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China Law Employment Update

  • China

    29-01-2018

    1.    Public holiday for 2018

    On 30 November 2017, the General Office of the State Council published the official national holiday and the adjusted holiday arrangement in China for 2018. The adjusted holiday arrangement permits switching nonworking days with working days to grant longer consecutive period of days off for the employees.

    Holiday

    Official Public Holiday in 2018

    Adjusted Holiday Arrangement

     

     

    Non-Working Days

    Working Days

    New Year’s Day

    January 1 (1 day)

    December 30, 2017 to January 1, 2018

    -

    Spring Festival

    February 15-17 (3 days)

    February 15-21

    February 11 (Sunday) and February 24 (Saturday)

    Tomb Sweeping Day

    April 5 (1 day)

    April 5-7

    April 8 (Sunday)

    Labour Day

    May 1 (1 day)

    April 29-May 1

    April 28 (Saturday)

    Dragon Boat Festival

    June 18 (1 day)

    June 16-18

    June 19 (Tuesday)

    Mid-Autumn Festival

    September 24 (1 day)

    September 22-24

    September 25 (Tuesday)

    National Day

    October 1-3 (3 days)

    October 1-7

    September 29 (Saturday) and September 30 (Sunday)

    Civil servants and employees of state-owned enterprises are entitled to days off in accordance with the adjusted holiday arrangement. Most private companies also follows the adjusted holiday arrangement but they are not legally required to do so; they may provide additional non-working days provided that they follow the official public holiday schedule.

    2. Repeal of Document 481 on employee compensation

    On 24 November 2017, the Ministry of Human Resources and Social Security had repealed, amongst others, the Measures on Economic Compensation for Violating or Terminating of Employment Contracts 1994 (违反和解除劳动合同的经济补偿办法) (“Document 481”).

    Document 481 was issued to provide detailed calculations on the economic compensation including penalties for underpayment of labour compensation such as salary and overtime payment, statutory severance and medical subsidiary.

    Document 481 was partially superseded by China’s Labour Contract Law which was in effect in 2008. The Labour Contract Law repealed provisions on penalties for underpayment of labour compensation and confirmed that statutory severance for service provided post 2008 will be calculated in accordance with the Labour Contract Law, and for years of service prior to 2008, statutory severance will be calculated in accordance with the existing law (i.e., Document 481). The Labour Contract Law did not provide the calculation method for medical subsidy; hence, it remains unchanged.

    Now that Document 481 is repealed, it is unclear how statutory severance for services provided pre-2008 and medical subsidy will be calculated.

    It is perceived that statutory severance for work done prior to 2008 would still be calculated in accordance with Document 481. This is because the Labour Contract Law provides that for situations prior to the Labour Contract Law’s coming into effect, statutory severance shall be calculated based on the prevailing law and regulations at the time. In fact, the local labour bureau in Beijing issued an opinion on 17 January 2018 confirming this position.

    According to Document 481, an employer is required to pay the employee medical subsidy if the employment contract is terminated as the employee cannot return to work because he or she suffered non-work related injuries or is sick. Medical subsidy ranges from six months’ salary to nine months’ salary in the case of serious illness and no less than 12 months’ salary for those who have termination illness.

    After Document 481 is repealed, there are however no laws and regulations clearly stipulating the calculation of medical subsidy. Those with local rules which provide the calculation method (e.g. Shanghai and Jiangsu Province) must rely on them, but it is uncertain what calculation method those without local rules may rely on. Based on this, local labour bureaus should be consulted when calculating statutory severance for service provided prior to 2008 and the medical subsidy.

    3. China’s SAFEA implements changes to work authorisation policies to bring in more foreign talent

    On 1 April 2017, the State Administration of Foreign Experts Affairs (the “SAFEA”) extended its new unified employment visa pilot scheme from selected regions such as Beijing, Shanghai and Guangdong to nationwide. The purpose of the new system is to streamline the work permit application process for foreigners and simplify the materials needed to attract high-level foreign talent to China.

    New Application System and the Assessment for Qualification of Work Visa

    The new application system has integrated two types of work permits (i.e., the permit for foreign employees to take up employment in China issued by the Ministry of Human Resources and Social Security and the work permit issued to high-level personnel and much needed foreign experts issued by the SAFEA) into one “foreigner employment permit”.  Under the unified system, the SAFEA being the sole authority responsible for issuing work permits to the foreign nationals will classify the candidates into three categories based on a point system. They will consider the individual’s education level, annual salary, years of experience, relevant working experience, Chinese proficiency, age, location of work, etc.

    Tier

    Category

    Examples

    Quota

    Requirements

    A.  

