Compliance Guide for Enterprises to Hire Foreign Employees: Qualifications, Processes and Legal Essentials

Compliance Guide for Enterprises to Hire Foreign Employees: Analysis of Qualifications, Processes and Legal Points

Under the background of accelerating global talent flow, the employment of foreign employees has become an important way for enterprises to expand their international business and enhance their technical strength. However, this process involves a complex legal framework and administrative approval process, enterprises need to build a systematic solution from the three dimensions of qualification review, job adaptation and compliance management to avoid legal risks and maximize the value of talents.

1. enterprise qualification examination: double verification of legitimacy and job scarcity

1. hard threshold for subject qualification
according to the regulations on the administration of employment of foreigners in China, enterprises must meet four core conditions:

• legal viability : enterprises must be established in accordance with the law, there is no record of major violation of law and breach of trust, and the business license is valid. For example, a technology company was included in the list of business anomalies due to its failure to conduct annual inspections on time, resulting in the rejection of work permit applications for foreign employees.
• job scarcity : the recruitment position must conform to the principle of "there is a temporary shortage of suitable candidates in China. When a new energy automobile enterprise recruits battery R & D experts, it needs to provide a domestic talent market supply and demand analysis report, which proves that the position is difficult to meet the demand through local recruitment.
• Salary competitiveness : The salary of foreign employees shall not be lower than the average level of local industry. When a cross-border e-commerce company recruits a director of operations in Southeast Asia, it needs to set a standard with reference to the median salary of foreign experts in the same industry, and make it clear in the labor contract that the basic salary is not lower than the local minimum wage standard.
• Pre-industry approval : Enterprises involved in special industries such as education, medical care, catering, etc. must first obtain a license from the competent authority. For example, the recruitment of foreign teachers in international schools requires a "school license" and "qualification certificate for hiring foreigners".

2. Enterprise type restrictions
Individual businesses and unincorporated organizations not legally established are not qualified to recruit foreign employees. When a restaurant applied for a work permit for a foreign chef as a self-employed person, it was rejected because the main qualifications did not match.

2. foreign employee qualification verification: professional skills and background review are both important

1. Basic conditions screening
Foreign employees must meet five basic requirements:

• Age and health : at least 18 years old, and the physical health status meets the job requirements. When a manufacturing company recruits foreign engineers, it requires a medical certificate issued within 6 months and explicitly rejects candidates with infectious diseases.
• No criminal record : A certificate of no criminal record issued by the police of the country of nationality is required, and the issuance time is within 6 months. A financial institution was found to have been involved in commercial fraud after entering the company because it failed to verify the criminal records of foreign executives, and the company faced significant compliance risks.
• Education and Experience : Foreign professionals must have a bachelor's degree and more than 2 years of relevant work experience, and the age is not more than 60 years old. When a biomedical company recruits foreign researchers, it requires a degree certificate and a certificate of work qualifications issued by a former employer, and verifies the authenticity of its professional experience through LinkedIn.
• Language ability : Set language standards according to job requirements. When recruiting foreign sales director of an international trading company, candidates are required to provide IELTS score of 7.0 or above or the same level of proof.
• Cultural Adaptability : Assess cross-cultural collaboration skills through scenario simulation interviews. When an Internet company recruited a foreign product manager, it designed a case study question on "how to deal with the differences in the needs of Chinese and Western users" to select candidates with cultural sensitivity.

2. Talent classification management
Foreign employees are divided into three categories, each corresponding to different approval criteria:

• category a (high-end talents): such as nobel prize winners and national scientific research project leaders, age and academic qualifications can be exempted. When an AI company introduces a Turing Award winner, it only needs to provide proof of its academic achievements and project cooperation agreement.
• category B (professional talents): bachelor's degree and 2 years of working experience are required, but those who meet the requirements of innovative and entrepreneurial talents and outstanding graduates can be appropriately relaxed. When a start-up recruited foreign algorithm engineers, it successfully applied for age exemption because it held the gold medal of the international top competition.
• Category C (other staff): to meet the needs of the domestic labor market, such as foreign language teachers, nursing staff, etc. When an international school recruits foreign English teachers, it is required to provide TEFL certificate and teaching evaluation report.

