[Q&A] Can Companies Hire Former Civil Servants?
2024. 11. 29
Question: Can a company hire former or retired civil servants as consultants?
Answer: The position of civil servants is unique. Even if they have resigned or retired, they may still influence related business activities during specific periods, potentially leading to issues such as bribery. Chinese law imposes restrictions on part-time jobs or positions held by former or retired civil servants.
For example, Article 107 of the "Civil Servant Law (2018 Revision)" states: "If a civil servant resigns or retires, those who were in leadership positions at the county or section level and above cannot work in enterprises or other profit-making organizations related to their previous work for three years after resignation; other civil servants cannot work in enterprises or other profit-making organizations related to their previous work for two years after resignation. They are also prohibited from engaging in profit-making activities directly related to their previous work." Additionally, documents such as the "Opinions of the Central Organization Department on Further Regulating the Part-time Work (Holding Office) of Party and Government Leaders in Enterprises" also strictly limit the part-time work (holding office) or engagement in profit-making activities of Party and government leaders within three years after resignation or retirement.
On the other hand, if a company only hires a former or retired civil servant to provide consulting or other services and pays remuneration without establishing a labor relationship, and there is only an economic relationship between the two parties, it can be understood as not constituting "part-time work" or "holding office," thus not violating the aforementioned regulations. However, if a company plans to hire a civil servant who resigned or retired within the last three years, it is recommended to carefully distinguish different situations from a compliance perspective:
1.If the services provided by the former civil servant are related to the area and business scope of their previous position, it is highly likely to be deemed as personal engagement in profit-making activities related to their previous job and will still be subject to the "Regulations on Disciplinary Actions of the Communist Party of China," constituting a violation of integrity discipline. Additionally, if the remuneration for the service is significantly higher than the market price and is in exchange for "using their position to benefit others," it may constitute bribery, and the company hiring the civil servant could be suspected of bribery.
2.If the services provided by the former civil servant are outside the area and business scope of their previous position, it generally does not constitute a violation of laws or regulations. However, this situation is relatively rare.
Therefore, it is recommended that a company conduct a comprehensive investigation into the area and business scope of the former civil servant's previous position and the length of time since their resignation or retirement before hiring them. It may be considered to have the former civil servant make appropriate commitments in the service contract to avoid any loss to the company due to their violation of laws or regulations.