Your employers no longer able to secretively cancel your work permit in Shanghai

Recently, I scored a big victory in a case against Shanghai Labor Department (“SHD“) in which we sued SHD for wrongly cancelling the work permit of my client, an American individual. The court judgment, coming after long period of intentional delay, declared that SHD’s cancellation of alien work permit based on the unilateral application by employer is illegal. This is the first case of its kind ever so judged in Shanghai, a positive token for expatriates working in Shanghai, China.

FACTS: my client was duly employed by a Shanghai shipping company in 2010. For some unknown reason, the company served a termination letter on my client stating that because of incompetency of the client, the company decided to terminate the labor contract. The client was very disappointed and immediately challenged the decistion by going to labor arbitration. Arbitration commission delivered an award in client’s favor ordering the company to reinstate the employment and pay salaries. However not untill the date of receiving the award did we come to know that during the proceeding of arbitration, client’s work permit had been revoked by SHD based on the company’s application in which the company falsely represented to SHD that the employment with client was duly terminated. As a result of such cancellation, labor arbitration commission only ordered the company to pay salary to client up to the date on which the work permit was revoked, which means that salary for the period from the date of revocation of the work permit to the date of delivery of arbitration award cannot be supported by the arbitration tribunal on the ground that because of the cancellation of the work permit, the relationship between the client and the company can no longer be considered to be a lawful labor relationship.

Apparently, client’s loss was due to the wrongful revocation of the work permit by the SHD. So we sued SHD. Our argument is simple and powerful: can SHD revoke the alien work permit that was duly obtained, based on an unlawful termination of labor contract by the employer?  It is obvious that SHD failed to verify whether the labor relationship in question had been legally terminated and instead SHD simply believed what the company had said before them was true.

It is noteworthy that it has been a decades-old practice in Shanghai that Shanghai Labor Department can simply cancel or revoke the work pemit held by the foreigner employees based on information provided by employers without due regard to such alien employees. This often can cause big trouble for such expat employees who, without work permit, may be thought to illegally stay in China and may be then forced to exit China. Moreover, without the work permit, labor arbitration commission and courts would not regard the relationship between the foreigners and their Chinese emlpoyers as legal labor relationship as governed under China Labor Contract Law, which will result in the loss of entitlement on the part of such expat employees to claim economic compensation or damages from their employer companies for wrongful termination.

In the couse of lawsuit against SHD, Huangpu court intentionally suspended the proceeding without legal ground for almost a year, and repeatedly asked our side to withdraw the case. Of course, we rejected such request and insisted that a fair judgment be delivered. 

Now with this victory, expat employees in China, at least in Shanghai will be better off because their employers can no longer pull the trick of revoking their work permit without their awareness and cause hardship on them.

As to the legal nature of the work permit, I have arrived at a new understanding of it, please read: A new view on the legal nature of the work permit for foreigners working in China

Jason Tian

Jason Tian, senior partner, specializes in foreign-related legal services ranging from foreign investment in China, banking and capital, real estate, M&A, corporate, international trade, estate planning, inheritance and divorce at his blog: https://www.sinoblawg.com.

14 Comments

  1. Jason Tian   •     Author

    Just saw a post on Shanghai Labor Bureau website. One of the official at Shanghai labor department in charge of alien employment confirmed expressly that Shanghai Labor Bureau will not revoke an alien employment permit without the confirmation from the employee about the termination of the employment. In other words, once in dispute, employers cannot revoke work permit that may exacerbate employees’ hardship.

  2. Alvin   •  

    Hi! Sir I read all of your advices ,can you advice me also because my boss they give visa always he want to get my passport and he get my diploma and all my certificate now , I resigns immidietly after I barrow my passport because he treat me as animal to work always scared me if I cannot follow to him he cancel my visa , so I decid after I get my passport I never come bk to work and I already give my copy of my resignation , my question sir after he cancel my working permit he will cancel also my RP?

    • Jason Tian   •     Author

      Generally, they can, but they may not do it at all, a reason why foreigners can travel cross Chinese borders after work permits are cancelled.

  3. Jason Tian   •     Author

    As pointed out already in a later post on this blog “the dillema for expat employees in China”, it seemed that Shanghai Labor Department has not stopped their illegal practice of cancelling Alien Work Permit without the consent of or notification to the expat in advance.

    Readers reading this post shall not have the illusion that your employer will no longer be able to cancel your work permit without your knowledge.

    I will try to understand the real picture on the issue which seems unclear with conflicting information popping up.

    Again, my suggestion is that when you sense that you are going to fall out with your employer, you may wish to inform the labor department that they shall not revoke your work permit without giving notice to you.

