In view of the rapid spread of COVID-19 across the world,  Ministry of Foreign Affairs and National Immigration Administration of The People's Republic of China (PRC) issued the “Announcement on the Temporary Suspension of Entry by Foreign Nationals Holding Valid Chinese Visas or Residence Permits″ ( this Entry Announcement) on March 26, 2020. According to this statement, Chinese government has decided to temporarily suspend the entry into PRC by foreign nationals holding visas or residence permits still valid to the time of this announcement, effective from 0:00 a.m. March 28, 2020【1】.

The measure taken in Entre announcement will deeply affect those foreign entrepreneurs as well as enterprises which will employ or have employed foreign employees. It will also be certain challenge for the enterprises to avoid labor disputes with their foreign employees during the pandemic period.

If a foreigner plans to conclude or has concluded a labor contract with an enterprise located in PRC, but he/she is unable to enter PRC due to the above-mentioned measures, the labor contract between the employer and foreign employee may rise some discussion. 

1. Conclusion of Labor Contract

If the employer has given an offer to a foreigner but has not applied for the work permit for the latter, the foreigner has not obtained the status of employee. Thus, the employer is entitled to renegotiate the work conditions based on of force majeure.

However, the cancellation of the work offer is not considered automatic. The employer shall effectively communicate with foreign candidates to reduce the risks relating to the establishment of labor relationship and its cancellation. We do not recommend employer to cancel the issuance of offer on grounds of the Entry Announcement directly unless the employer is able to provide valid evidence to explain the necessity to cancel the offer, in which case the decision of the cancellation of the work offer shall be explicitly informed to the foreign candidate and justified before the latter starts work【2】.

2. Performance of Labor Contract

If a foreigner cannot enter PRC and is unable to perform his/her work duties on work site, the solution of "remote work" or remote work can be organized by the employer if it is practicable. For the "remote work" or remote work, since it may substantially affect the employment conditions, the employer and the invloved employee may reach any amendment of labor contract by email【3】.

The regular wages shall be paid to the foreign employees in accordance with his/her valid Chinese labor contract if the latter works correctly abroad. However, it is suggested that the employer clarifies in writing with physically absent employees the rules to check the attendance and to calculate the salaries and other benefits【4】.

If the foreign employee is not able to provide to his/her employer any effective work abroad, the annual leaves can be first consumed. Then the salaries can be adjusted in according with Chinese laws and regulations, such as 70% or 80% of minimal salary of the municipality in the precedent year where the employer locates from the second months of suspension of work【5】.

Meantime, during the pandemic period, salary commitments were relaxed in each region accordingly【6】. The temporary and appropriate reduction of the remuneration of a foreign employee, in general, will not affect the extension of his/her Foreigner Work Permit.

3. Termination of Labor Contract

The labor contract terminates on the consented date of expiration whether the employee staying abroad can come back to workplace.

The employer is not entitled to terminate the labor contract only according to the Entry Announcement while the labor contract of the foreign employee has not expired. The Entry Announcement does not constitute the legal basis to terminate the labor contract. Any conditions in Chinese labor laws and regulations regarding the cancellation and termination of labor relationship shall always be respected【7】.

However, the employer may negotiate with the employee staying abroad any amicable termination of labor contract or directly terminate the labor contract in line with the conditions stipulated in valid labor contract and the internal rules and regulations of the employer while any specific unilateral termination has been  anticipated, such as an employer’s termination notice before certain time in advance consented in a labor contract.

The employer shall also inform in writing the employee staying abroad while the employer decides to carry out an economic layoff whether this employee is involved in the layoff plan. 

4. Cancellation of Work Permit

According to the Article 20 of the “Administrative Provisions on Employment of Foreigners in China (Revision in 2017)”, After the termination of the labor contract between the foreign employee and his/her employer, the employer shall promptly report to the labor administrative authorities and the public security authorities, hand in the foreigner's Work Permit and Residence Permit, and complete the exit formalities with the Public Security Authorities.”

Therefore, it is the legal obligation of the employer to cancel its former foreigner employee's Work Permit after the termination of the labor contract.

During the pandemic period, online cancellation of the foreigner's Work Permit has been allowed. For example, in Shanghai, the approval time for the cancellation of a foreigner's Work Permit is shortened from 10 working days to a maximum of 3 working days. After the termination of the labor contract, the former foreign employee shall sign a termination certificate. If the foreigner is unable to sign the certificate due to his/her absence or loss of contact, other proofs may be recognized (such as relative emails, discussion records via WeChat or certificate of dissolution with electronic signature). To properly cancel the former foreign employee’s Work Permit can avoid the employer to engage the risks of immigration authorities’ sanctions or labor dispute.

5. Settlement of Labor Dispute

According to the “Administrative Provisions on Employment of Foreigners in China (Revision in 2017)”, the statutory time limit to apply for resolving the labor dispute shall be suspended while an employer or employee fails to apply for labor arbitration within the time limit due to pandemic.

The above time limit shall be calculated from the date on which the reason for suspension, i.e. the entry suspension by foreigners due to the pandemic measures, is eliminated. If the labor dispute arbitration institution fails to treat the case within the statutory period due to the pandemic, the statutory period for trial shall be extended correspondingly.

