A hukou allows immigrants to receive the same legal recognition and treatment as permanent residents in the country. Foreign employers may be responsible for acquiring this designation for their employees and should be familiar with the process and its significant to employees working in China.
Benefits of a Hukou
Having a Shanghai hukou gives immigrants the same legal rights as permanent residents. This is an attractive option for many individuals who move to China for work.
An employer’s liability to cover employee social welfare taxes vary based on the employee’s hukou status.
Tax Requirements for Hukous
An employee’s hukou status influences the amount and type of payments the employer is responsible for through the Shanghai social welfare program.
Companies save money when they are only required to pay for comprehensive social insurance. This payment covers work-related injuries, hospitalization insurance and elderly subsidies.
For Type B or Type C residence permit employees who have a rural hukou outside Shanghai, an employer is only responsible for paying the employee’s comprehensive social insurance.
Urban social insurance is expensive as it covers many things, including:
- Medical insurance
- Unemployment insurance
- Maternity insurance
- Work-related injuries insurance
- Housing fund
Employers are responsible for paying for urban social insurance for employees with an urban hukou in or out of Shanghai. Type A permit residents who have a rural hukou have the right to request employers cover their urban social insurance.
Prerequisite for Acquiring a Hukou
Before a worker can receive a Shanghai hukou, he or she must obtain an urban residence permit and retain it for at least seven years. Additionally, he or she must meet additional eligibility criteria.
Employees must often request information from their employers to assist with this process or to renew their residence permit if employees hold residence records outside the city.
Process of Acquiring a Shanghai Residence Permit
This type of permit keeps the recipient’s identifying information on it. Permits include:
- Type A – Introduced talents
- Type B – General employers or employees
- Type C – School attendants
Most permits last one year, but Type A permit holders can receive legal residency status that remains valid for three years or five years. The permit will only last for as long as the worker’s labor contract.
All applicants must provide the following information to apply for a residence permit:
- A residence registration form
- A valid identification certificate
- A health status certificate issued by a hospital above the district-level
- Information regarding marital status and children for applicants between the ages of 18 and 49
- A certificate of residency that establishes the worker will live in the city for longer than 180 days.
Additional eligibility criteria for each type of applicant include:
Type A Applicants
Individuals applying for this type of permit must have a bachelor’s degree or above or is considered a special talent who moved to Shanghai for the purpose of work, investment or entrepreneurship. The applicant’s spouse and children can also apply.
Type A applicants must provide the following additional information:
- Documentation from their employer’s HR department, including a recommendation to be hired
- A copy of the employer’s business license
- A copy of the company’s organization code
- A copy of the applicant’s academic credentials
- The hukou for the area for where the applicant is from
- Labor contract with a term for longer than a year, with at least six months before its expiration or an establishment certificate that shows the applicant is planning on investing or establishing a business in Shanghai
If the applicant is also applying for his or her spouse or child, he or she must provide the marriage or birth certificate.
Type B Applicants
A Type B applicant must be able to establish a stable job and residency in Shanghai. He or she will be asked for many of the same documents as a Type A applicant.
He or she must also provide proof of a labor contract with a term of more than six months, payment records for social insurance and an employment registration certificate.
Workers who work in certain occupations – such as those that are considered to be hazardous to the health of others or associated with an elevated amount of risk – will be required to provide their employment certificate.
Investors, business owners and entrepreneurs will be required to provide their business license and payment records for social insurance.
Type C Applicants
Type C applicants must study at a Shanghai college, must need to reside in Shanghai for more than six months to receive non-formal education, be the child or parent of someone who has a Shanghai hukou or comes to live with his or her spouse.
Requirements for Businesses to Assist with Type A Residence Permit
The employer must also meet specific eligibility criteria in order to assist with an employee’s application to secure this type of residence permit.
The employer cannot only be a representative office in Shanghai. Additionally, it must truthfully state that it has capital of a minimum of RMB1 million unless the entity is knowledge, technology or high-tech intensive and a startup that was set up by college graduates.
Applicants who work at a branch company must provide documentation from the legal parent company that truthfully states that it has capital of a minimum of RMB 10 million.
Employers must register at www.21cnhr.gov.cn and verify their business before being able to assist with the Type A residence permit application.
Renewing Type A Residence Permits
A Type A resident permit recipient will need to renew their residence permit depending on the period when the permit was valid, which may be for one, three or five years.
The applicant must provide the following information with their renewal application:
- A completed application form
- Documentation from the employer’s human resources department that includes a recommendation to keep the worker employed and a copy of the human resource official’s identifying information
- Identification card and existing residence permit
- Individual income tax and social insurance payment records for the last year when the permit was in place
If the applicant is working with a different employer at the time of renewing his or her residence permit, the applicant must provide all of the necessary company and contract information.
The new employer must meet the standards described above. Employers must register or update their company information when the employee is renewing his or her permit. They can do this at the same site online.
Requirements to Obtain a Shanghai Hukou
Individuals who obtain a residence permit and keep it active for at least seven years may be eligible for a Shanghai hukou. They must meet additional eligibility criteria, including:
- A record of completing seven years of payments for urban social insurance during the period they held the residence permit
- A record of individual income tax payments during the period when they held the residence permit
- Established work history in certain professional or technical positions or have a technician-level vocational qualification or higher
- Proof that the employee has not committed a crime or developed a record of this nature
Occasionally, new policies are released that make it more favorable for certain employees to obtain residency status or a hukou.
Historically, high-level technicians, employees who submit a high China individual income tax or social insurance rate or who work in specific positions in certain geographic locations have received favorable treatment, such as not having to wait the full seven years to apply for their Shanghai hukou.
Graduates who received their college education overseas are eligible to apply for their hukou when they return to Shanghai as long as they meet all of the necessary requirements. They have up to two years from the date they come back to Shanghai to take advantage of this option.
Contact Horizons for Help
The Horizons team have extensive knowledge of the Chinese immigration system.