China has introduced its first comprehensive Social Insurance legislation which will apply to both Chinese nationals and foreign nationals working in China.
The new legislation came into force on 1 July and covers basic pension, medical, unemployment, maternity and work-related injury insurance. Both employers and employees will be required to make contributions.
A key aspect of the new legislation is that it provides that non-Chinese nationals working in China should participate in social insurance programmes. It is, however, still unclear precisely how the new law will apply to them. For now “interim measures” have been put in place to deal with foreign employees working in China, but various issues remain to be addressed. Contribution thresholds are, for example, unclear and can vary considerably by region. Further information is required on how the new law will be implemented across China’s different provinces and cities.
In the meantime employers should review their Chinese employees’ current contribution levels and social insurance registration to see if they may be required to pay more to the country’s welfare system and to ensure there are no unexpected liabilities going forward.