As update to our recent blog on China, clients are inquiring into why immigration enforcement and compliance in China is on the increase, yet favorable work authorization measures for foreign workers are being implemented by authorities at the same time. We don’t see these two initiatives at odds with each other; rather China is improving access to work visas so that foreign employers have greater incentives to invest in the region and increasing its enforcement actions for non-compliance to ensure employers are investing compliantly.
By way of background, in July 1, 2013, China put into effect its revamped Exit and Entry Administration Law, and with it, increased scrutiny of foreign employees and their work activities. This development, coupled with increasingly rigorous enforcement by authorities, demands that companies be proactive in understanding the immigration laws and ensuring strict compliance.
The new law clarifies the meaning of the term “illegal employment,” which is defined as either working in China without the proper work and residence permits or working beyond the scope prescribed in the work permits.
Additionally, the rule prohibiting business visitors from staying more than 90 days in China within a one-year period is experiencing markedly higher levels of scrutiny than before, as this is an area of significant noncompliance. Now, “if you stay more than 90 days, you will be considered employed in China.” Any changes in material information such as changes in residential address or employer must be reported within 10 days. Moreover, authorized foreigners must register within 24 hours of arriving in China at the local Public Security Bureau and are required to carry their work and resident permits with them at all times.
Among the new enforcement powers granted to government agents, local public security now has the authority to question on the spot an individual suspected of violating the regulations. Such persons may be detained for investigation, repatriated without a hearing, and prohibited from re-entering China for up to five years.
In the corporate realm, businesses have experienced an increase in auditing and worksite visits by plainclothes police over the last year. These enforcement officers may come into the workplace and ask employees to see permits, and may even be able to effectuate a workplace inspection at the homes of foreign workers.
Practical Pointers for Companies
Under the new rules, employers that hire workers illegally could be fined up to 100,000 yuan renminbi (approximately $16,000). Thus, companies should take compliance with the new laws very seriously. It is tempting to eschew sometimes onerous compliance for business efficiency, but compliance should carry the day each and every time. Non-compliant conduct is likely to catch-up with those entities at some point and it can quickly become a costly endeavor.
To that end, companies should:
- Raise awareness among employees about the laws and how to comply;
- Appoint a person to be responsible for overseeing Public Security Bureau registration, corporate business license registration, and timely filing of applications;
- Maintain detailed records of employee work authorization documents and each individual’s time spent in China on business visas;
- Verify that existing employees are in fact authorized to work at their current locations; and
- Manage the risk of business travelers to ensure they obtain the right type of visas and authorization, taking into account that individual’s particular travel history.