A positive change in favor of expat employees in Shanghai
Nov 01, 2011

A positive change in favor of expat employees in Shanghai

Shanghai is hot destination for expat workers. However, Shanghai city is not really as nice towards expat employees as towards foreign capital.

One of the things that make an expat working in Shanghai not all that pleasant and joyful is the local regulation in Shanghai that allows employers to stipulate, almost at will, conditions for terminating the employment contract with the expats. The local regulation was stepped up in April, 1998 in order to implement the “Administrative Measures on Foreigners Working in China” promulgated in 1996 by then Ministry of Labor. In this Shanghai implementation rules, it is provided that an employer may upon agreement with the expat employee hired by it stipulate in the employment contract, among other things, the term of employment, position, remuneration, insurances, working time, conditions for terminating employment, and default liability. In practice, it is interpreted that companies may stipulate conditions for termination which may not be allowable in the case of employment with Chinese nationals. For example, in some cases we handled in the past, we found that typically the employer will avail itself in the labor contract of the right to terminate the contract without cause by giving a one-month prior notice to the expat employee. In one case, a WFOE even reserves the right to terminate the employment contract with the expat employee “at will” so long as it pays an amount of severance pay. Unfortunately, despite the fact that such stipulation of terminating conditions is not in compliance with the then effective regulations, arbitration agencies and courts in Shanghai are all applying this Shanghai local rule in labor disputes.

This Shanghai local judicial practice is still ongoing even in the face of China Labor Contract Law coming into force on January 1st, 2008, while in most of other cities in China expat employees are more or less treated equally as Chinese nationals under China Labor Contract Law. Lawyers frequently, as we have done, argue in both arbitration and court proceedings that Shanghai’s local regulations should be deemed as invalid because the local rules are clearly not in line with the new Labor Contract Law, and not in line with national treatment of foreign nationals in China.

Earlier in March, Shanghai No.2 Intermediary People’s Court that has jurisdiction over the appellate court proceedings initiated in the northern part of Shanghai published its second “white book” on the trial of labor disputes in respect of year 2010. In this “White Book”, there is a special section devoted to address expat employment in Shanghai. The heading of this section reads “expat employment to be further standardized”.

Under this section, the White Book notes that Article 26 of China Labor Contract Law provides employment terms in a labor contract shall not run counter to compulsory provisions in laws and administrative regulations (for reference to China legislation hierarchy, click here), and otherwise such terms shall be held null and void. Though Shanghai local rules allow the parties to a labor contract to agree on certain terms, if the terms agreed in the labor contract with the expat transgress compulsory provisions in laws (mainly China Labor Law and China Labor Contract Law) and administrative regulations (mainly, Implementation Rules for China Labor Contract Law), such terms shall be held null and void. The White Book advises employers that hire expat employees to check up and revise their labor contract terms that are not in compliance with China Labor Contract Law.

This is the first official message so far we have come to know that signals a challenge to the decade-old local biased practice against expats. I myself interpret this as a positive change, a step of progress in  protecting expat employees’ interests in Shanghai.

It shall be noted that, as mentioned above, Shanghai No.2 Intermediary People’s Court has jurisdiction over only the northern part of Shanghai. In other words, its policy will not be applicable in the southern part of Shanghai including Pudong, Luwan, Huang Pu etc. Even though, I believe that this change will finally be extended throughout Shanghai. Just a matter of time.

What do you think?

For more information about China labor law, you can contact the author, Jason Tian, at [email protected], or [email protected], or give him a call at +8613816548421, or +8621-20283433


  1. Darrell says:

    oops….per my previous msg i stated 10 to 26 hours per month…..sorry actually that was supposed to be 10 to 26 hours minimum per week overtime that I do not gt paid for. But still I get all the BS and deduction from my salary….

