Opinion: Under greater scrutiny

● Special talent visa (R1 and R2 visas). Newly proposed R visa (both R1 and R2) aimed at highly talented foreigners and foreigners with talents that are scarce and sought after in the PRC. As the Draft Regulation does not specify the type of qualifications required and the relevant approval procedures, it remains to be seen which national or local policy for attracting special foreign talents will apply for the purposes of issuance of an R visa.

● Travel visa (L visa). Existing L visa to be split into: (i) newly defined L visa to cover foreigners who seek to enter the PRC for tourism purposes; (ii) Q visa for foreigners seeking to visit family members; and (iii) S visa for foreigners who visit for private purposes, such as marriage or adoption.

New residence permit regime

The Draft Regulation sets out seven categories of residence permits in place of the existing two categories. The newly proposed categories of residence permits are: special talent; work type; study type; journalist; family type; dependant; and other (humanitarian or other reasons).

The Draft Regulation sets out detailed rules for each category of residence permit in relation to eligibility and supporting documents required.

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Illegal employment

The Draft Regulation proposes stricter rules to address illegal employment under the Exit-entry Law. Working in the PRC “beyond the scope specified in a work permit” will include the situation where a foreigner works in a location which differs from that where the sponsoring entity is located or works for an entity other than that specified in the work permit. The Draft proposes an addition to the definition where a foreigner holding a work visa valid for 90 days or less works beyond the scope approved by the competent authority.

Finally, the Draft adds to the definition where a foreigner forms a de facto employment relationship with an entity in the PRC, where the foreigner has no work permit or work type residence permit and no local employment contract. This provision under the Draft Regulation is likely to influence the resolution of disputes based on illegal employment relationships.

The increased emphasis on illegal employment in the Exit-entry Law and the Draft Regulation shows the government's intent to scrutinise employment relationships more closely; however, the degree of enforcement remains to be seen.

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Catalogue for foreign employment

The Exit-entry Law provides for the Ministry of Human Resources and Social Security (MHRSS) to issue a catalogue for guiding employment of foreigners in the PRC. The catalogue will provide guidelines as to which sectors or industries may employ foreigners and aid interpretation of undefined terms used within existing regulations (for example, lack of local candidates under the Exit-entry Law).

The catalogue is expected to facilitate enforcement in this area, but there is no mention of the catalogue in the Draft Regulation.

Some industries and companies may find it harder or no longer possible to bring in more junior foreigners, given the rising numbers of recent PRC graduates who are unemployed. This is an area for companies to watch closely with respect to continued recruitment from abroad.

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Seeking clarity

Certain issues have not been clarified, including the qualification and approval requirements under the special talent visa and transitional issues in respect of the new regime. Notwithstanding these uncertainties, the likelihood is strong that the authorities will review the employment and residence arrangements of foreigners in the PRC with greater scrutiny when the Exit-entry Law and Draft Regulation become effective. Employers need to keep abreast of future developments and audit employment arrangements for their foreigners working temporarily or long-term in the PRC to ensure that they do not fall foul of the new rules.

Lesli Ligorner and Ashni Shah, Simmons & Simmons, Shanghai and Hong Kong