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PRC Labour Law - Bitesize

6 November 2013
Mayer Brown JSM Newsletter

Employment of Foreigners (Including Hong Kong, Macao and Taiwan Residents) in China (Cont'd)

Does a foreigner who is not employed by a PRC company, but who frequently travels to the PRC as an employee of a foreign company to deal with business in the PRC, need to obtain a work permit?

Generally, a foreigner who enters the PRC for commercial or trade activities does not need to obtain a work permit and work visa, but can enter the PRC on a business visa (i.e., M-type visa, effective as of 1 September 2013), valid for a maximum term of six months. In such case, the documents regarding the commercial activities issued by a trade partner in China, or trade fair invitation or other invitation letters issued by the relevant entity or individual, are required for the purpose of application.

However, a work permit and work visa are required if such foreigner under a cross-border secondment arrangement is required to work in the PRC as a secondee for three months (generally, over a period considered as being cumulative rather than continuous) or more, unless he or she is to work as an engineer or other professional under a Sino-foreign technology transfer agreement.

In practice, the hosting PRC entity is required to complete the relevant application and filing formalities, similar to those required for a regular case of employment of a foreigner in the PRC (see our Bitesize of 30 October 2013 for details).

If a foreign company with no legal entity established in the PRC needs its foreign employee to work in the PRC for business development purposes, would there be any legal implications for such arrangement?

Strictly speaking, any such activities could potentially be regarded as "resident business activities" and subject to a fine. Article 35 of the Administrative Regulations on the Registration of Resident Representative offices of Foreign Enterprises, effective as of 1 March 2011, provides that where a foreign company engages in business activities in relation to a representative office without registration, the registration authority may order it to stop those activities and impose a fine of more than RMB 50,000 but no more than RMB 200,000.

Can a foreigner simultaneously work for two or more PRC employers in Mainland China?

Generally, no. In principle, the employer specified on the foreigner’s work certificate must be that employer he or she actually works for in Mainland China, and only one employer is allowed to be registered as the "working unit" on the work certificate.

However there may be exceptions, subject to the regulations of various localities. For example, in Shanghai, such multiple employment arrangements may be permitted if the foreigner concerned is seconded by the overseas employer to work for several PRC subsidiaries within the same group of companies as the overseas employer.

There are also exceptions for particular types of work whereby a foreigner can work for a number of different employers in the PRC (e.g., a foreign journalist may work for more than one employer after going through certain processes).

If a PRC employer wishes to employ a foreigner, can it rely on the employee’s work permit obtained in respect of his/her former employer?

No. As stated above, the employer specified in the foreigner’s work permit must be the same employer that he or she actually works for in Mainland China. Therefore, if the foreigner changes job in Mainland China, his or her original work permit must be cancelled and the new employer must apply for a new work permit for him or her.

However, the rule above may vary for different job types, e.g., journalists are subject to guidelines issued by the PRC Ministry of Foreign Affairs, rather than to the rules of the relevant local Human Resources and Social Security Bureau.

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