Court Dismisses Foreigner's Claim for Work Permit & Back Pay

Court Ruled | Court Dismisses Foreign Employee's Claim for Work Permit and Back Pay

Welcome to our new column, where we share real court ruling cases related to expats & mostly foreign employment in China. We hope these cases provide valuable insights into arbitration and judgments concerning foreign workers!

*Disclaimer: This English version (especially legal terminology) is for reference only. In case of any discrepancies, please refer to the original Chinese court decision. For formal legal advice, consult a qualified attorney.

Case: Labor Dispute Between R and a Shanghai Design Firm

(Case No. (2018) Hu 01 Min Zhong 11138)

01

Key Takeaways

A foreign employee's request for an employer to process a work permit is not within the jurisdiction of Chinese civil courts.

If a foreigner works during a period when their employment permit has not been approved, the relationship with the employer is deemed a contractual service (labor service) relationship, not an official labor relationship.

02

Case Summary

R previously held legal employment in Shanghai and later planned to join a new company — a Shanghai advertising design firm. He signed a written labor contract and supplemental agreement, and transferred his prior work permit accordingly.

Although the design firm submitted an application for R's new work permit, the approval was never granted. Despite this, R continued working at the firm. On January 21, 2018, frustrated by delays, R emailed the company expressing dissatisfaction over the lack of a permit. He declared he would stop working from January 22, citing legal risks of continuing employment without a permit.

The next day, R signed a departure confirmation form stating he was leaving on January 31 and had no further claims, with salary settled. The company followed up with a formal termination letter confirming the end of the contract as of January 22, which R signed for on January 24.

On January 25, R filed for labor arbitration, demanding:

1. Issuance of a valid foreign work permit;

2. Salary of RMB 40,500/month from January 2018 until the permit would have been granted.

Pic irrelevant to text

03

Arbitration and Court Rulings

Labor Arbitration Committee:

The Shanghai Labor Arbitration Committee rejected the case, citing R's lack of legal standing due to the absence of a valid employment relationship.

First Trial (Jinshan District Court):

Since the firm never successfully obtained a work permit, R's role did not constitute a formal labor relationship under Chinese law. Instead, it was considered a labor service relationship.

Chinese courts do not have jurisdiction to force an employer to secure a work permit for a foreigner.

After R's voluntary termination and lack of work from January 22 to May 11, 2018, the court found no grounds to award unpaid salary, especially as there was no proof of agreed post-termination compensation.

Appeal (Shanghai First Intermediate Court):

R appealed the first-instance ruling, but the appellate court fully upheld the original judgment.

04

Conclusion

This case underscores critical points for both foreign employees and Chinese employers:

• Without an approved work permit, no legal labor relationship exists, even with a signed contract.

  
  

• Official termination records and employee acknowledgements carry significant legal weight.

Stay tuned for more real-life cases that shed light on foreign employment legalities in China!

Source: China Judgements Online

Get daily news, tips, and events in Shanghai

Connect with expat communities and industry experts

For the latest jobs&policy updates, scan the code below to follow AnyJob! 

If you have any questions about China visa applications (work visa, company registration and more), please contact our visa consultant Lisa.

Click "Wow" if you like this article