China Employment Law Update - January 2015

13 January 2015

In this edition:

New Rules for Foreigners on Short-Term Work Assignment in China

On 6 November 2014, the Ministry of Human Resources and Social Security, the Ministry of Foreign Affairs, the Ministry of Public Security and the Ministry of Culture jointly issued the Relevant Handling Procedures for Foreign Nationals' Entry into China to Perform Short-Term Work Assignments (Trial) (the "Procedures"), which will take effect on 1 January 2015.

The key points of the Procedures are as follows:

I. Short-term work assignment refers to one of the following activities for less than 90 days:

1. conducting works such as technical or scientific research, management or consulting activities for a cooperation partner in China;

2. providing training at a sports institute in China (including athletes and coaches);

3. film production (including advertisements and documentaries);

4. participation in fashion shows (including car models or print advertisements);

5. foreign-related commercial performance; or

6. other activities as determined by the Human Resources and Social Security Department.

II. The following activities for a period of less than 90 days will not be considered to be short-term work assignments:

1. providing repair and maintenance, installation, testing, disassembly, guidance and training inconnection with the purchase of machinery or equipment;

2. providing training, supervision and inspection for a bidding project in China;

3. performing short-term work assignments for branch offices, subsidiaries or representative offices in China;

4. participating in sports events in China (including athletes, coaches, doctors and assistants);

5. carrying out volunteer works in China without pay or with payment by an overseas organisation; and

6. conducting performances that are not defined as “foreign commercial performance."

For the activities under II (1), II (2), II (3) and II (4) if the stay is less than 90 days, an "M" visa must be applied for. For II (5) and II (6), provided that the stay is less than 90 days, an "F" visa must be applied for.

III. Application process for foreign nationals' entry into China for short-term work assignment:

Step 1: Foreigners seeking to enter China for a short-term work assignment must obtain anemployment license (工作许可) and a work certificate (工作证明) from the local Human Resource and Social Security Bureau. For foreigners who will conduct foreign-related commercial performances, the organising unit must apply for an approval and a work certificate from the local Cultural Bureau. 

Step 2: An invitation letter must be obtained from the relevant governmental authority by submitting the employment licence or approval and work certificate.

Step 3: Foreigners must apply for a work visa (i.e. a "Z" visa) at a Chinese embassy or consulate.

Step 4: Foreigners seeking to enter for a short-term work assignment for more than 30 days but less than 90 days must also obtain a work-related residence permit from the local public security bureau after entering China.

IV. What this means for foreigners with short-term work assignments in China:

In the past, foreigners could come to China for short-term work assignments of less than 90 days by holding a business visa (i.e. an "M" visa). However, according to the Procedures, after 1 January 2015, foreigners entering China to conduct certain activities for up to 90 days will need to apply for an employment licence or approval and work certificate, which means a longer and more complicated application process prior to the foreigner's entry into China.


No Fees for Personnel Files of "Floating" Personnel in 2015

In China, every employee has an official personnel file, which contains information such as the employee's education and employment history. The term "floating" personnel in China refers to people who have not attained permanent residency ("hukou") in the place in which they are residing. Personnel files for "floating" personnel must be held by government service agencies in charge of public employment and human resources.

On 10 December 2014, Five Departments (the Central Organization Department, the Ministry of Human Resources and Social Security, the Development and Reform Commission, the Ministry of Finance, and the National Archive Bureau) jointly issued the Notice on Further Strengthening Management and Services for Personnel Files of "Floating" Personnel ("Notice"). According to the Notice, all fees such as management fees, access fees, certification fees and transfer fees for personnel files will be waived from 1 January 2015, and government service agencies in charge of public employment and human resources shall provide "floating" personnel with basic services for personnel files free of charge.


Draft Measures Provide Equal Rights for Residence Permit Holders

On 4 December 2014, the Legislative Affairs Office of the State Council released Draft Measures for the Administration of Residence Permits ("Draft Measures") for public comments. According to the Draft Measures, migrant citizens (i.e. Chinese citizens who have resided in cities other than their permanent residence) may apply for residence permits that will enable them to enjoy the same basic rights and benefits as permanent residents.

To be eligible to apply for a residence permit, migrant citizens must have resided in the city to which they wish their rights and benefits to apply for over six months. They must also have a stable job, or a stable home or be in continuous education in that city.

Before the Draft Measures, migrant citizens could only apply for temporary residence permits, which do not offer many of the rights or benefits enjoyed by permanent residents. In Beijing, for example, holders of temporary residence permits are generally not entitled to receive free compulsory education or take the college entrance exam in Beijing. Under the Draft Measures however, holders of residence permits will be able to enjoy these rights, and will gradually be entitled to further benefits, including the right to receive vocational training, employment assistance, housing support, social welfare, social assistance, and the right for children of residence permit holders to participate in local high school and college entrance exams.

Furthermore, subject to meeting the requirements of the local government, the Draft Measures will allow holders of residence permits to apply for permanent residency (hukou) for themselves, their spouse, minor children and parents.


Dongguan Intermediate Court defends Nokia's termination of former workers who staged a strike

In November 2014, nearly 3,000 workers at the Nokia factory in Dongguan, Guangdong, staged a series of strikes and protests relating to concerns arising from Nokia's decision to sell its mobile phone business to Microsoft. Over 200 employees were dismissed for failing to return to work in breach of the company regulations. Some of these employees issued claims against Nokia for illegal dismissal and sought reinstatement. However, as detailed in one recently publicised judgment, the Dongguan Intermediate Court upheld the decision of the district court of first instance that the dismissals had been lawful.

In its decision, the court gave consideration to the company's Employee Handbook, stating that it had been properly formulated and announced to the employees in accordance with the law. The court also held that the provisions contained within the Handbook, specifically that which stipulates that an employee's absence for 3 consecutive days without prior authorisation amounts to a serious violation of company regulations and shall be cause for immediate termination without compensation, are not contrary to any legal requirements and therefore are lawful and valid. As such, since the employee's conduct (i.e. absence from work for 3 consecutive days without authorisation due to participating in the strike) constituted a serious violation under the terms of the Handbook, the company was entitled to terminate her employment without compensation.


Labour disputes ranked No. 1 source of social conflict in China

According to an article from China News Service, a report issued by the Chinese Academy of Social Sciences on 24 December 2014 states that labour disputes remain the number one source of social conflict in China.

The report indicates that 522,000 labour arbitration cases involving 721,000 workers were handled in the first three quarters of 2014, representing increases of 5.6% and 11.1% respectively, on the corresponding period in 2013. According to the report, mass protests that stemmed from labour disputes have also been on the increase. These protests mainly related to disputes over unpaid wages, mass layoffs/redundancies and economic compensation, taxi operation, and social insurance and benefits. The report noted in particular that 52 protests in the first three quarters of 2014 involved more than 1,000 workers each, indicating an increase not only in the frequency of large-scale protests, but also in the number of workers participating.

Authors

Walsh-Pádraig

Pádraig Walsh

Partner
China and Hong Kong

Call me on: +852 2248 6000
Image of Ying Wang

Ying Wang

Partner
China and Hong Kong

Call me on: +86 21 2312 1288
de Silva-Susan

Susan de Silva

Consultant
Singapore

Call me on: +65 6534 5266