In the eyes of many Chinese officials, ignorance of the law is no excuse, especially in cases of non-Chinese living in China.

My advice to Simon is to try to get what he needs from his irresponsible employer first. If he (or she) can't get him 'legal', then he must turn himself in at the local PSB office. There he can expect to be punished if he has overstayed and/or has been teaching illegally. He should try his best to sort out his bad situation through the assistance of his employer. He should point out his legality problem forcibly, and say if the shit has to hit the fan, he'll make sure he won't be the only one in trouble. That might well help. If it doesn't, he can proceed to land himself and his employer in it as a last resort by coming clean with the PSB. The problem with that is there will only be one winner, the PSB!