China Employment Law Update - June 2017

Before the formal implementation, in 2016 China had released the Pilot Implementation Plans for Foreigners' Work Authorization Policy (the “Plans”), which were restricted to 10 locations in China. On 1 April 2017, the new work authorization policy - Circular on the Implementation of Work Permit Service Guidelines for Foreigners in China (the "Guidelines") - issued by the State Administration of Foreign Expert Affairs (SAFEA) came into effect nationwide. The Guidelines provide further details and highlight the specific regulations of the Plan.

New Changes

In comparison with the old policy, the Guidelines have introduced the following key changes:

• Combining the Permits for Foreign Experts Working in China and Licenses for the Employment of Foreigners with the Notice on Foreigners' Work Permit and combining the Foreign Expert Certificates and the Employment License for Foreigners with the Employment Certificate for Foreigners;
• Introducing a new online application system to complete the relevant application forms and upload supporting documents for the labour bureau's prior approval;
• Creating a unique identification number to identify every foreign employee;
• Classifying foreign employees into three different categories under a Point-Based System according to their educational background, work experience, salary awarded from the sponsoring entity, Mandarin proficiency, working locations age , etc., and;
• Setting corresponding limitations towards different categories based on the idea "Encourage the top, control the middle, limit the bottom."

To encourage high-level talent from abroad, the Guidelines unveiled the following new polices and measures for those applying from Category A:

• simplifying the supporting documents;
• establishing a new mechanism for applicants to apply for a work permit without leaving China, therefore reducing the time of the approval process; and
• lifting the age restriction.

Application Procedures Simplified

The general application procedures are as follows:

• Before entrance into China:
  
  
  
  • The employer should:
  1. complete the online application form and upload the required certified supporting documents for the labour bureau's prior approval;
  2. submit the hard copy documents on-site, if the labour bureau determined that the former files were qualified; and
  3. obtain the Notice on Foreigners' Work Permit.
     
     
  • The employee should:
  1. take a physical examination; and
  2. use the Notice on Foreigners' Work Permit to apply for the enforcement visa (Visa Z).

• After entrance into China:
  
  
  
  • The employees should:

  use the Notice on Foreigners' Work Permit and the employment contract, along with other documents, to apply for the Employment Certificate for Foreigners

  • The employers should:

  use the Employment Certificate for Foreigners to apply for the resident permit.

Noted: the whole application process may take approximately six months.

Attractive "Green Card" Policy

In order to attract overseas talent, China has also put significant effort into improving the permanent residency ("Green Card") System. In 2016, the Ministry of Public Security approved in total 1,576 foreigners in China for permanent residence; an increase of 163% over the last year. Some cities also conduct special policies to retain foreign talent. Shanghai, for example, has proposed the Shanghai "Green Card", which has been issued to 1,343 foreigners since May 2016.

In general, the requirements for such a “Green Card” are quite stringent. For foreigners to acquire permanent residency, the following paths are available:

1. They have made a direct investment in China with a stable operation and a good tax paying record for three successive years;
2. They have held the post of: deputy general manager; factory deputy director, or higher; associate professor; associate researcher; another associate senior title or higher, or have enjoyed equal treatment, for at least four successive years, with a cumulative period of residency in China not less than three cumulative years in four years, and with a good tax paying record;
3. They have made a great and outstanding contribution to, and are specifically needed by, China;
4. They are the spouse of, or an unmarried child under 18 years of age of, a Chinese citizen;
5. They are the spouse of a Chinese citizen, or of a foreigner with permanent resident status in China, with at least five years of marriage, at least five successive years of residency in China and at least nine months of residency in China each year, and have a stable source of income and a place to live;
6. They are an unmarried person, under 18 years of age, living as a dependant with his/her parent; or
7. They are 60 years old or above, with no directly related family member abroad and are living as a dependant with any directly related family member in China, and have stayed in China for at least five successive years, with at least nine months of residency in China each year, and have a stable source of income and a place to live.

The periods of time mentioned above refer to a successive duration up to the date of application.

Excluding the paths described above, some cities, for example Shanghai, issued local regulations and set up other paths to permanent residency, including:

1. Foreigners who have worked in Shanghai continuously for at least four years and have stayed in China for at least six months a year. Their annual income and income tax payments must exceed RMB 600,000 and RMB 120,000. They should apply for a "D" visa and then apply for permanent residency.
2. Senior industry professionals employed by a company on the Shanghai Science and Technology Commission's innovative occupation's list (www.stcsm.gov.cn). They can apply for a foreign talent visa ("R" visa) and working residence permit. This residence permit will initially be issued for five years, and the employee can apply for the permanent residence permit after working continuously for over three years.