Compliance Guide for the Whole Process of Hiring Offshore Personnel: Key Steps from Qualification Review to Risk Prevention and Control

Compliance guide for the whole process of hiring foreign personnel: key steps from qualification review to risk prevention and control

In the context of accelerating global business expansion, the employment of foreign personnel has become an important way for enterprises to acquire international skills, language and cross-cultural management skills. However, cross-border employment involves multiple complex areas such as visa management, labor regulations, and tax compliance. If it is not operated properly, it may lead to illegal employment penalties, project interruptions and even legal proceedings. This paper systematically combs the core processes and key risk points of hiring foreign personnel, and provides a landing-able operational framework for enterprises.

Pre-qualification before 1. employment: ensuring that the enterprise and the position are "in compliance"

1. Enterprise subject qualification verification
The enterprise must have legal business qualifications and the business scope matches the employment position. For example:

• when recruiting foreign algorithm engineers, technology companies need to prove that they belong to "high-tech enterprises" or that their positions are listed in the "catalogue of urgently needed talents";
• educational institutions need to hold a "school license" and foreign teachers' qualifications to recruit foreign teachers;
• medical institutions recruit foreign doctors, must have the "medical institution practice license" and the corresponding department settings.
  An international school's hiring of foreign teachers was deemed illegal because it did not obtain the qualifications for hiring foreign teachers, and the school was ordered to suspend business for rectification and fined.

2. Job scarcity argument
Enterprises need to prove that jobs cannot be qualified by domestic personnel, and usually need to provide one of the following materials:

• Industry report: for example, for positions in the field of artificial intelligence, the "talent gap data" released by third-party organizations can be cited.
• expert argumentation: invite experts from trade associations to issue job particularities;
• project contract: if transnational cooperation projects explicitly require overseas personnel to participate.
  A manufacturing enterprise failed to provide proof of job scarcity, and its recruitment of foreign engineers was rejected, and the enterprise was restricted from employing foreign personnel for 6 months.

3. The salary of overseas personnel shall be in line with the market value of the post and shall not be lower than the local minimum wage standard. For example:

• Beijing stipulates that the monthly salary of foreigners shall not be less than 7000 yuan (subject to the latest local standards);
• the salary structure should be transparent and the composition of basic salary, performance and subsidies should be clearly defined.
• "yin and yang contracts" are prohibited: if a low-salary contract is signed to reduce social security payment, high bonuses will actually be paid.
  a foreign company was ordered by the labor department to reissue the difference and pay compensation because the salary paid to foreign employees was lower than 50% of the market price, thus damaging its reputation.

2. visa and work permit processing: opening up the "legal channel" for cross-border employment

1. visa type selection
select the appropriate visa according to the term of employment and the nature of the position:

• z-word work visa : applicable to long-term full-time positions, enterprises need to apply for "foreigner work permit notice" first, and employees need to apply for z-visa entry with the notice, apply for "foreigner work permit" and residence permit again;
• r talent visa : for high-level talents (such as nobel prize winners and academicians), a letter of recommendation from the provincial government is required, and the visa is valid for up to 5 years.
• B business visa : only short-term communication (such as technical training, market research), prohibit substantive work.
  a consulting company was found to be illegal for allowing foreign employees to participate in project development with B visa, and both the enterprise and employees were punished.

2. Key points of work permit application

• Bill of Materials : including enterprise business license, employment contract, resumes of overseas personnel, academic certification, proof of no criminal record, etc.;
• approval process : submit online through "foreigners' work management service system", and some cities (such as Shanghai and Shenzhen) implement "one netcom office";
• approval time limit : 20 working days for ordinary posts and 5 working days for high-level talents.
  due to lack of materials (such as failure to provide notarization of academic qualifications), the application for work permit was returned, delaying the employee's employment for 2 months.

3. Permission changes and cancellations

• changes : When the position, salary, or work location changes, need to apply for renewal of work permit within 10 days;
• cancellation obligation : after the employee leaves office, the enterprise must cancel his work permit within 10 days, otherwise it may affect the subsequent employment qualification of the enterprise;
• overdue risk : if the employee is not canceled in time, the enterprise may be implicated in punishment.
  a foreign company did not cancel the work permit of the former foreign employee, which led to the employee's illegal employment in other enterprises with the expired permit. the enterprise was fined and suspended for 3 months.

