| Pursuant to The Provisional Measures Regarding Participation in the Social Insurance Scheme by Foreigners Working in China (No. 16 Decree), which went into force on October 15, 2011, enterprises in China who employ foreigners shall apply for social insurance registration for their foreign employees with 30 days of obtainment of work permits. |
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Why shall I pay for social insurance?
Q: Why are foreigners working in China required to participate in social insurance?
A: First, the requirement for foreigners working outside of their home countries to participate in social insurance in their countries of employment is necessary for their host countries to fulfill their obligations under international conventions and is in line with international practices. Currently, most developed countries and some developing countries around the world afford the same treatment to foreigners working in their countries as their citizens in order to protect their social insurance benefits; these countries have passed laws mandating the participation of foreign employees in social insurance; and foreign employees are required to pay social insurance fees and are given national treatment. Chinese citizens working abroad and Chinese enterprises investing abroad have been consistently required by the laws of their host countries or regions to participate in social insurance and pay social insurance fees.
Second, with the requirement for foreigners working in China to participate in social insurance, foreign employees’ demand for social insurance will be better satisfied. Prior to the promulgation of the Social Insurance Law, some enterprises and foreigners employed by foreign organizations in China voluntarily requested to participate in China’s social insurance; their requests, however, were denied by some local social insurance service providers on the grounds of absence of applicable laws or regulations. This directly affected foreign employees’ access to social insurance benefits. The promulgation of the Social Insurance Law and the No. 16 Decree provides a legal basis for foreigners working in China to participate in social insurance. This will afford stronger protection for their social insurance benefits in China.
Who must pay?
Q: What foreigners must pay social insurance fees?
A: According to Article II of the No. 16 Decree, foreigners working in China refer to people of non-Chinese nationality who are legally employed in China and hold a Foreigner Work Permit, a Foreign Expert Certificate, a Resident Foreign Correspondents Card, or another employment certificate and a foreigner residency permit, as well as people holding a Permanent Residency Permit.
Q: Are employers of foreigners required to pay social insurance fees?
A: According to Article III of the No. 16 Decree, businesses, institutions, social organizations, privately-run non-enterprise entities, foundations, law firms, accounting firms and other organizations (hereinafter referred to as “employers”) which have been legally registered in China and recruit foreign employees, shall participate in the schemes of basic employee pension insurance, basic employee medical insurance, industrial injury insurance, unemployment insurance, and maternity insurance. The employer and the employee shall both pay social insurance fees in accordance with regulations.
Employers who have hired foreigners shall apply for social insurance registration for their foreign employees with 30 days of obtainment of work permits.
Foreigners who have been assigned by their overseas employers to work in China shall have their China-based entities apply for social insurance registration for them in accordance with the provisions in the preceding paragraph.
How shall I pay?
Q: Can I take my personal account out of China?
A: According to Article V of the No. 16 Decree, for foreigners who have left China before they reach the statutory age for collecting pension payouts, their personal social insurance accounts will be retained, and their number of years paying social insurance fees will count if they come back to China for work. If a foreigner has requested termination of his or her social insurance relationship, the sums which have been deposited into his or her personal social insurance account will be paid to him to her in full. For foreigners who have deceased, the balance of their social insurance accounts will be inherited by their legal heirs.
Q: How is the contribution to the social insurance scheme shared by the foreign employee and the employer?
A: The No. 16 decree does not specify a percentage for contribution from the foreign employee and the employer. The percentage is to be set by local governments on the basis of actual circumstances. In Guangzhou, the percentage of contribution has been determined with reference to that of locally registered residents.
| Percentage of Contribution to Social Insurance Scheme for Foreign Employees | ||
| Social Insurance Items | Employee | Employer |
| Pension | 8% | 12% or 20% (see Note) |
| Healthcare | 2% | 8% |
| Unemployment | 1% | 2% |
| Childbirth | 0% | 0.85% |
| Work-related Injury | 0% | 0.5%-1.5% |
| Total | 11% | 23.35%-24.35% |
| Benchmark Ceiling (RMB) | 13,623 (three times the city’s average monthly salary) | |
| Contribution Ceiling (RMB) | 1,499 | 3,181-3,317 |
| Note: 12% applies to foreign-invested enterprises, public institutions, and social bodies. For example, 12% is applicable to international schools such as the American International School of Guangzhou (AISG), while 20% is applicable to multinational companies such as P&G. | ||
Q: When shall we start paying for social insurance?
A: The No. 16 Decree will become effective at the end of the year, but insurance fees are payable from October 15. Nonpayment shall be made up.
(Translated by Guangzhou Association of Foreign Affairs Translators)