The Social Insurance Law of China of PRC – New Update Go back »
2011-08-31 | Nanjing
The Social Insurance Law of China of PRC – New Update:
Draft of Special Regulation for Foreign Employee Social Treatment in China
Backgrounds
As discussed months ago, The Social Insurance Law of China (SIL) came into effort on July 1st, 2011, of which Article 97 provides that foreigner employed in China shall join the Chinese social insurance system and SIL shall be referred. It is a pity that SIL does not provide details of foreigners’ insurance treatments.
Considering the importance of this topic we would like to give you some update regarding this matter.
On June 10th 2011, the Ministry of Human Resources and Social Security (MHRS) drew up the Tentative Measures for the Employment in Social Insurance of Foreigners Employed in China (Draft) and published on the website of Legislative Affairs Offices of the State Council to public for comments, providing implementing rules on applying SIL to foreign workers.
Main Contents
1. Who are foreign employees?
The Draft defines foreign employees are those foreigners who have Chinese working permits to work in China.
2. Who will pay social insurance?
According to the Draft, foreign workers hired by employing units incorporated or registered in China and the expatriates dispatched by their foreign employers to the foreign employers' branches and representative offices in China must participate in China's social insurance system. Participating foreign individuals and their Chinese employers or the branch/representative offices in China of their foreign employers are required to pay the social insurance fee.
3. Which kinds of social insurances will be paid?
Similar to Chinese citizens, foreign employees will pay the basic endowment insurance, basic medical care insurance, workers' compensation, unemployment insurance, and maternity insurance.
Following the SIL, housing funds are not involved in social insurance system. The Draft does not mention this point either.
4. The Treatments
Qualified foreign employees participating in the social insurance system will enjoy social security benefits under the condition provided by SIL. In case that a foreign employee leaves China prior to the time when he or she can collect the pension, there are two opinions:
1) his or her individual account can be retained and the payment period will be calculated cumulatively when he or she re-enters China for employment; or
2) upon written application by the foreigner, the social insurance authority may also pay the foreign employee the amount in his or her account in a lump sum and terminate the basic pension relationship.
The second choice is not available for Chinese citizens under the SIL, which prohibits them from withdrawing anything from their individual basic pension accounts.
Also, it is provided in the Draft that the amount in the social insurance account can be inherited in case that the foreign employee passes away.
5. Bilateral agreements on social insurance
It is provided in the Draft for citizens from countries with which China has a bilateral agreement of social insurance, the terms of such agreement will apply.
Till now, Germany and South Korea have signed bilateral social insurance with China.
6. Certificate of living
For those foreigners live abroad but enjoy Chinese social insurance treatment, a certificate of living shall be filed to social insurance offices authorized by MHRS every year or every month if required by Chinese offices. This certificate shall be issued or verified by Chinese embassy or consulate.
Comments of the Draft
However, there is still confusion regarding the Draft that may need further legal explanation from the government.
1. When to pay the social insurance
It remains unknown when foreigner employees’ participation in social insurance system will actually be implemented. Since the new SIL already became effective on July 1, there is a possibility that foreigners’ contributions may be backdated at a later date to July 2011.
2. Concerns of Medical Insurances
Since the quality of medical services covered by medical insurance is one of the major concerns of most foreigners living in China, it is also essential that future regulations clarify whether foreigners’ contributions to medical insurance will at least partly cover the cost incurred from using international clinics.
3. The contributions of insurances need to be clarified
While foreigner employees also shall be forced to contribute to work-related injury insurance, maternity insurance and unemployment insurance, further explanations may be needed to justify the contributions. For example, how do foreigners out of employment benefit from unemployment insurance when they are not legally allowed to stay in the country if not employed?
A short summary
The public comments period of the Draft has been finished on June 17 and till now there is no updates published. From the Draft, we can see the effort by Chinese government to build a fair and transparent social insurance system for foreign employees in China, although it seems that the Draft is not good enough. We will keep an eye on the developments in this field.
For more information please send an email to: c.dandrea@picozzimorigi.it
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Disclaimer
This publication is distributed solely for information purposes and does not constitute legal advice. Although all the information in this document was obtained from reliable official sources, no guarantee is given with regard to their accuracy and completeness. This document may not be reproduced and copies of this document may not be distributed without our prior permission.
© 2011 Picozzi & Morigi Law Firm