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PRC SOCIAL INSURANCE LAW new obligations and impact for

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					   PRC SOCIAL INSURANCE LAW
new obligations and impact for Foreigners


                 Vivian Desmonts
            FCCIHK – September 5, 2011




       PARIS . LYON . BORDEAUX . LA REUNION . BRUXELLES . BARCELONE . MILAN . DUSSELDORF
   BUENOS AIRES. TUNIS . PEKIN . SHANGHAI . CANTON . SEOUL . HANOI . HO CHI MINH VILLE . SINGAPOUR
                       CONTENT

1.   Goals
2.   Key points
3.   New legal obligations for foreign workers
4.   Applicable social insurance rates
5.   Conclusion
1- Goals of the new Law
•   Harmonisation : first Law to adopt an unified approach to the
    different social insurances in China (promulgated on 28 October
    2010 and in force since 1 July 2011)

•   Main goals of the Law:
       - better recognition of workers’ rights and promotion of social
       harmony and stability
       - unification of retirement contribution rates and benefits at
       national level
       - unification of contribution rates for disease, unemployment
       and work-related injuries at local level

•   2011-2015, 12th Five-year plan: greater social harmony,
    unemployment rate less than 5%, increase of the Minimum Wages
    by at least 13% per year, creation of 45 million jobs in urban
    areas…
2- Key points of the new Law
•   Full transfer from a city to another of all rights of workers to
    retirement pensions and sickness insurance, regardless of their local
    Residence Permit or ‘Hukou’

•   New powers for social insurance bureau or tax bureau to collect
    social insurance premiums: check the bank accounts of employers
    and directly withdraw the outstanding amounts, request the employer
    to provide collateral, apply to court to seize assets, etc

•   New penalties in case of violation or late-payment: fine of 1 to 3 times
    the value of unpaid social contributions and late payment interest of
    0.05% per day

•   Executives and relevant managers of the company can be asked to
    correct and can be held personally liable (fine of 500 to 3000 RMB)
3- Situation of foreign workers before July 11
•   No national mandatory social contributions for foreigners (except
    HK, Macau and Taiwan nationals)
•   Problems of implementation for HongKong, Macau and Taiwanese
    nationals and interpretation by local authorities
•   Depending on cities, foreigners may contribute to some social
    insurances:
     – Guangzhou: retirement, disease, work- related injuries and
       unemployment
     – Shanghai : retirement, disease, work- related injuries
     – Beijing : work- related injuries


•   Contribution rates and maximum caps differ from one city to
    another
     – Guangzhou, Shenzhen, Beijing : same calculation method as the one
       applied to Chinese workers without hukou
     – Shanghai, Zhongshan : same calculation method as the one applied to
       Chinese workers with local hukou
3- New legal obligations for foreign workers
•   As from 1 July 2011, Foreigners employed in mainland China shall
    participate in social insurance with reference to the new law
•   An implementing regulation should soon be adopted specifically for
    foreign workers (including from HK, Macau and Taiwan)
•   According to a Draft Regulation published 13 June 2011, Foreign
    workers subject to compulsory social insurance would be:
     – employees of PRC companies and generally all foreigners working in
       enterprises, public organisations, groups, privately owned enterprises,
       law firms, accounting firms and any other form of organisation in China
       (« work unit »)
     – foreign workers seconded to branches or representation offices in China
       by overseas employers
     – and in general terms, any holder of a work permit, expert certificate or
       international press card
•   Draft regulation would clearly apply to citizens of HongKong, Macau
    and Taiwan working in mainland China
3- Draft Regulation for foreign workers

•   Compulsory social health insurance covers :
     – Medical, basic insurance
     – Retirement, basic insurance
     – Work-related injury insurance
     – Unemployment insurance
     – Maternity insurance


•   Housing fund isn’t strictly considered as a social insurance
3- Draft Regulation for foreign workers

•   When a foreign worker leaves China, he/she will be able either
    to keep his/her personal social insurance account for old-age
    benefits or close it to obtain a refund of all the retirement
    premiums paid (employee share only).


•   Issue: still no treaty on social insurance between China and
    France or HK
    As a consequence, social contributions paid in China aren’t
    taken into account for any benefits in France or in Hong Kong.
    = risk of having to pay double insurance premiums
4- Current rates for non-local hukou holders

            Social
            Contributions

                                                                                           Total
                       Share                                                     Work-     (housing
                                                                                 related   fund        Monthly social
City                           Retirement   Medical   Unemployment   Maternity   injury    excluded)   security cap


Shenzhen    Employee’s share   8%           2%        0%             0%          0%        10%
                                                                                                       12 615 *

            Employer’s share   10%          6.5%      0.4%           0.5%        0.5%      17.9%


Guangzhou   Employee’s share   8%           2%        1%             0%          0%        11%

                                                                                 0.5 to    23.35 to
            Employer’s share   12%          8%        2%             0.85%       1.5%      24.35 %     9 090 to 12 303


Zhongshan   Employee’s share   8%           0.5%      0%             0%          0%        8.5%


            Employer’s share   10%          2%        1%             0%          1%        14%         1631 to 8 277


Dongguan    Employee’s share   8%           0.5%      0%             0%          0%        8.5%


                                                                                 0.5 to    16.3 to
            Employer’s share   13%          2.3%      0.5%           0%          1.5%      17.3%       1200 to 9 090
  4- Current rates for non-local hukou holders



           Social contributions


                                                                                    Work-     Total
                                                                                    related   (housing    Monthly social
                    Share                                                           injury    fund        security cap for
City                              Retirement   Medical   Unemployment   Maternity             excluded)   2010


Beijing      Employee’s share     8%           2%        0.20%          0%          0%        10.2%

                                                                                    0.2% to   31.2 to
             Employer’s share     20%          10%       1%             0%          1.5%      32.5%       12 603


Shanghai     Employee’s share     8%           2%        1%             0%          0%        11%


             Employer’s share     22%          12%       2%             0.50%       0.50%     37%         11 688
4- Current rates for non-local hukou holders


•   Example in Shenzhen:
         • total amount of employee’s contributions = around 1262 RMB / month
         • total amount of employer’s contributions = around 2224 RMB / month



•   Example in Guangzhou:
         • total amount of employee’s contributions = around 1096 RMB / month
         • total amount of employer’s contributions = around 2498 RMB / month
5- Conclusion
•   Pending issues:

     –   New social security number for foreign workers is to include a valid passport
         number. What about French passports and their renewals with new passport
         numbers?

     –   How a foreigner, who has worked and has paid social contributions for 15
         years, will be entitled to reside in China and receive Chinese retirement
         pension ?

     –   Will dismissed foreign workers be allowed to stay in China and receive
         unemployment benefits ?

     –   What will be the impact of PRC birth control policy on pregnant foreign
         employees in China ?

     –   What rights in case of a return in France and without any convention on social
         security?
                                        Thank you

                                               Q&A

DS Avocats Law Firm in China:
Guangzhou office                                                           Beijing office
email: desmonts@dsavocats.com                                              email: bret@dsavocats.com
tel: +86 20 8121 8669                                                      email: savoie@dsavocats.com
                                                                           tel: +86 10 6588 5758
Shanghai office
email: severin@dsavocats.com
tel: +86 21 6390 6505


            PARIS . LYON . BORDEAUX . LA REUNION . BRUXELLES . BARCELONE . MILAN . DUSSELDORF
        BUENOS AIRES. TUNIS . PEKIN . SHANGHAI . CANTON . SEOUL . HANOI . HO CHI MINH VILLE . SINGAPOUR

				
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posted:9/29/2011
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