China abolishes employment permit requirements for HK, Macao, Taiwan residents

HONG KONG – China’s State Council has released a circular announcing that residents from Hong Kong, Macao and Taiwan (HMT residents) no longer need to obtain an employment permit to work in mainland China. The announcement instructs the Ministry of Human Resources and Social Security (HRSS), to formulate substitute policies and measures to supervise the employment of these HMT residents.

In a Client Note, lawyers Baker McKenzie say the new policies and measures will cover employment services, social security, unemployment registration, and protection of labour rights and benefits.

The local HRSSs have yet to issue detailed enforcement policies.

BM says that, currently, any employer seeking to employ an HMT resident directly or as a host employer in a secondment arrangement is required to apply for an employment permit for the employee before that employee can legally work in mainland China.

A Hong Kong or Macao resident engaging in individual industrial or commercial household operations is also required to apply for his or her own employment permit.

An HMT resident can only start working after obtaining an employment permit, can only work for the employer who sponsored the employment permit, and can only work at the location where the employer is registered, BM says.

Following the State Council's circular, local HRSSs in most cities (Beijing, Chengdu, Guangzhou, Qingdao and Shenzhen) have started to implement the employment permit exemption policy for HMT residents, BM says.

Chengdu, Guangzhou, Qingdao, Shenzhen and other cities have stopped accepting employment permit applications for HMT residents. Beijing has made the employment permit optional for HMT residents.

“Until substitute policies and measures are released, Beijing will still process employment permit applications for HMT residents so that these residents can meet other regulatory requirements, such as for enrolment in PRC social security.

“Other cities, like Shanghai and Tianjin, have yet to announce when the new policy will be enforced. Employment permits remained mandatory for HMT residents in Shanghai and Tianjin as of August 9.”

BM says that, in coming weeks, the existing HMT employment regulations are expected to be revised or repealed.

The HRSS and local HRSSs are expected to release enforcement policies and guidance associated with employment of HMT residents in mainland China.

Current restrictions on HMT residents working in mainland China will be relaxed, which may broaden employees' choices of employment and applicable employment structures.In the meantime, BM says, employers should continue applying for employment permits for HMT resident employees where possible and monitor policy changes on HMT resident hiring.  www.bakermckenzie.com (ATI).