Overview of China’s Recent Guide to the Employment of Foreign Employees

I. Foreigner’s Work Permit

Article 5 of Rules for the Administration of Employment of Foreigners in China stipulates that the employer shall apply for a Foreigner’s Work Permit (the “Work Permit”) for the expatriate. The Exit-Entry Administration Law of the People's Republic of China (《中华人民共和国出入境管理法》) clearly stipulates that an entity or individual shall not employ foreigners who do not have a Work Permit. 

Typically, the application of a Work Permit is a two-step process: First, the employer shall create an account and submit documentation for the application on the official website of the Ministry of Science and Technology for a preliminary examination for pre-qualification screening for a Foreigner’s Work Permit Notice. Secondly, the applicants who pass the screening will receive a Foreigner’s Work Permit Notice online and can then apply for a Z or R visa accordingly. 

After obtaining the visa and successfully entering China, a foreign employee who will be working in China for more than 90 days shall apply for the Work Permit within 15 days after entry. For those who will only be working in China for 90 days or less, only a Foreigner’s Work Permit Notice or an Invitation Letter for Foreign Experts is required.

There are some exceptions which allow a foreigner who has already entered China to skip the first step of screening and apply directly for a Work Permit. The most common situations where such exception applies are where a high-end foreign talent³ who has already entered China with other type of visas or valid residence permit, or where a foreign employee who is employed by a new employer but remains in the same profession and holds a valid work-type residence permit, provided that, the previous Work Permit is cancelled by the employer prior to the application for a new one. 

The Work Permit has a validity period. The employer is obliged to apply for an extension of Work Permit 30 days before the expiry date. If the validity of the Work Permit is not extended, it will be automatically revoked and invalidated.

Here is the Ministry of Science and Technology’s flowchart which sets out the process for Work Permit application.

II. Foreigner’s Residence Permit

The Foreigner’s Residence Permit of PRC (the “Residence Permit”) is the permit document for legal residence that foreign nationals shall apply for with the exit and entry authority of China’s public security authorities after entering China. Holders of valid residence permits may enter and exit without applying for a visa. For work-type residence permit, the expatriate is required to submit the application within 30 days of entry, and those who will work in China for less than 30 days do not need to apply for the Residence Permit. The validity period of Residence Permit is varies, depending on the type of work as set out in the table below:

For the extension of the Residence Permit, the relevant application shall be submitted 30 days before the expiry. Upon review, the period of stay shall be extended provided that the reasons for extension are reasonable and sufficient.

III. Social Insurance

According to the Interim Measures for the Participation in Social Insurance of Foreigners Employed in China (《在中国境内就业的外国人参加社会保险暂行办法》), foreigners legally employed by any domestic employer in China and those who have been dispatched to a branch or representative office registered in China after entering into employment contracts with foreign companies, shall be subject to mandatory social insurance contribution⁴ in China. Foreign employees which home country of incorporation has a social security agreement with China⁵ , may be exempt from the obligation to pay insurance premiums for specified periods as stipulated in the agreement.

Employers should complete the social insurance registration for its foreign employees within 30 days of the issuance of their work permit. If the foreign employee leaves China before reaching the pensionable age, his/her social insurance account can be kept and can be utilised again upon re-employment in China again. The amount in such social insurance account can also be withdrawn upon written application to terminate the social insurance account.

IV. Practice in Shanghai

The practice relating to work permits, residence permits and social insurance varies across the different regions. We set out below the Shanghai municipal government’s flowchart on “Practical guide to living in Shanghai” which briefly summarises the relevant administrative procedures and competent authorities. More details are available on the official website.⁶