China Practice

China Waives Work Permits for Hong Kong, Taiwan and Macau Residents

A relaxation of longstanding restrictions on hiring residents of Hong Kong, Taiwan and Macau (“HTM”) was among a list of official changes approved by China’s State Council on August 3, greatly expanding their employment opportunities in China.

Under the pre-existing system, mainland employers had to obtain approval from three separate government agencies before they could hire staff from any of these regions, a process that normally took more than a month to complete.

The restrictions continued after employment commenced, since the work permits were valid for only two years and were non-transferable. Employees wanting to change jobs would need to find employers willing to go through the approval process. As a result, many HTM residents worked illegally in China which meant that they were not eligible for social insurance benefits such as state-subsidised medical insurance.

The State Council decision means that such employees will now be entitled to the same employment freedoms as local residents and are more fully able to obtain social insurance coverage. Under the new arrangements being implemented in cities across China, employees simply apply for jobs in China and if hired, their new employer handles all of the filings needed to register for social security and other benefits. No vetting is required.

These changes only apply to Chinese nationals and will not impact expatriate HMT residents.

So far, most commentary about these new arrangements has been focused on their supposed economic benefits, pointing to, for example, opening up China’s vast employment market access to fresh talent, particularly in knowledge-based industries. However, for HMT residents, the benefits are more personal and potentially life-changing.

First, working in the mainland, in an industry of their choice, is now finally viable since employers there will be less likely to reject these candidates on the basis of overly complicated administrative procedures. Second, these changes level the playing field for HMT residents since they are now free to seek employment elsewhere and any time without having to wait for a new employer to obtain approval.