employment in China

Daxue Talks transcript #15: consultation with a lawyer about employment in China

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Find here the Daxue Talks episode 15. From the talk with Gabriel, explore the market of employment in China.

Full transcript below:

I am Gabriel from Shanghai Li Dong Fang Law Firm, I am a lawyer with 7 years of working experience. My specialty is labor law, company law, intellectual property rights, trademark, copyrights and international trade, banking rules.

  1. What do you need to be careful of when signing a labor contract? What are the typical issues?

First, the type of the entity. We should be careful with the type of the entity we are going to sign a labor contract with. In Chinese law, only entities with legal personality can hire people. For other entities like the representative office of a foreign company, they can only hire staff through a third party. For example, Tesco, foreign enterprise service corporation.

2. What do you need to be careful of when hiring someone? What are the typical issues?

When hiring someone, the employers should make sure their potential employees have graduated, have already graduated. Because in the Chinese labor law, the in-school students are not competent entities, in the Chinese labor law. And, make sure the applicants have no criminal records. Besides this, the employers should also check the potential applicants, their potential employees could apply for the job. For example, the diploma of their graduation and the qualification for the job should be true and valid.

3. What do you need to be careful of when hiring the cleaning person in the office? What are the typical issues?

Regarding hiring the housekeeper, my suggestion is that we should pay attention to the age of such cleaners, or housekeepers. Because in Chinese law, for the retired people, the company can sign a service agreement with them. By doing so, saving the cost of medical insurance, retirement funds, public reserve funds, and unemployment compensation. However, we should also pay insurance for them, just in case of an accident.

4. How can employers make changes to existing employment agreements? What kind of penalties employers can include in a labor contract?

In Chinese law, the employment contract can only be changed with mutual consent, mutual approval from the parties’ guarantor. And, the law provides that the employers shall include penalty other than China expanse. For example, if the employers are out of cost of its staff, oversea study and training costs of the third party’s scope, then, when the contract, when a labor contract is terminated, the employers have the right to ask its employees to pay back such funds.

5. What constitutes illegal work by foreigners in China? In the case of illegal employment in China, what responsibilities will the employee and employer assume?

Namely, working in China with foreign expats working in China without a work permit constitutes illegal work. But there are other forms of illegal work. For example, when foreign expats register, apply; when they apply for a work permit, their employers and workplace will be registered in the database. Well, if such foreign expats work for other entities or in other places, that constitutes illegal work too.

Just in a word, if the foreign expats have a part-time job in China, well, they’re risking doing illegal work. And in this case, in that case, the foreign expats shall be subject to a fine between 5 000 RMB and 10 000 RMB. Their employer shall also be subject to penalty fines. Normally, the employer shall pay 10 000 Chinese yuan per illegal worker. The maximum amount of such penalty shall not exceed 100 000 RMB.


Daxue Talks is a show powered by Daxue Consulting, a china-based strategic market research company founded in 2010! With Daxue Talks, you will stay up to date with all the latest business updates in China.

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