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(Jul 01, 2011) China's new Social Insurance Law, which is set to take effect on July 1, 2011, includes one article applicable to foreigners employed in China, stating that they "will refer" to the Law and join the social insurance system. (Laney Zhang, China: Law on Social Insurance Passed, GLOBAL LEGAL MONITOR (Nov. 4, 2010).) Recently, just before the Law is to take effect, the Ministry of Human Resources and Social Security drew up the Tentative Measures for the Enrollment in Social Insurance of Foreigners Employed in China (Draft), providing implementing rules on applying the Law to foreign workers. On June 10, 2011, the draft was published online to solicit public comments. (Text of the Draft [in Chinese], Legislative Affairs Office of the State Council website (June 10, 2011).)

According to the draft text, 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 (Draft, art. 3). China's social insurance under the Social Insurance Law includes basic endowment insurance, basic medical care insurance, workers' compensation, unemployment insurance, and maternity insurance (Social Insurance Law, art. 2). 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 (Draft, art. 3).

Qualified foreign workers participating in the social insurance system will enjoy social security benefits under the conditions prescribed by law (Draft, art. 5). If a foreign worker leaves China prior to the time when he or she can collect the pension, the worker has two choices: 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 worker the amount in his or her account in a lump sum and terminate the basic pension relationship (id.). The second choice is not available for Chinese citizens under the Social Insurance Law, which prohibits them from withdrawing anything from their individual basic pension accounts (Social Insurance Law, art. 14).

For nationals of countries with which China has a bilateral or a multilateral social insurance agreement, the terms of the agreement apply (Draft, art. 9). The Draft covers Chinese citizens in Hong Kong and Macau and the residents of Taiwan, if they are employed in mainland China (Draft, art. 11). The Draft has an appendix stipulating the rules for assigning social security numbers to foreign workers; those workers will be issued a social security number and a social security card (Draft, art. 10).

Lawyers in China are warning employers that hiring foreigners will become more expensive because of the insurance contributions. (Employing Foreigners About to Get More Expensive, CHINA LAW & PRACTICE (June 22, 2011) (by subscription).)

Author: Laney Zhang More by this author
Topic: Social security More on this topic
Jurisdiction: China More about this jurisdiction

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Last updated: 07/01/2011