How to Avoid Legal Disputes With Your Chinese Employer?

Generally speaking, foreign employees working in China enjoy the same rights as Chinese employees and workers.  However, it is a fact that are some notable discrepancies between the generality and the practical application of Chinese labor laws. 

One example is that many foreign workers struggle with a substantive understanding of Chinese labor laws and may be taken advantage of by malicious actors. Anecdotally, recent legal consultations with foreign clients have revealed that foreign nationals working in Mainland China experience legal problems and disputes, such as labor contract issues, deliberate dismissal and being forced to leave the country due to difficulties in their understanding of Chinese laws.  Specifically, the translated Chinese meanings are often interpreted differently in the language of the foreign worker, which can lead to misunderstandings between workers and employers. 

This article illustrate practical information for foreign nationals working in China, the legal issues such persons face while working in China and some useful tips in order to avoid such problems. The primary objective of this article is to inform foreign employees that they must exercise caution when undertaking labor contracts. In any case of doubt, it is necessary to consult a lawyer, in order to protect the legitimate rights of the worker. This article is a good starting point for foreign workers deciding to work in China.

An Exapmle Case:

A fictional woman, Ms. P, a Ukrainian national, has faced the problem of having her Foreigner Employment permit cancelled by the company she was working for in mainland China. The company asked her to compensate them in the amount of 20.000 RMB due to losses incurred. This requirement from the company contradicts the labor laws as set by the Republic of China, and thus, the compensation of termination in the amount of 20.000 RMB is wrongful, impermissible and illegal under Chinese law. A Chinese lawyer familiar with the Chinese Labor Law advises Ms. P of her rights under the Chinese Labor Law. These law, which are available on the (Organizations Name) website, which outline the requirements for the entry-exit with a Chinese company. As a result of this consultation, Ms. P is able to avoid the fine as well as any having any undesirable exit records.

From the hypothetical case above, it can be seen that if the company has declared a compulsory cancellation of the work permit  of the foreigner and it was officially announced and listed on the Public Security Bureaus department s entry-exit website  ,that foreigner in case of the cancellation has to leave the country within 10 days, otherwise their stay will be illegal.

. A foreign national must do this within 10 days from the date of the official announcement that was published on the website.  Furthermore, such a national must to go through the cancellation formalities at the location where it was originally issued. If they fail to do so within the time limit stipulated by the relevant regulations, the expiration date of the residence permit will start 10 days after the date it was announced.  If no other valid visa is held, the party which violated the law shall bear the responsibility of the aliens illegal overstay.  

Employment legal disputes:

In Chinese legal practice, if Chinese nationals have labor disputes, they are able to get the relevant assistance, but when it comes to foreign employees and their legal disputes, foreign employees typically must go through the first and second instances of an arbitration procedure in order to secure the appropriate compensation.  For a foreign national this can be frustratingly complex.  The majority of foreigners do not have time nor the ability to go through all of the required arbitration procedures, as a trial can last up to 2 years. Another problem can take place when the local company cancels the Alien Work permit or the Foreign Work Permit, which can affect foreign nationals stay in China, where they cannot protect their legitimate rights in the case. 

Another important factor that can affect the situation is the workers inability to communicate in Chinese. As a result of the this language barrier, many foreign nationals are prone to face the problem of the inability to consult with local lawyers concerning their dispute, which is a fundamental and legitimate right under Chinese Law. The vast majority of foreign nationals face the same problem: they lack the ability to consult or communicate with local lawyers and protect their legitimate rights. All of these factors can lead to the problem of local companies taking advantage of this fact that a foreign national is not familiar with the local law and language and this is where labor disputes or wrongful termination concerning the agreement may arise.

Tips for Foreign Nationals:

From the above case, if Ms. P had consulted with a lawyer before the termination of the labor contract she could have avoided the legal dispute altogether. The followings tips can be useful when a labor contract is terminated:

Tip #1: Holding a foreigner work permit is deemed as establishing a labor relationship between the employee and the employer.

A Labor relationship" is a professional term in law, or a term of art, which means that the company must  undertake the corresponding obligations to the employee as stipulated by law; it is indispensable and non-transferable. 

Among these rights is the obligation to contribute to social security, regular payment of wages, compliance with minimum wage laws, paid-time off, sick-leave, public holidays. Such rights are an extension of "labor relations" and the rights stipulated by law. 

The date when labor contract is signed between the employer and the employee is also the date when the contract comes into effect. However, foreign employees should make sure they are signing a labor contract and not simply a  cooperation agreement.  Some companies attempt to use this unlawful practice in order to avoid incurring the above referenced obligations and other duties under Chinese law. Foreign nationals should consult a Chinese lawyer before entering into such a significant and fundamental agreement to ensure their rights are fully protected.

Tip #2: The termination procedures of the labor relationship is the most important issue in terms of the employment. 

A foreign national should consult with a lawyer to establish a favorable and valid  reason for the termination of labor relationship. This should occur before the contract is terminated with the employer in order to best protect the foreign nationals rights. Reference to the procedures and requirements  according to Chinese law can be found in China Republic labor contract law 21, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 47, 48, 80, 87, 88. 

Tip #3: An Alien Employment Certificate must only be held by the foreign employee

When a foreign employee is being hired by the local company, the employer will assist in the obtainment of  the Alien Employment certificate application. At this point, the foreign employee must have the original copy of this certificate .

Tip #4: The employer cannot solely stipulate the articles on the liquidated damages in a labor contract 

Articles 22, 23 and 25 of the Labor Contract Law clearly stipulate that liquidated damages can only be agreed upon during the "service period" and during the "confidentiality obligations and competition restrictions period and in other cases, employers cannot agree or stipulate in a contract provisions on liquidated damages. This is not clear, will have to rewrite. 

Tip #5: When a problem with the termination of the labor contract and relationship has already arisen, it is of vital importance to find a lawyer and consult these issues.  Such consultation should include the reasons for the wrongful termination of a contract and/or other related legal risks.  This is of paramount importance and is a significant issue that the foreign employee must resolve. 

In summary, when it comes to labor disputes, the best option would be to find a local lawyer from the law firm early on.  A Chinese lawyer experienced in this field, with the ability to speak both English and Chinese, who is willing to consult with you and the company, and who understands the relevant legal matters, will be invaluable. Moreover, the best option for any foreign employee is to consult with the lawyer on the labor contract and its provisions.

Author: Kumbayeva Aigerim

Editor: Crystal Huang


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