China Employment Law Update - September 2016

30 September 2016

  1. Confirmation that an employer/employee relationship exists between footballers and football clubs.
  2. Pilot program for foreign work permits to begin in selected provinces on 1 October 2016.
  3. Major violations of labour and social security laws to be made public.
  4. Social Security Agreement signed between China and the Netherlands.

New legislation on employment of football players by football clubs

In August 2016, the Human Resources and Social Security Ministry, Education Ministry, General Administration of Sports and All-China Federation of Trade Unions jointly issued an Opinion on "Strengthening and Improving Labour Security for Professional Football Clubs" (the "Opinion").  The key point of the Opinion is that football clubs are now under an obligation to put employment contracts in place with their players.  Prior to the Opinion, there was uncertainty regarding the nature of the relationship between players and clubs.

Football club associations should now prepare a template employment contract for reference. The contract must be concise, practical and take into account the nature of football sports. Football clubs will need to liaise with the relevant authorities in order to obtain work permits for foreign football players.

The Opinion specifies that local governments should instruct clubs to  ensure that their players have the benefit of social insurance ..  The football club is required to start paying social insurance fees within 30 days of its establishment.

In light of the Opinion, local governments should also instruct football clubs to set up trade unions and to carry out trade union activities. Finally, local governments are required to expand employment opportunities for professional football players, particularly players who are now retired from football.

Pilot program for a new system of foreign work permits initiated

The State Administration of Foreign Experts' Affairs has announced that a new work permit system for foreign experts working in China will be trialled from 1 October 2016 until 31 March 2017 in the provinces of Beijing, Hebei, Tianjin, Shanghai, Anhui, Shandong, Guangdong, Sichuan and Ningxia.

Under the pilot program the current "Foreign Experts Working Permit" and "Alien Employment Permit" will be consolidated into a "Foreign Persons Work Permit Notice". Prospective foreign workers will be classified into three categories (A, B and C) under the principle of "encouraging high-end, controlling general, limiting low-end" immigration. Category A corresponds to foreign high-end talents; Category B corresponds to foreign professional workers; and Category C corresponds to foreign people who work to meet labour market needs, for example temporary workers, seasonal workers and non-technical workers. For Category C a points-based system will be implemented to differentiate between workers and limit the number of permits granted. Potential workers will fall into one of the three categories and will either face certain restrictions (in category C), or facilitations (in category A). In addition, the pilot program aims to halve the amount of documents which have to be filed and introduces a primarily electronic filing system to facilitate the procedure.

In provinces which are not testing the pilot scheme, the current system will remain in place until 1 April 2017, when the program will be extended nationwide. Work permits already issued will continue to be valid but holders may have the option to apply for the new documentation.

Violations of labour protection laws and social security laws to be made public

The Ministry of Human Resources and Social Security (MOHRSS) has announced that in addition to the "Measures for the Public Announcement of Major Labour Security Violations", which was issued on 3 August 2016 and comes into effect on 1 January 2017, additional measures are to be taken to make major labour or social security offences public.

The new evaluation methods focus on a three-tier rating system for companies. Companies with an excellent track record and which shall not be routinely audited are categorised as Class A, average companies which shall be regularly inspected are deemed to be Class B and companies with a history of violations which will fall under tight scrutiny of the enforcing agencies fall into Class C.

This new evaluation system will serve to inform the public of serious offences and it is hoped that it will have a self-regulating effect. Information to be made public under the new measures includes the full company name, name of the legal representative, unified social credit code (or registration number) and registered address, as well as key facts relating to the offences committed. At least once a quarter the data  will be published both on the website of the local labour authority as well as printed in major newspapers, or broadcast on TV stations and other media.

These measures shall be implemented in parallel to the new evaluation method and shall come into effect on 1 January 2017.

Treaty on protection of social security rights signed in The Hague

On 12 September 2016, after nearly two years of negotiations, the People's Republic of China and the Netherlands signed a bilateral agreement relating to social security matters.

The main focus of the agreement is to protect the social security rights and interests of workers, enterprises and employees, reduce labour costs through prevention of double pay and to promote bilateral economic and trade relations. As a result of this treaty Dutch companies who send employees to China as well as the Dutch employees themselves will be exempt from pension insurance, unemployment insurance and other mandatory social security contributions in China.  Employees of Chinese companies sent to work in the Netherlands will enjoy the same treatment.

The agreement will come into effect after it has been ratified by the legislature of each of the two countries. This agreement adds to a growing number of bilateral social security agreements the Chinese government has entered into, with similar arrangements already in place with Germany, South Korea, Denmark, Finland, Canada and Switzerland.

Authors

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