Major differences in labor law between foreign and Chinese employees in China

 2018-05-28  149

Major differences in labor law between foreign and Chinese employees in China

While the labor law in China doesn't differentiate between foreigners and Chinese, however, some employee rights have turned to be different based on the actual implementation and interpretations of different laws. Here are ten major differences in labor law between foreign and Chinese employees.


1. Employment documents are necessary to establish legal labor relations

According to the provisions of the "Exit and Entry Administration Law" implemented in July 1, 2013, foreigners working in China should obtain work permits and work class residence certificates to work legally. otherwise it's deemed as "illegal employment".


While Chinese employees do not need to process such documents and can establish labor relations with the employer just upon working, this rule was made to ensure employers who refuse to sign the labor contract with their employees cannot manipulate the law.


2. Restrictions on internships

Foreigners doing internships need approval from their school/university and the public security organ. Employers cannot provide internships for foreign students who are studying abroad.

While there are no restrictions on recruiting Chinese interns; it only needs the agreement of the intern.


3. Prohibition on labor dispatch or outsourcing

Labor dispatch is the method when an enterprise hires its employees through intermediary employment agency. Hence, the employees sign the labor contract with the agency which in turn sign the agreement with the enterprise. This allows the enterprise flexibility in starting and ending the employment, also cuts down the employment risks. However, employers cannot recruit foreign employees through labor dispatch and outsourcing. While this is perfectly legal for Chinese employees.


4. Prohibition on part-time jobs

Foreign employees can only work in the region and enterprise where the employment certificate is issued from. If the employment area is changed, the corresponding formalities should be handled. Foreign employees (except foreign experts in certain regions) are not allowed to take part-time jobs.


Chinese employees can have cross regional part-time jobs without such restrictions, as long as the relevant parties can reach a consensus.


5. Non fixed term labor contracts

The regulations on the Employment Administration of Foreigners stipulate that the maximum duration of labor contracts for foreign employees shall not exceed five years. Therefore, in the judicial practice, the fourteenth article of The Labor Contract Law on non-fixed term labor contracts cannot be applied to foreign employees.


While Chinese employees can have a permanent labor contract with their employers automatically upon extending the labor contract for the third time.


6. "Bilateral mutual exemption" for social insurance

For foreigners whose countries have bilateral agreements with China over social insurance, and upon the mutual agreement between relevant parties, it's legal to hire foreign employees without fully or partially paying the social insurance. As of September 2016, China have signed bilateral mutual exemption agreements with seven countries, including South Korea, Germany, Finland, Canada, Denmark, Switzerland and Holland.


The social insurance for Chinese employees is enforced upon the establishment of labor relations, no agreement between the employing unit and the employee shall be waiver from the social insurance.


7. Mutual agreement supersedes certain legal requirements

Foreign employees who are lawfully employed should implement China's labor standards, including minimum wages, working hours, rest breaks and social insurance. However, in some areas, mutual agreement over certain labor law requirement can supersede the law. This creates a loop hole for employers to manipulate the labor right of foreign employers through singing customized labor agreements written in Mandarin.


For Chinese employees, such mutual agreement can never supersede the written labor law. So even if Chinese employees agreed by writing to gave away part of their labor rights, the agreement isn't lawful.


8. Flexible rules over the retirement age

Although the employment certificate is usually restricted by age, but the law of China does not prohibit foreigners who exceed the legal retirement age from working in China. As long as the employment certificate is valid, it is legally risky for the employer to terminate the labor contract.


 However, when Chinese employees reach the retirement age, the employer may terminate the contract.


9. Not subject to China's family planning policy

Foreign employees can have children in or outside the country. Female employees may enjoy maternity leave and are not subject to the limit of the number of childbearing. For maternity insurance benefits, foreign employees working in Beijing and Guangzhou are allowed to receive it for two childbearing.


10. Cannot overturn illegal termination of work permit

According to China labor law, an employer who illegally terminates the labor contract will be liable for paying compensation or restoring labor relations. Unfortunately, that's not applicable for foreign employees.  


However, for Chinese employees, as long as the labor contract is not expired, the employer should restore the labor relations with the employees which are illegally relieved.