In a case reported on August 29, 2013, the Shanghai Jing’an District People’s Court dismissed a foreign national’s claim for reinstatement, reasoning that the foreign national’s work permit had expired and therefore the foreign national was unable to lawfully perform his employment contract in China.

The foreign national had been working for the company since September 1, 2009, and his work permit expired on September 21, 2012. On February 6, 2012, the company gave a termination notice to the foreign national and paid RMB 362,500 in lieu of the 3 months notice stipulated in his employment contract. The foreign national brought the dispute to the labor commission on June 5, 2012, requesting for reinstatement and back payment of his regular salaries up to the date of reinstatement. The labor tribunal supported the foreign national’s requests and the company filed a lawsuit with the Jing’an District People’s Court. The Jing’an District People’s Court ruled that, by the time of the trial, the foreign national’s work permit had expired and thereafter, the foreign national’s employment contract could not be performed because the foreign national was no longer eligible to lawfully work in China. Considering the company had paid 3 months’ salaries in lieu of notice, the court rejected the foreign national’s claims for reinstatement.

Under PRC law, a foreign national must obtain and maintain a valid work permit (and residence permit) to lawfully work and reside in China. Theoretically, the employer is responsible for renewing a foreign national’s work permit upon its expiration if the employment contract is still in effect. This case shows, however, that it is possible for a company to essentially be able to unilaterally terminate a foreign national by not renewing the foreign national’s work permit during the term of employment. Even if the court later finds the termination to be wrongful, this case shows at least some courts will not grant reinstatement but only order damages, if any, though not all courts may necessarily follow this line of reasoning.