    1. Jason Tian says:

      Dear Darrell, sorry for your situation. Seldom do I hear an expat being exploited like this. The best thing you can do is to look into whether you have the right to terminate the employment for the breach or violation by the employer. In this case, you can claim damages from the company and at the same time to sue for payment for your overtime work provided that you have records showing your overtime.

      For that purpose, I need to take a look at your employment contract and have a face-to-face discussion with you for the matter. By the way, are you based in Shanghai?

      1. Darrell says:

        rght ow i am working in a place called jiangyin. I was supposed to e in shanghai but e changed that as well ad keeps me here in order to do the project we are working on….which BTW has also changed many times due to some sort of BS in one way or another.
        Regaring my employment agreement tere are two….the one that we signed specifying the terms of employement that I agreed to and the one he turned into the government. Which one do you want to see and discuss?
        Regarding the time records…..He will not give me a copy of my previous timecards but I sort of figured that he would do that since the tiecard process was as much a joke as the staff punching in and out for each other and not even being here. Now he has a finger print time recorder and even though its broken most of the time he also will not give me a copy of that eighter….so from the time I started to figure all this out (approximately 1 month after I got here) I started keeping my own record of time on a standard time sheet so that I could remembe when I worked and exactly how much I worked in case he tried to say differently.
        to tell you te truth there has been so many breaches of contract it would be pretty esy to termenate my own contract. Actualy I can just quit There is really nothing he can do but cancel my work visa and if and when I just quit I really wont give a shit about hat

      2. Darrell says:

        Oh and BTWrote myoriginal contract outlining heerms and coditions ofemployment. He took that and altered it for the government so theywould see that he was payinng less then half of what I really make. So I know my contract better then he does!

        1. Jason Tian says:

          Hi Darrell, I am afraid that the time records you kept by yourself without confirmation by the company won’t mean much to you, as the company will surely challenge the genuineness of your time sheet. You may want to report the misconduct to the local labor department to see whether any punishment will ensue then. otherwise, there is really not much you can do on your own to penalize your boss.

  2. Darrell E. Eubanks says:

    I would like to know more about what an expat can do when an employer continually
    1) changes (or alters to his advantage) the agreement terms of the employment contract he signed with the expat?
    2) What can be done when an employer posts “company rules and regulations” that are directly contradictory to the actual rules and regulations inforced by the company….such as work days, work hours and pretty much everything about the posts rules being a joke (or false)? The company posts these supposed regulations but operates in a totally different manner. Example….I work at least a minimum of 10 to 26 hours overtime every month. Supposidly overtime (in the posted regulations) is not allowed but it done on a regular basis office wide. Recently me boss told me that the company only has 4 days per month off (mainly sunday) and because I did not work on two (2) saturdays he was deducting it from my salary…even though I work overtime on a regular basis!!! Not only does it make me feel like an ass for putting in so much overtime but also for actually giving a shit about the company even though i do not getting paid for it, but then he came and announced it in front of the entire office (as if to make an example out of me). There are many many many other what should be considered “violations” that this company committs regularly, what can I do besides simply quiting my job and telling my boss to go to hell with his job and leaving other potential expats that he want s to hire to suffer??? He made promises in the contract and verbally that he has NEVER done…like insurance. I have been working for him for one year and he has NEVER gotten insurance for me as agreed upon. It also makes me wonder if he in-fact lied about paying my taxes and I worry about the fact that he made a phoney contract up to give to the government which does not in any way shape or form describe the true agreement of my employment so that he would not have to pay as much tax for having a foriegn employee.
    Lastly, since I moved to my own apartment he continually stated that he does not like that I live somewhere else other then in the hotel that he wants the staff to live in, he continues to make things more and more difficult for me….like he does not want me to have a life outside of this office or his work.

    I have asked other labor law attorneys about this but they were expats also and did not know how to address these issues. I think these things and the many other violations this man commits should be made example of in the highest court of the land.

    What can be done about this man and his company? I think he should not be allowed to own or run a company in China or anywhere else in the world for that matter!!!