Category Archives: Employment

SHORT TERM WORK IN CHINA – NEW RULES
Dec. 2014 to Feb. 2015 China Bulletin

Foreigners Performing Contracts in China Impacted:

On January 1, 2015, new visa regulations came into effect impacting short term (90 days or less) assignments to China.  They require foreign nationals providing technology, research and other services to counterparties in China for any period of less than 90 days to obtain a Z (work) visa.  Applicants should schedule approximately a month to complete the application procedures, but application time for an M visa should not change.  Participants in sports training, filming, fashion and commercial performances are also affected by the new regulations. Continue reading

LABOR DISPATCH/SECONDMENT NEWS
July 2014 China Bulletin

The Ministry of Human Resources and Social Security (MOHRSS) issued the Regulations on Labor Dispatch, effective from March 1, 2014 (Dispatch Regulations), providing helpful clarifications to the 2012 revisions to the Employment Contract Law (ECL) (see Secondment/Dispatch Rules Amended, Jan.-Feb. 2013 China Bulletin). These regulations were motivated in substantial part by a perception that labor dispatch arrangements, popular with employers, are an end-run around the employee protections in China’s labor laws. When fully implemented, the Dispatch Regulations will severely curtail the use of dispatch arrangements, limiting them to no more than 10% Continue reading

SERVICE INVENTION DEVELOPMENTS
Feb. to June 2014 China Bulletin

In August, 2012, the China State Intellectual Property Office (SIPO) issued draft regulations that would have added substantial new administrative burdens and legal uncertainty to compensation for service inventions. However, in June, 2013, the Shanghai High People’s Court issued Guidelines (Shanghai Service Inventions Opinion, Aug.-Sept. 2013, China Bulletin) that employers favored for providing reassurance and certainty. Recently in April, SIPO, issued an updated revision of the draft regulations that retain problematic provisions, such as mandating compensation for technological secrets and know how that are not patented (see English Translation). Continue reading

SHANGHAI SERVICE INVENTIONS OPINION
August-September 2013 China Bulletin

In August, 2012, the China State Intellectual Property Office (SIPO) issued draft regulations that caused consternation among employers because, if promulgated, they would have created substantial new administrative burdens and legal uncertainty with regard to remunerating employee inventors (see Draft Rules on Service Inventions, November-December, 2012, China Bulletin).  The draft regulations were not promulgated, but in January, 2013, SIPO and several ministries did issue opinions that apply to state-owned enterprise employees (see Service Inventions, January-February, 2013, China Bulletin).  In a more recent development, the Shanghai High People’s Court issued the Guidelines on Adjudication of Disputes Involving the Rewards and Remuneration of Inventors or Designers of Service Inventions and Creations (the Guidelines) on June 25th.  This opinion, posted and then removed from the Court’s website, should, if followed by lower courts, provide substantial reassurance and certainty to employers in Shanghai. Continue reading

CROSS-BORDER SECONDMENTS – PRC TAX/EMPLOYMENT
April-May China Bulletin

State Administration for Taxation (SAT) issued Announcement 19, [2013] No. 19, with effect from June 1, 2013, providing guidance on seconding expatriates to China.  Many U.S. companies send expatriate employees to work in China on a temporary basis.  If considered employees of the U.S. company while rendering services in China for more than six months in a year, a service permanent establishment (PE) of the U.S. company will normally be created retroactively in China under relevant double-taxation agreements.  A U.S. company with a PE must file Enterprise Income Tax (EIT) returns and pay EIT on actual or deemed income in China. Continue reading

NEW VISA CATEGORIES FOR FOREIGN PROFESSIONALS
April-May China Bulletin

The State Council issued the draft Administration for Regulation of Entry and Exit of Foreigners, expected to become effective July 1, 2013, building on the Exit-Entry Administration Law of China [see June 2012 China Bulletin] increasing the number of types of ordinary visas from eight to 12.  The most significant change will be that these regulations add an R visa as part of China’s effort to attract foreign talent. Continue reading

SERVICE INVENTIONS
January-February 2013 China Bulletin

In November, the State Intellectual Property Office released the Draft Service Invention Regulations (reviewed in the November-December China Bulletin).  Of particular concern in the regulations is an expansion of the scope of service inventions to know-how, requiring employers to track inventions and inventors themselves post-employment and potentially across generations.  Several provision in the regulations also would expose employers to new claims by employee-inventors.  The American Bar Association, the US-China Business Council and other organizations and businesses have expressed concern about several provisions of these regulations to the State Intellectual Property Office (SIPO). Continue reading

SECONDMENT/DISPATCH RULES LAW AMENDED
January-February 2013 China Bulletin

The Employment Contract Law (ECL) was revised on December 28, 2012, with effect from July 1, 2013, to restrict employers’ use of secondees, a widespread practice in China, by 1) clarifying that “temporary” means no more than six months, 2) limiting “substitute” secondments to periods of time when another employee is unable to work or is on leave, and 3) defining “auxiliary” to mean not engaged in the employer’s principal business (see June China Bulletin). As revised, the ECL now expressly states that the number of seconded employees an employer uses may not exceed a “certain percentage” of its total labor force. The specific percentage is not stated. Continue reading

DRAFT RULES ON SERVICE INVENTIONS
November-December 2012 China Bulletin

In November, the State Intellectual Property Office (SIPO) released the Draft Service Invention Regulations for a comment period, which ended on December 3rd.  The draft regulations have attracted considerable attention and comment because of their potential to impose an unreasonable cost burden on R&D in China.  The burden arises less from compensation awarded to inventors than from the notice, accounting and administrative burdens the draft regulations would impose on companies that employ inventors, and related exposure to penalties and liabilities. Continue reading