The employment relationship between employers and foreigner will determine whether Chinese labour law will apply. Chinese regulations will be applied to foreigners who have entered into employment agreement with Chinese companies in China. However, If foreign employees fail to get a working visa/permit, or foreign employees are directly hired in other countries and then are seconded to work in China, they will be subject to Chinese civil law in China.

When hiring a foreigner in China, social insurance should be taken into account. The new China Social Insurance Law took effect July 1 2011; central and most local implementation provisions require employers that enter into direct employment with expatriates working within China to participate in all five categories of social insurance, which substantial increases in employment costs for foreign employers. However, China Social Insurance Law provides that workers from countries that have signed bilateral social insurance agreements with China may avoid paying two premiums.

According to the Administration of Foreigners Working in China Provisions and its implementing rules, where a foreigner is subject to a local employment contract and has worked in China for three months or more, there are five items required by China employment law which must apply to his/her employment, i.e., minimum wage, work hours, rest and leave, occupational safety and health and social insurances.

If the governing law in a secondment arrangement could be the law of the home country where the expatriate has established employment, the relevant legal requirements of China employment law, such as termination restriction, severance pay, etc. will not apply to him/her. As opposed, the foreigner would generally be entitled to same legal protections and benefits as the Chinese nationals subject to the local rules and practice.

As far as immigration issues are concerned,in order for a foreigner to lawfully work in China, he/she must get a proper working visa, work permit and residence permit, and the employer in China needs to assist in the preparation of relevant documents and the application.