3. labor contract signing: the "legal moat" of defining rights and obligations

1. Contract requirements
According to regulations, the labor contract must contain the following contents:

• Basic information of the enterprise and employees;
• Contract period (up to 5 years);
• Work content and location;
• working hours and leave;
• salary and payment method;
• social insurance and welfare benefits;
• contract cancellation and termination conditions;
• liability for breach of contract and dispute resolution.
  an enterprise was found to have violated the law when dismissing foreign employees because the contract did not stipulate the conditions for dismissal during the probation period and was required to pay compensation.

2. Cultural differences clause design

• language version : the contract should be written in Chinese with a foreign translation, both texts have the same effect;
• attribution of the right of interpretation : it is agreed that "in case of conflict between Chinese and English versions, the Chinese version shall prevail";
• cultural adaptation support : for example, enterprises provide cross-cultural training and local instructors.
  A multinational team did not have a clear right to interpret the language in the contract, and Chinese and foreign employees had differences in understanding the terms, causing labor disputes.

3. confidentiality and non-competition

• scope of confidential information : specify the customer list, technical plan, financial data, etc;
• non-competition period : the enterprise shall pay economic compensation for no more than 2 years after leaving office;
• standard of compensation for breach of contract : if the actual loss or the agreed amount (e.g. 500000 yuan) is higher.
  a technology company did not agree on non-competition compensation, resulting in foreign employees leaving to join competitors, the enterprise can not pursue its responsibility.

4. compliance management during employment: build a "firewall" for risk prevention and control

1. Social security and individual income tax payment

• compulsory social security insurance types : pension, medical, work injury, unemployment and maternity insurance;
• individual income tax withholding : foreigners are required to pay individual tax on "comprehensive income" or "business income", and enterprises are required to perform withholding obligations;
• tax treaty utilization : tax treaties signed with some countries (e. g. Germany, Singapore) can avoid double taxation.
  an enterprise did not take advantage of the Sino-German tax agreement, resulting in foreign employees to pay tax repeatedly, causing complaints and affecting the reputation of the enterprise.

2. Attendance and performance management

• Attendance system : specify working hours, overtime rules and leave process;
• performance appraisal : set quantitative indicators (such as KPI completion rate) to avoid subjective evaluation;
• reward and punishment mechanism : set graded punishment measures for violations (such as lateness and absenteeism).
  A foreign company was convicted of "procedural violation" when dismissing foreign employees due to vague performance appraisal standards, and was required to pay compensation and restore labor relations.

3. Cultural conflict response

• communication mechanism : establish regular meetings (such as weekly and monthly meetings) to promote information sharing;
• conflict mediation : introduce third-party organizations (such as HR consulting companies) to mediate cross-cultural conflicts;
• team building : organize cultural exchange activities (such as festival celebration and team expansion) to enhance cohesion.
  a multinational team reduced the turnover rate of foreign employees from 35% to 12% through the implementation of the "cultural integration plan.

5. turnover and subsequent management: avoiding the legacy risk of "big tail"

1. Resignation procedures

• Work handover : specify the handover content (such as customer data and technical documents), time limit and responsible person;
• Certificate cancellation : assist employees to handle the cancellation procedures of work permit and residence permit;
• non-competition restriction activation : if you need to restrict the employment of employees, you need to sign a supplementary agreement and pay compensation when you leave your job.
  An enterprise did not start the non-competition agreement, which led to the disclosure of trade secrets after the departure of foreign employees, and the enterprise suffered heavy losses.

2. Financial compensation and compensation

• legal compensation : economic compensation shall be paid according to the working years (e.g. one month's salary shall be paid every full year);
• compensation for illegal termination : the enterprise shall pay twice the economic compensation for illegal termination;
• compensation for breach of contract of employees : if employees leave early or disclose confidential information, the enterprise may investigate their liability for compensation.
  an enterprise failed to recover its losses when suing foreign employees for failing to retain evidence of employee breach of contract.

3. Long-term compliance tracking

• blacklist management : blacklist employees with serious violations to avoid re-employment;
• policy update response : pay attention to changes in visa, social security and personal tax policies, and adjust management strategies in a timely manner;
• case review : regularly analyze employment dispute cases and optimize the management process.
  an enterprise has reduced the incidence of employment disputes by 60% by establishing a "compliance risk database.

Conclusion: Compliance is the "lifeline" of hiring foreigners

To employ foreign personnel, you need to take "prequalification as the starting point, visa processing as the key, contract signing as the guarantee, compliance management as the core, and resignation processing as the end point". Enterprises should build a full-process compliance system to prevent risks from the three aspects of system, process and technology, so as to maximize the value of overseas talents and minimize the risk of employment. Through refined operations, companies can take the lead in global competition and drive sustainable business growth.