Chinese Enterprises Hire Foreign Employees: A Full Analysis of Compliance Operation and Risk Prevention and Control

Chinese enterprises hire foreign employees: full analysis of compliance operation and risk prevention and control

With the acceleration of globalization, the international layout of Chinese enterprises is deepening day by day, employing foreign employees has become an important means for many enterprises to expand overseas markets and introduce international technology and management experience. However, the employment of foreign employees involves complex legal procedures and compliance requirements. If the company does not operate properly, it may face administrative penalties, labor disputes and even legal proceedings. This paper will systematically sort out the core points of Chinese enterprises to employ foreign employees from the three dimensions of policy framework, operation process and risk prevention and control.

1. policy framework: defining legal boundaries and avoiding compliance risks

China's management of foreign employees is based on the "the People's Republic of China Exit and Entry Administration Law" and "Regulations on the Employment of Foreigners in China" as the core, and a "work permit residence permit" dual certificate management system has been established. According to the regulations, enterprises employing foreign personnel who have not obtained the work permit for foreigners and the residence permit for work are illegal employment and will face a fine of 10000 yuan for each illegal employment, with a total amount of no more than 100000 yuan. If the circumstances are serious, the business license may also be revoked.

Exceptions : Foreign employees who hold a Foreigner's Permanent Residence Permit are exempt from work permits, and their labor relations are established in the same way as Chinese citizens; some specific positions (such as offshore oil operations, theatrical performances, etc.) can be directly employed with special permits. However, such exceptions are only a very small number, and enterprises need to strictly check themselves against the policy.

2. operation process: four steps to ensure compliance of the whole process

first step: pre-approval and post declaration
enterprises are required to submit the "overseas employment demand declaration form" to the local human resources and social security department, specifying the post name, post requirements and reasons for "urgent shortage. Some free trade zones have relaxed job restrictions, but companies still need to prove the irreplaceability of foreign employees. For example, a technology company was unable to prove the "special skills" of foreign engineers, resulting in the rejection of a work permit application.

Step 2: Apply for the "Foreigner Work Permit Notice"
Enterprises need to submit the following materials online:

• Employment contract (it should be clear that the salary is not lower than the local minimum wage standard);
• foreign employees have no criminal record certificate (subject to embassy or consulate certification);
• diploma and work experience certificate (subject to confirmation by the overseas study service center of the Ministry of education of China);
• health examination report.
  a food company was fined 100000 yuan for failing to verify that foreign employees had no criminal record, resulting in 10 employees being found illegally employed.

Step 3: Visa Processing and Entry
Foreign employees apply for Z-visa from Chinese embassies and consulates abroad on the basis of the Notice of Work Permit for Foreigners. Within 15 days after entering the country, the enterprise needs to apply for a work permit for foreigners with a permit notice, labor contract and passport to the original license issuing authority; within 30 days, it will assist in applying for a work residence permit, which is usually valid for the same period as the labor contract.

Step 4: Employment Management and Dynamic Tracking

• Contract Management : The labor contract has a maximum term of 5 years, and no unfixed term clause is allowed. A technology company signed a 3-year contract with a foreign employee and did not apply for an extension 30 days before the expiration, which caused the employee's residence permit to expire and the company was ordered to rectify within a time limit.
• Salary and Social Security : The salary of foreign employees shall not be lower than the local minimum wage standard, and they shall participate in pension, medical, work injury, unemployment and maternity insurance according to law. However, citizens of countries that have signed bilateral social security agreements with China (such as Germany and Japan) can be exempted from paying part of the insurance with the insurance certificate.
• annual inspection and change : enterprises need to handle the annual inspection of work permit for foreign employees every year, and report to the public security exit and entry department within 10 days after the employee leaves office and passport change. An enterprise was given a warning and corrected within a time limit for failing to cancel the leave employee's residence certificate in time.

3. risk prevention and control: three core points, build a strong compliance line

1. qualification examination "triple verification"

• academic certification : the academic certificate of foreign employees must be certified by the embassy and consulate and confirmed by the overseas study service center of the Ministry of education of China to avoid the risk of forgery.
• work experience verification : request to provide the contact information of the former employer, and verify his position, responsibilities and working time by phone or mail.
• verification of no criminal record : certificates of no criminal record in some countries (such as Vietnam) need to be notarized by notary offices and certified by Chinese embassies and consulates abroad, and enterprises need to reserve 2-3 weeks for processing.

2. Compliance boundaries for flexible employment

• Project-based cooperation : For short-term technical support or market research needs, enterprises can sign a "technical service contract" with foreign employees to clarify the civil cooperation relationship between the two parties and avoid being recognized as a labor relationship. However, it should be noted that this model is not suitable for long-term, stable positions.
• Dispatch and Secondment Restrictions : Chinese law prohibits the dispatch of foreign employees to work in other units or the evasion of employment responsibilities through secondment. An enterprise once faced administrative punishment for seconding foreign engineers to an affiliated company, which was found to be illegal employment.

3. "Closed-loop operation" of resignation management

• Early declaration : 10 days before the resignation of foreign employees, enterprises are required to submit the resignation certificate and residence certificate cancellation application to the public security exit and entry department.
• document retention : keep the handover documents (such as work permit, access card recovery records) for at least 2 years for labor inspection or litigation evidence.
• non-competition compliance : if non-competition terms are agreed with foreign employees, the compensation standard and payment method should be clearly defined to avoid being invalid due to vague terms.

Conclusion: the compliance cornerstone of global talent strategy

Hiring foreign employees is a "compulsory course" in the process of internationalization of Chinese enterprises ", however, compliance operation is not a simple" certification process ", but a systematic project involving law, taxation, human resources and other fields. Enterprises need to establish a "special post responsibility system", regularly participate in policy training organized by the business department, or introduce professional foreign-related human resources service agencies to build a full-process compliance management system from recruitment, employment to resignation. Only in this way can we effectively prevent and control legal risks while attracting international talents, and escort the global development of enterprises.