3. compliance management: risk prevention and control from recruitment to resignation

1. Key points of compliance in the recruitment stage

• Labor contract design : the maximum term shall not exceed 5 years, and the terms such as work content, salary and treatment, and liability for breach of contract shall be specified. An enterprise was punished by the labor department because it did not specify the "prohibition of part-time work" clause in the contract, resulting in foreign employees working in two companies at the same time.
• transparent salary structure : the basic salary shall not be lower than the local minimum wage standard, and the performance salary shall be linked to the assessment results. A foreign company split the salary of foreign employees into "basic salary, housing subsidy, transportation subsidy" and specified the amount and payment conditions of each part in the contract.
• Deep background investigation : Verify academic qualifications, work experience and criminal records through third-party agencies. When a financial institution hires a foreign wind control director, it entrusts a professional background investigation company to verify the reasons for leaving the company and its professional ethics.

2. Enrollment compliance

• Certificate processing timeliness : enterprises are required to apply for a work permit for foreigners within 15 days after the entry of foreign employees, and apply for a work residence permit within 30 days. Due to the failure of a manufacturing enterprise to apply for a residence permit in time, foreign technical experts were restricted from leaving the country and the progress of the project was delayed.
• mandatory social security payment : enterprises are required to pay five insurances and one fund for foreign employees, but some types of insurance can be exempted by bilateral agreements with Germany, Japan and other countries. According to the Sino-German social security mutual exemption agreement, a German-funded enterprise only needs to pay work injury insurance and pension insurance for foreign employees.
• Standardization of accommodation registration : Foreign employees are required to declare accommodation registration to the local police station within 24 hours after entering the country. An enterprise was fined by the public security organ for failing to urge foreign employees to complete registration.

3. On-the-job dynamic management

• extension procedures in advance : enterprises need to apply for extension 30 days before the license expires, failure to do so will result in the invalidation of the document. A technology company was unable to continue to participate in national projects due to its failure to extend the extension for the foreign R & D director in time.
• strict examination and approval of job change : foreign employees need to re-apply for work permit when changing jobs, and enterprises are not allowed to adjust their work content without authorization. A trading company was found to be illegally employed because it did not go through the change procedures and allowed foreign sales managers to engage in financial work.
• complete closed loop of resignation procedures : enterprises need to report to the public security department 10 days before employees leave their jobs and cancel their work permits and residence certificates. An educational institution did not cancel the certificates of the foreign teachers who left their jobs in time, resulting in their illegal employment by others using their identities.

4. typical risk scenarios and coping strategies

1. illegal employment risk
a cultural communication company hired foreign actors without a work permit to participate in commercial performances, which was found to be illegal employment, and the enterprise and its employees were fined respectively. Enterprises need to establish an "early warning mechanism for the expiration of certificates" and set up special personnel to regularly check the validity of certificates of foreign employees.

2. labor dispute risk
a foreign company was finally sentenced to pay high compensation for failing to specify the calculation standard of overtime pay in the labor contract and having a labor dispute with foreign employees. Enterprises should formulate standardized contract templates with reference to the Labor Contract Law and invite legal advisers to review the legality of the terms.

3. cultural conflict risk
a foreign technical expert of a manufacturing enterprise proposed to leave because he did not adapt to the Chinese management style, and the enterprise lost millions of training costs. Enterprises need to provide cross-cultural training for foreign employees and establish a "tutorial system" to help them integrate into the team.

In the global talent competition, enterprises need to build a recruitment system based on compliance, and transform foreign employees into the core driving force for business growth by accurately positioning needs, deepening background review and improving process management. At the same time, enterprises should organize regular compliance training to ensure that the human resources team has the latest policy developments and provide a solid talent guarantee for the internationalization strategy.