  4. josef   •  

    Hi Jason,

    I need your advice. If I am going to tender my resignation, which I will give 30days notice, should i NOT let them have my passport before the 30days is over and DO NOT SIGN anything that I do not understand in case they try to terminate my work permit and my residence permit altogether abruptly? My residence permit says I can stay in china for many more months. What will happen once the work permit and residence permit gets terminated? Does the exit entry bureau change my residence permit to an L (tourist visa)? If yes how long will this visa be? 1 month, 3 month?

    • Jason Tian   •     Author

      Hi Josef, employers don’t have to have your passport to terminate or cancel your work permit, but still it is advisable to keep your passport from your employer. In any case or situation, you don’t sign anything before you fully understand what it is about and means to you.

      In practice, cancellation of work permit does not necessarily lead to revocation of residence permit with which you can still enter and exit China borders.

      I am not aware of the practice of changing your residence permit to other types of visas.

      • josef   •  

        Hi Jason,

        Its a great relief to get such information from a very informed professional like you.
        I am trying to safe guard myself before I leave the company but in any case that the company plays tricks on me and shortchange me, you will be the first one I will get help from.

        But i’ve also heard that if the company do not give me a “release letter” for leaving the company after giving a notice, my chances to get a new work permit when I join a new company can be very difficult due to lack of this release letter as the labour department needs this letter to say I’ve been released from the contract.

        Is there anyway to safeguard myself for this matter?

  5. Issi Chan   •  

    I read your article about the lawsuit against Shanghai Labor Department for cancelling work permit without employee consent. My question now is, Shanghai Labor Department now have policies in place to make sure employer cannot cancel the work permit without employee signed document? Or they will still cancel upon request of employer and employee still have to sue to have permit reinstated?

    • Jason Tian   •     Author

      Hi Issi Chan, well, I have not checked whether Shanghai Labor Department has revisited their old policy or not, but I did hear from another expat inquiring labor issues that Shanghai Labor Department started asking for a written consent or agreement from the employers when they unilaterally apply to cancel an expat’s work permit.

      Definitely, that case has improved the wellbeing of expats in Shanghai labor market.

      • Jason Tian   •     Author

        According to Issi Chan below, she has found out that in one of the forms which are required to be submitted to labor department for revoking a work permit, there is requirement of employee’s signature to be made thereon. Apparently, Shanghai labor department has improved their practice.

        My concern is what if the signature is forged. The damage this forgery may result in is the same as there had been no such requirement for employee’s signatures. In the court hearing, I have argued that labor department should notify its decision to the expat employees whose work permits are going to be cancelled as this is actually required by China Administrative Licensing Law. Not sure whether the labor department will do it or not.

  6. Mike   •  

    Hello,

    I really enjoyed reading your article and would like to get some advice.

    I have an expert visa but my employer has never given the work permit to me.

    Every time I ask for it, I get the run around or lies. Finally, after a big show down I was informed the university will not give it to me because of reasons of liability. To this day, I do not know if I have a legal work permit or not.

    Another issue I have is according to expert regulations, teachers are entitled to vacation with pay, just like the Chinese counterparts. However the school is only paying 10 months and will not pay vacation.

    Before signing the contract I inquired about paid vacation and was told I would have it. The university has been cheating the expat teachers of their legal entitlements for many years now.

    When I showed the university the labor law, they told me to look at the contract. I responded the contract states clearly we must obey the Chinese labor law. Expert labor regulations clearly state foreign experts are entitled to vacation pay.

    The analogy I used as explanation is like a worker discovering he is getting paid less than the minimum wage law. When he brings this to the attention of the employer he is greeted with “look at the contract.” It’s not fair” I said, and if they would not pay the vacation pay we should go to mediation as detailed in the contract.

    Then things got worse. The university retaliated with false witness, libel, slander, defamation and character assassination and are threatening to fire me. I have to protect my name and dignity now.

    This is a case of retaliation for a teacher merely asking the university to comply with the labor law. Am I out of line for this?

    I wonder who is getting the tens of thousands of dollars over the years that should have been paid out to expert foreign teachers?

    Ah geez, this is China. I might not even have a case. The law is always very funny. Like in the States, “relationships” play a major factor and often trump the spirit of the law. I’m sure the university is short on the law but long in the relationship game.

    There are other factors to consider like delay. How can a foreign expert fight a long winded legal battle if the university cancels the visa?

    If you can help me, please recommend a good lawyer in Beijing. I need someone to protect me, save my dignity and my ability to make a living in the future.

    Sincerely,
    Mike

    • Jason Tian   •     Author

      Dear Mike, I have refered your case to one of my friend in Beijing who is also a lawyer offering legal services regarding labor issues. If things cannot work out, please let me know. My advice is that you find a new job and have your employment contract carefully reviewed by a labor lawyer. It will not be helping much at all to have a fight with the university in court. Here is China.

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