Mo' work, mo' problems. China has a reputation as sort of a legal gray zone, not helped by the "inventive" ways companies sometimes get around legal obstacles to hiring someone. But we want answers! Yes or no answers! We reached out to a trio of lawyers for hard, hard answers to common employment questions.
Note: these answers are provided by legal experts, but might not specifically apply to your situation. We feel like we say this a lot, but just so we're clear: waving some article you found online (even one as good as this!) under your employer's nose during a labor dispute is Not A Good Idea™. Seek professional legal advice if you are in legal trouble. We have a list of three dozen lawyers right here.
Our legal panel, from left to right:
Liu Zhe is a lawyer at the Shanghai office of Long An Law Firm. He specializes in corporate law, labor law and dispute resolution.
Sophie Mao is the Managing Partner at Chibridge Law Firm. She passed the Chinese bar in 1997 and has been practicing ever since. She specializes in contract law, foreign direct investment and intellectual property.
Art Dicker is a lawyer based in Shanghai focusing on employment, governance, fundraising, commercial contracts, and other general corporate matters for small and mid-sized companies. Art is the host of The China Business Law Podcast which can be found on XimalayaFM, Apple Podcasts and most other podcast networks.
Go!
1. My employer says they want to hold on to my work permit for safekeeping. Is this legal?
No. When hiring an employee, the employer may not retain the employee's resident ID card or other documentation, nor collect property or security form them under some other guise.
The Law: Labor Contract Law of the People's Republic of China, Article 9
- Liu Zhe
The Reality, In Layman's Terms: A company is required to terminate a work permit when the employment contract ends, but otherwise there is no logical explanation for why they would want to hold onto your document, other than to have leverage over you. While you do not need to show your work permit very often in China, you will need it from time to time, for example applying to exchange RMB to foreign currency at your local bank. Use that as your reason for wanting to hold onto your work permit.
- Art Dicker
2. My employer says the company will not provide medical insurance for foreign employees. Is this legal?
No. Any foreigner employed legally in China is entitled to social insurance, including medical insurance, work-related injury insurance, unemployment insurance and maternity insurance. The social insurance premiums shall be paid by the employing unit and the particular foreign worker in accordance with the provisions.
The Law: Interim Measures for the Participation of Foreigners Employed in China in Social Insurance, Article 3
- Liu Zhe
No. Any foreign employee, if they are working in China legally, is entitled to social insurance, the same as their Chinese colleagues.
- Sophie Mao
The Reality, In Layman's Terms: Living as a guest in a foreign country like China, don't expect any special favors as far as ease of use of this insurance — for example being able to use you medical insurance with English language documentation. Your employer may just assume you won't actually use the government insurance program and try not to pay.
- Art Dicker
3. I got offered an internship in a company in Shanghai but they won't provide me a visa. Is this legal?
No. By internship, we usually mean one for students before graduation from university: if you are still a student studying at university, you can't work as an intern with your student visa. You must get approval from your school and get a mark on your visa at the local Public Security Bureau. There are no specific regulations for this yet but the internship should be related to the student's study in school.
The Law: Administrative Regulations of the People's Republic of China on Embarkation and Disembarkation of Foreigners, Article 22
- Sophie Mao
The Reality, In Layman's Terms: Technically that is certainly correct and what should be done, although I suspect many students (especially unpaid interns) in reality still intern while on a student visa.
- Art Dicker
4. I have a work permit for my main job, but my employer says they will cancel it if I freelance on the side. Is this legal?
Yes. Freelancing can be regarded as a change of occupation, so from a legal point of view there are certain risks. A foreigner who changes their employers and profession at will or extends their term of employment without permission will have their work permits withdrawn and residence status canceled. In cases of deportation, the costs and expenses shall be paid by employed foreigners or their employers.
The Law: Circular on the Issuance of the Regulations on the Management of the Employment of Foreigners in China, Article 28
- Liu Zhe
The Reality, In Layman's Terms: Many companies prohibit "moonlighting" — doing significant work on the side in addition to your day job. Remember your work permit is specific to a certain company and job.
But really it is not so much a work permit issue from your company's perspective. It's more they do not want you to be dividing your energy and attention on other things, or being seen in your freelancing activities as a representative of their company. Or worse, you taking business away from your main company by freelancing on the side. So your company has a legitimate right to prohibit you from freelancing. Look to see if your employment contract or company rules (such as a handbook) explicitly prohibits it.
- Art Dicker
5. I was fired after two years but my boss says foreign employees are not entitled to severance pay. Is this legal?
Depends. According to current Chinese law, Chinese labor standards apply to foreigners working in China in terms of minimum wages, working hours, rest and vacation, labor safety and health. For severance pay and other issues, refer to the labor contract agreed between employer and employee. Make sure the issue is clearly addressed in your labor contract to protect your rights.
