses, termination, severance payment and even how Chinese labor law applies to foreign nationals. However, none of these matter unless the foreign national is working legally, which is the topic of today’s article.
To work in China, a foreign national must obtain a Work Permit and a Residence Permit for employment. An overview of the procedures to obtain these documents was provided in my previous article How to Obtain a Work Permit & Residence Permit in the People’s Republic of China.
At the national law level, a foreign national is deemed as working illegally if he is:
1. Working within China without obtaining a work permit and a residence permit of the work type as required;
2. Working within China beyond the scope specified in a work permit; or
3. Working within China beyond the prescribed scope of jobs or period in violation of rules for the administration of work-study foreign students, if the foreign national is a foreign student.
Whilst many foreign nationals begin working as soon as they enter China on their Z visa, on paper, they should wait approximately a month until the Work Permit and Residence Permit for Employment are obtained. In addition, the Work Permit is linked to the specific role they were hired for and does not offer much flexibility. Foreign employees are bound to a position, a location and an employer. Thus, having two employers or two main work locations is illegal. The same applies for the position. If a foreign employee changes position whilst keeping the same employer and location, he must inform the local SAFEA bureau and go through the relevant processes.
Foreign employees are bound to a position, a location and an employer.
Aligned with the above definition of illegal employment of foreign nationals, a Work Permit is required for the court to recognize an employment relationship. This includes a de facto employment relationship as well as a contractual employment relationship. Entering China on a tourist or business visa with the promise of a work permit is dangerous. The employer may delay the Work Permit and, during that time, if a dispute were to arise, the foreign employee would not enjoy the benefits and protections of employment. He would instead need to fight under the Contract Law, which is much less beneficial. This risk is still minor compared to the consequences of working illegally such as fines, jail time, deportation and a decade-long ban:
“A foreign national who is illegally employed shall be fined not less than 5,000 yuan but not more than 20,000 yuan; or if the circumstances are serious, shall be detained for not less than five days but not more than 15 days and be fined not less than 5,000 yuan but not more than 20,000 yuan concurrently…
Foreign nationals who engage in any activity inconsistent with their cause of stay or residence or otherwise violate Chinese laws and administrative regulations, causing their continuing stay or residence in China to be improper, may be ordered to exit China within a prescribed time limit.
Foreign nationals who violate this Law with serious circumstances may be deported as decided by the Ministry of Public Security if the violation does not constitute a crime. The punishment decision of the Ministry of Public Security shall be final.
Deported foreign nationals shall be prohibited from entering China within ten years from the day of deportation.”
With these consequences in mind, the M Visa should be discussed. Foreign nationals cannot be employed on an M visa as it is for business and trade activities. From business trips to employment, it may be understood as a spectrum and the middle of this spectrum is a gray area with room for debate. Some points clearly lean towards employment, such as having a Chinese or local employer, or if the income is from China. In case of doubt, it is much better to remain on the safe side and assume that a Work Permit and Residence Permit for Employment are necessary.
In regards to internships, they are, in most cases, illegal. Paid internship has considerable risks because it is viewed as employment since compensation in exchange for labor is considered as such. Unpaid internships are less risky; however, I still discourage anyone from taking such risks unless going through proper (and verified) channels.
Finally, for the readers from Hong Kong, Macau and Taiwan, this article does not apply, since a Work Permit is no longer required for locals of these locations.
To conclude, foreign nationals should work legally or face the consequences. In some cases, it may be difficult to be entirely sure whether it is employment; in some others it should be common sense.
River Delta Law Firm