Comment：

【1】According to the Entry Announcement, Entry by foreign nationals with APEC Business Travel Cards will be suspended as well. Policies including port visas, 24/72/144-hour visa-free transit policy, Hainan 30-day visa-free policy, 15-day visa-free policy specified for foreign cruise-group-tour through Shanghai Port, Guangdong 144-hour visa-free policy specified for foreign tour groups from Hong Kong or Macao SAR, and Guangxi 15-day visa-free policy specified for foreign tour groups of ASEAN countries will also be temporarily suspended. Entry with diplomatic, service, courtesy or C visas will not be affected. Foreign nationals coming to China for necessary economic, trade, scientific or technological activities or out of emergency humanitarian needs may apply for visas at Chinese embassies or consulates. Entry by foreign nationals with visas issued after this announcement will not be affected.

【2】It should be noted that the Labor Contract Law can be fully applied to foreigners in Guangdong in according with “Guidance of the Guangdong High People’s Court and Guangdong Employment Dispute Arbitration Commission on Several Issues concerning the Application of the Law of the PRC on Mediation and Arbitration of Labor Disputes and Labor Contract Law of the PRC″ (according to the Article 18,  Employment labor relations of Foreigners, Hong Kong and Macao residents in the mainland Chinese should be dealt as the employment relationship in mainland China). However, some provinces, such as Shanghai Municipal put forward that the labor contract signed by employers and foreigners should be applied to autonomy of the will. According to the Article 26 of “Notice of Several Issues concerning the Application of the Regulations of Shanghai Municipal on Labor Contracts ", the labor rights and obligations of foreign workers and Taiwan, Hongkong, Macao workers who are allowed to work in the administrative area of this Municipality are stipulated in the labor contract after determined by the board of directors or management agencies″. And Article 16 of “Notice of Shanghai Municipal Bureau of Labor on Issuing Several Opinions on Implementing the Administrative Provisions on Employment of Foreigners in China″,   the duration, position, remuneration, insurance, working hours, conditions for termination and liability for breach for the employment relationship between an employer and its foreign employee as well as other rights and obligations shall be specified in an employment contract. Those local regulations have become the main legal basis to resolve disputes between employers and foreign employees in Shanghai.

【3】According to the Article 21 of “Administrative Provisions on Employment of Foreigners in China (Revision 2017)” issued by  Ministry of Human Resources and Social Security, the wages paid by an employer to a foreigner employee shall not be lower than the minimum wage standard at its locality.

【4】Unless otherwise provides or agreed, during the period of the "work at home" or remote work, employers may set a detailed working schedule and explicitly require the response time and approaches. Employers may supervise employees’ work through a daily or weekly report.

【5】The published minimal salary is CNY 2,100 in Guangzhou, CNY 2,200 in Shenzhen, and CNY 2,480 in Shanghai until now for example.

【6】For example, Shanghai government stipulated, for employer apply for the extension for foreign talents who originally taking the salary commitment, during the epidemic period (tentatively scheduled from February to April 2020) foreign employee's salary can be loose appropriately.

【7】The conditions for the cancellation of the labor contract should be clearly defined by law or agreed by the parties as a prerequisite, the Entry Announcement does not directly constitute a necessary condition for the legal cancellation of labor contract, and the employer cannot cancel the labor relationship because the foreign employee cannot enter the country to work constitute absenteeism. 

- TEAM MERBERS -

Xin Jing  Partner     

E-mail: jingxin@zlwd.com

Dr. JING, since practicing, has been focusing on the research of the fields of Labor and Social Security Law, Immigration, and Marriage and Family Law and Immigration Law, etc. She has solid legal theoretical foundation and professional legal literacy. She has twelve years of professional legal education background, during her study in France, she has obtained a Professional master’s degree in Commercial Law and a Research master’s degree in Civil Law, and afterwards gained a doctor’s degree in Comparative law with the highest comment of France.

Dr. JING is proficient in the laws of China, France and Quebec of Canada and has rich experience in overseas legal practice, such as Quebec City Courthouse, Laws firms in France and Quebec, etc.

Working Language:  Mandarin, French and English

Alice Sun  Partner

E-mail：suntao@zlwd.com

Ms. Alice SUN is partner of P.C.WOO & ZHONGLUN W.D.LLP, counsel of China French Chamber of Commerce and Industry (South China), arbitrator in Wuhan Arbitration Commission and Changsha Arbitration Commission. Ms. Alice SUN's main fields of legal practice include cross-border M&A, private equity investment, restructuring, insolvency, public-private-partnership, etc. Before joining our law firm , Ms. Alice Sun has been working at ADAMAS Law Firm (Paris) and LPA-CGR Law Firm (Paris/Guangzhou/Shanghai).

Claire He  Paralegal

E-mail：heqi@zlwd.com

Education Background:Wuhan University（Bachelor of Law）

Practice Areas:Foreign law & International trade negotiations and Enterprise risk prevention and control

Bar Admissions/Professional Qualifications:

Legal professional qualification

LANGUAGES：English, German, Mandarin Chinese.