- Liu Zhe
No. As long as the foreign employee works in China legally, the labor relationship is protected by the labour law. If the company fires the employee, they are entitled to severance pay.
- Sophie Mao
The Reality, In Layman's Terms: There are some cases in Shanghai which at least give some perverse credibility to the argument that foreigners are not entitled to severance unless it's specifically set forth as a right in your employment contract. And not all companies would want to put the right to severance explicitly in an employment contract — why highlight this to the employee?
But the majority view is that foreigners are entitled to it. If your company refuses to give you severance, especially in an open-term contract, tell them OK, then you disagree with the termination in the first place, and want your job re-instated. They may end up having to pay to make you go away in that case — especially if they think you will be making a labor arbitration claim against them. That's usually a headache they would rather make go away by paying some severance.
- Art Dicker
6. I was hired to a job in Shanghai and the company said to get a tourist visa or business visa first, and then they would apply for a work permit when I arrive. Is this legal?
No. According to the current Chinese law and Shanghai local regulations, foreigners who work in Shanghai must hold an employment visa (Z) to enter China. When foreigners in China on other visas apply for the Document of Permit for Employment, they must leave China after acquiring the Document of Permit for Employment, and reapply for the Z visa to enter China.
The Law: Chinese Law and Shanghai Local Regulations
- Liu Zhe
No. Any company that wants to hire a foreign employee has to apply for a Notice for Work Permit for the foreign employee. The foreign employee can apply for a Z visa using this Notice in his/her home country, and then apply for a work permit after he/she enters China.
- Sophie Mao
The Reality, In Layman's Terms: This is certainly not the way it is supposed to be done, although it often is done this way. You also do not always have to leave the country to get a work permit and residence permit.
- Art Dicker
7. My job title on my work permit is "marketing manager" but I was hired to be something else. Is this legal?
No. Foreign employees have to do the job specified in the work permit, and work for the same company which applied for the work permit. If the employee changes their position or their company, they must apply for a new work permit.
The Law: Circular on the Issuance of the Regulations on the Management of the Employment of Foreigners in China, Article 28
- Sophie Mao
The Reality, In Layman's Terms: If you are working for the same company but doing a slightly different job with slightly different title, this is probably not worth losing sleep over. If your work permit lists you as a specially skilled architect and instead you are actually doing social media account management for an advertising company's clients, you probably need to get that straightened out. Otherwise companies will change people's titles and job scopes all the time and this is usually even mentioned as a possibility in the employment contract you sign with your employer.
- Art Dicker
8. A prospective employer offered me a job. They offered 20k/month salary but 15k for the first three months as part of probation. Is this legal?
No. There are two issues involved here actually. First, if the term of the contract is less than one year, the probation period cannot be more than one month. If the term of contract is less than three years, the probation can't be more than two months. Second, the salary during the probation period should be no less than 80% of the regular salary specified in the labor contract.
The Law: Labor Contract Law of the People's Republic of China, Articles 19 & 20
- Sophie Mao
The Reality, In Layman's Terms: Feel like this one's pretty clear, for the reasons Sophie stated.
- Art Dicker
9. I took a new job, and during the probation period the employer told me on Friday afternoon not to come back the following week. Is this legal?
Depends. If the labor contract specifically says that the Labor Contract Law of the People's Republic of China applies, the employer cannot terminate the labor contract at will. If there is no explicit agreement on the application of law, conditions of termination can be agreed in the labor contract between both parties. In this situation, termination that meets the agreed conditions is legal. If the employer fails to terminate the contract in accordance with the termination conditions, it's illegal.
The Law: Labor Contract Law of the People's Republic of China
- Liu Zhe
The Reality, In Layman's Terms: It is pretty easy to quickly do one or two evaluations of the employee and find within a week that he or she is not performing. Terminating an employee in China during probation period is for all intents and purposes basically as easy as terminating an employee in an "at-will" system in the US.
- Art Dicker
10. My employer offered to pay half of my salary to a Hong Kong bank account and the rest to my China bank account. Is this legal?
Depends. It's not clearly defined. Chinese law protects the legal income of foreign employees and punishes employers who fail to pay their wages in full. The form the payment takes should be negotiated between employee and employer and written into the labor contract. Be careful your agreement doesn't amount to tax evasion, or you will be severely punished.
- Liu Zhe
Depends. According to individual income tax law of PRC, the employer is the withholding agent of its employees. That means when the employer pays its employees' salary, it will deduct the tax from the salary in line with the tax law and pay the deducted amount to tax authority.
The Law: Individual Income Tax Law of The People's Republic of China
- Sophie Mao
The Reality, In Layman's Terms: Chances are your employer is trying to lower your taxable income in China so as to lower its employer-side social insurance benefit payments. Remember, if you are primarily working in China, you are ultimately responsible for your China income tax obligations, in addition to your employer's responsibility to first withhold it. Where the company pays you does not matter, it is still subject to Chinese income tax.
- Art Dicker
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