Work Permit and Social Insurance Requirement for Foreigners in the People’s Republic of China

From Rainer Burkardt

The number of foreign employees in the People’s Republic of China (“PRC”) is rising steadily. Alone in 2013 more than 150,000 foreigners lived in Shanghai and it is expected that the amount of the foreign workforce in the PRC will continue to increase.

For foreign employees assuming their work in the PRC often questions come up, as to the legal parameters of employment in the PRC, especially about labor law-related regulations and social insurance coverage.

For foreigners who wish to work in the PRC for a company registered in the PRC (this also includes foreign invested companies), the first hurdle is obtaining a work permit. This is generally necessary to receive a work visa (Z visa). A work permit will only be issued for a specific position and only the hiring company may apply for it. In general, an interested party therefore must already have found a position, before it can apply for a work visa. Prerequisites for such a work permit are that the interested party

• is between 18 and 60 (55 for women) years of age,
• is in good physical health,
• has no prior convictions,
• possesses the skills and work experience required for the position and
• is in possession of a valid passport

In addition it must not be possible to be fill the position by a Chinese citizen. Therefore the employer must justify, based on the job requirements, why he is not hiring a Chinese citizen. The higher the required qualifications for the position are, the easier it is to produce such a justification. Generally the authorities accept a university degree and at least two years of work experience in the field of employment, or more than 10 years of work experience without a university degree as sufficient qualifications.

The maximum age for foreign employees is based on the Chinese retirement age.

Physical condition must be verified through a health certificate.

Once the work permit is issued, the employer may then officially request an invitation letter. Once the invitation letter, the work permit and the health certificate have been received, the interested party in its native country may apply for the Z visa, i.e. the visa to take up employment in the PRC. After the Z visa has been approved, the interested party may use the Z-visa to enter the PRC.

After arrival in the PRC, the employee still has to apply for an employment permit and a residence permit. For specific occupation groups there may be easements or additional requirements.

Which social insurance contributions and in which amount must be paid by foreigners is dependent upon the region where their employment position is located. For example in Shanghai foreigners may still be exempt from the social insurance requirements, in Shenzhen only the health and pension insurance contributions must be paid, while in Beijing all contributions are due, meaning contributions for unemployment insurance, workplace accident insurance, health insurance, maternity insurance and pension insurance. The amount of the contributions also depends on the region; however the rate for the employee for all social insurances lays around 11%.

In addition there are exemption possibilities based on the agreement between the Federal Republic of Germany and the PRC concerning social insurance from December 7, 2001. For example in case of a dispatch, an exemption from the Chinese social insurance obligation for up to 48 months may be granted, or in case of an individual interests of the employee, for whom the German social insurance requirement should continue to apply, an exception agreement can be reached between the competent authorities. Additional Information about this is provided by the „Deutsche VerbindungsstelleKrankenversicherung – Ausland“ (www.dvka.de).

Please note that this article is provided only as general information. We therefore assume no liability for the contents or the application thereof on any specific case.