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How is unauthorized employment defined?

The new law defines behavior that “shall”be deemed“unlawful employment” (非法就業):

    • First, “work” (工作) in China without obtaining an employment license and residence permit for work is illegal. (EEAL, art. 43(1)).

    • Second, it’s illegal to work in China beyond the scope of the work specified in the employment license (“出工作許可限定範圍在中國境內工作的”). (EEAL, art. 43(2)). The draft State Council regulations clarified that this includes working at a different work unit or outside of the geographic area specified in the employment license (工作許可證件) are restricted. (Draft State Council regs, art. 40). While the final regulations omit these specifics, they are probably implied. One ambiguity is the extent to which an employee working in one city can be assigned to work short-term in other cities.

    • Third, it’s illegal for foreign students to do work that violates work-study rules or goes beyond the scope of the position or hours approved by the exit-entry administration. (EEAL, art. 43(3).) As background, a student with a residence certificate who needs to take a part-time job or internship off campus shall obtain approval from the school, then apply to the exit-entry administration authorities for a notation to the residence certificate showing the part-time job or the location and period of internship off campus. (EEAL, art. 42). The law delegates to the Ministry of Education the obligation to establish a framework for foreign students to obtain work authorization. (EEAL, art. 42.) Presumably, that framework will cover any rules related to on-campus employment.

An underlying issue is how “work” should be defined. Under the draft State Council regulations, a labor relationship can be found to exist without a written labor contract, so long as there is a “de facto labor relationship with a work unit.” (Art. 41). The final State Council Regulations omit this provision. But the Labor Contract Law makes the same point. (Arts. 11, 14, 82). So, for example, merely labeling the foreign national an “independent contractor” or a “freelancer” or an “intern” will not allow an employer to escape liability for unauthorized employment where the facts establish that there is a labor relationship. Similarly, a 1994 government notice warned against illegal employment disguised as “exchange” or “training.

Nor can foreign nationals escape liability for unauthorized employment by claiming they are self-employed in China. Chinese law recognizes something similar to self-employment, namely, the individual industrial and commercial enterprise (IICE or 工商個體戶). A Chinese citizen may register an IICE. (General Principles of Civil Law, art. 26, adopted by the NPC and promulgated by the President on Apr. 12, 1986; Regulations on Individual Businesses, art. 2, adopted by the State Council on Mar. 30, 2011). Hong Hong and Macao residents who are Chinese citizens, as well as Taiwan residents, may also register an IICE. (Id., art. 27). However, foreign nationals do not have this right.

As explained above, a foreign national who enters into a labor relationship with a PRC work unit is “working” in China. Moreover, “work” takes place if a foreigner with a foreign labor contract and foreign source of remuneration is engaged in work-like activities for 3 months or more, according to the Labor Department order cited above.

“I’ve been offered a job in China. The employer says I should first to apply for an tourist or business visa to start work, then they will shift me to a work visa. Does that sound right?”

You can’t work for a China employer with a tourist or business visa. The statute is clear that work for a Chinese employer without a work-type residence permit is illegal. (EEAL, art. 43(1)). It’s a common scam for agencies/employers that are unable to secure such a permit to bring employees to China to work illegally with non-work visas. Further, without a work-type residence permit, you lack the legal protections afforded by a labor relationship, such as the right to use labor arbitration to seek unpaid wages.

Similarly, don’t come on the promise that after arrival the employer will seek authorization for you to work. As mentioned above, they can’t put you to work until you actually hold a work-type residence permit, and with narrow exceptions it’s not possible to change from a non-work visa to a work-type residence permit within China; instead, the applicant normally needs to seek a Z visa at a PRC consulate or other visa-issuing agency abroad.

Some employers will argue that the foreigner is not actually “working” so doesn’t need a work-type residence permit. As mentioned above, however, if the facts show that the foreign national’s activities constitute work, the absence of a written labor contract is not controlling. For example, merely labeling the foreigner an “independent contractor” or a “freelancer” will not be a cure where the facts establish that there is a labor relationship. Working in China without a work-type residence permit is engaging in high-risk behavior.