    Top Talent

    Senior Management of Fortune 500, investment banks  and accounting firms, technology experts, international entrepreneurs

    Encourage to come (no quota)

    • Leading talent
    • Score of 85+

    B.  

    Professional Personnel

    Management and Professional skilled workers, mid-level employees for MNCs and foreign enterprises

    Exert control (number to be determined by market demand)

    • Has at least a bachelor degree with two years of work experience
    • Score of 60-85

    C. 

    Unskilled Workers

    Temporary workers (less than 90 days), foreigners who meet the existing work management requirements, foreign students

    Limit (number subject to regulations relevant to the particular sector)

    • Score below 60

    Application Materials

    The amount of application materials will be reduced to about half the documentation needed previously. For example, the foreigner’s personal CVs and application letters are no longer needed. Moreover, after streamlining the process, most application materials submitted for Notification Letter of Foreigner’s Work Permit, will not need to be re-submitted for application of the Foreigner’s Work Permit Card.

    Tier A individuals are also eligible to apply through a “green channel” where they will be offered paperless verification and self-certification system for work experience, academic degrees and criminal record proof. The application process will be shortened from 10 business days to 5 business days. There is also no age limit for this category. Please see “New guidance on the application of R Visa (for top talent)” below for more details.

    The employer and foreign employee may submit their application electronically. This is particularly helpful for those who have not yet arrived in China, so they may upload the documents for preliminary review. The foreigner will then receive a foreigner work permit in which the permit number will be used regardless of whether there is a renewal or change of sponsor. Once the labour bureau confirmed that the applicant is qualified, the applicant will need to submit the hard copy documents on-site and if approved, obtain the Notification Letter of Foreigner’s Work Permit and the Foreigner’s Work Permit Card.

    Though rare, the longest period that a working visa may be granted is 5 years. In most cases, one year permit is likely to be granted with subsequent multi-year renewals.

    Improvements

    In spite these new regulations will simplify the permit process, there are concerns that the changes may be less beneficial for prospective foreign employees. As the new system separates candidates through a hierarchy of economic value based on their credentials, some fear this system will put prejudice on their ability to obtain a work permit.

    According to the SAFEA, the government “aims to strictly limit the entry of Tier C foreigners into China while trying to incentivise a greater number of Tier A professionals to bring their skills to bear in the Chinese economy.” As such, there is the aspect of “cherry-picking” individuals who are allowed to participate in the Chinese market.

    As the new regulations were implemented nationwide, many second tier cities are not as flexible as before when considering the work permit process. In particular, Tier B candidates found that they have more difficulties in gathering documents to prove their education and work experience received overseas.

    Some companies who had hired new employees since the system was in place stated that the process is repetitive as they would need to submit the application and documents in person after the preliminary check online. The electronic system is also inconvenient for foreigners as it is in Chinese only.

    4. New guidance on the application of R Visa (for top talent)

    On 28 November 2017, Implementation Measures regarding Foreign Talent Visa System (the “Implementation Measures”) was jointly promulgated by SAFEA, the Ministry of Foreign Affairs and the Ministry of Public Security to clarify application conditions and procedures for R Visa. Prior to this, there were no specific implementation guidance as to how R Visa(s) are to be applied.

    Application Conditions

    According to the Implementation Measures, top foreign talents who qualify as “Category A – Top Talent” are eligible to apply for the R Visa (i.e. Senior management of Fortune 500, investment banks  and accounting firms, technology experts, international entrepreneurs etc.). Conditions attached to R Visa(s) may vary depending on discretion of the authorities.

    Accelerated Green Channel and No Application Fee

    Application procedure for R Visa(s) is also accelerated and streamlined. According to the implementation Measures, application documents can be uploaded online by the applicant’s domestic employer. The SAFEA will issue a “Confirmation Letter for High Level Top Talent” within 5 working days and transfer relevant information to the relevant consulate. Such timeline can be further accelerated up to 2 working days upon application. The whole application is cost free. The applicant’s spouse and/or young children are also able to enjoy the above treatment.

    Valid Term and Times of Entry

    Eligible applicants, together with their spouse and young children are able to enjoy the R Visa for a term of 5 to 10 years with unlimited multi-entries.

    Nevertheless, please note that holders of R Visa(s) will still need to subsequently apply for working permits. The SAFEA will issue such working permit within 3 working days subsequent to submission of application documents.

    After the promulgation of the Implementation Measures, top foreign talents (e.g. senior executives of multinational conglomerates) will benefit from R visas. China holds a positive attitude in welcoming top foreign talents.

     

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