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New PRC Exit-Entry Law Imposes More Severe Punishment on Foreigners Carrying out Illegal Work

01/07/2012

On 30 June 2012, the Chinese legislature adopted a new Law of the People’s Republic of China on Exit-Entry Administration (“the New Law”). It replaces the PRC Law on Administration of the Exit and Entry of Citizens and the PRC Law on Administration of the Exit and Entry of Foreignerswhich were issued in 1985. The New Law will take effect as of 1 July 2013 and applies to the exit-entry administration of both foreigners and Chinese nationals. 
For foreigners, the New Law will impose stricter control over their entry, residence and work in China. Foreigners working in China and foreign invested enterprises hiring foreign employees in China may wish to pay attention to the following:

  1. The New Law distinguishes between the categories of residence of foreigners into two categories, i.e. residing in China for work purposes or for non-work purposes. The validity period of a residence permit can be 180 days to 5 years for non-work purposes and 90 days to 5 years for work purposes. Foreigners working in China shall obtain work permits and residence permits for work purposes. No Chinese entities or individuals are allowed to hire foreigners without holding work permits and residence permits to that effect. 
  2. The New Law, for the first time, expressly defines the term “illegally working in China”. There are the following three circumstances: 
    (1) Working in China without having obtained a work permit and a residence permit for work 
    purposes; 
    (2) Working in China outside the scope stated in his/her work permit; and 
    (3) Overseas students working outside the scope or time limitation, breaching the 
    administrative regulations on taking part-time jobs while studying at school. For a foreigner working China illegally, the New Law will impose more severe punishments than in the past on both the foreigner and the employer who hired them: A foreigner can be subject to a penalty from RMB 5,000 to RMB 20,000. In severe cases, the foreigner can even be detained for 5-15 days in addition to the penalty. An employer hiring foreigners illegally can be subject to a penalty of RMB10,000 per person with a cap of RMB100,000 in total. Any illegal income resulting from their employment can be confiscated. 
  3. In the past, PRC law did not specify the measures which can be taken by the authorities in the case that a foreigner was found to be working illegally. Now the New Law expressly provides that the authorities (i.e. the public security bureau or the frontier inspection office) can make an on-site inspection or continuous inspection of the suspects, and even impose a detention if the suspicion cannot be clarified after an on-site or continuous inspection. If a foreigner is proven to work in China illegally, the authority is entitled to repatriate such foreigner to his/her home country. If a foreigner is repatriated, he/she can be restricted from re-entering China for a period of one to five years, depending on the decision of the authorities. 
  4. Further, the New Law stipulates that foreigners and their Chinese employer are responsible for the authenticity of the invitation letter and other documents for the application for visa and residence permit. If they fail to do so, he/she will not be able to obtain the visa and residence permit. If the Chinese entity breaches the above regulations, a penalty of RMB 10,000 to RMB 50,000 can be imposed and the relevant illegal revenue can be confiscated. 
  5. As provided by the New Law, different types of ordinary visa such as visa for the purpose of work, business, study or traveling, etc. as well as application requirements will be stipulated by the State Council. We expect that the PRC State Council will issue the relevant implementing rules and regulations in the near future.
Source
China Insight - Employment & Pensions
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Authors

Jeanette Yu
Jeanette Yu
Partner
Shanghai
Jeanette Yu