Page 7 - The South China Business Journal
P. 7
wever, since social insurance is managed at the China and Japan both complete the relevant
a regional level, a range of inconsistencies exists domestic legal procedures.
amongst cities. As a result, most major cities have
implemented their respective requirements for Likewise, details on the agreements with France
foreign employees. and Serbia, including their implementation dates
and range of exemptions, will be announced once
For example, in cities such as Beijing, Tianjin, each country completes their respective domestic
Shenzhen, and Nanjing, among many others, legal procedures.
social insurance payments are compulsory for
foreign employees, who are treated in the same Basic process for applying for
way as domestic workers. Contrarily, Shanghai premium exemptions
does not currently require foreign employees to
contribute towards social insurance. Exemption does not apply automatically, and
companies with foreign employees are required to
While not all regional authorities have apply to related bureaus for exemption. Though
implemented rules in accordance with the process of applying for insurance premium
international social security agreements, exemptions varies across regions, and according
increasing the difficulty in obtaining exemptions to the specific agreement under which it is
for eligible expatriates, employees from countries performed, it follows a standard formula.
that have agreements with China are eligible for
social insurance exemptions. The entity that employs the foreign employee
in China must submit original certification of
To date, eight such agreements have been insurance issued by a relevant entity in the
implemented between China, and the following country of origin to the local Chinese social
countries: Germany, Korea, Denmark, Canada, insurance bureau. This will then be verified
Finland, Switzerland, the Netherlands, and and a copy will be held on record. Following
Spain. China has also made agreements with verification of this documentation, and possible
France, Serbia, and Japan; these agreements are further verification and certification, the
not yet in effect. employee in question will be exempt from the
relevant social insurance payments.
Applicable countries
The time limit of the exemption period may vary.
All existing agreements define the groups of For employees from the Netherlands, for example,
employees eligible for exemption, and lay out the the maximum length of the exemption period is
categories of social insurance for which employees five years. If the dispatch period is more than five
are exempt from paying. In turn, Chinese years, the time limit for exemption will not be
employees sent to the participating country will extended for more than one year.
also be exempt from making the relevant social
insurance contributions there. Difficulties of implementation
Social insurance exemptions are only While social insurance exemption agreements
available to a defined group of labor categories, offer cost benefits to enterprises based in China,
and not to all foreign employees. The eight businesses should act in caution regarding
bilateral agreements with China for social how they go about availing them. Although
insurance payment exemptions that have been bilateral agreements for exemption are made
implemented are as follows: at a national level, regional governments must
implement the system locally. This invariably
The agreement with Japan will cover the National results in inconsistencies and varying levels of
Pension and Employees’ Pension Insurance. It implementation at a local level, complicating the
will apply to dispatched personnel, employees process for companies and foreign employees.
on board ships and aircraft, civil servants,
and diplomatic and consular personnel. The Helen Kong, Manager of Human Resources
implementation date will be announced once Administration and Payroll Services at Dezan Shira
South China Business Journal 5
a regional level, a range of inconsistencies exists domestic legal procedures.
amongst cities. As a result, most major cities have
implemented their respective requirements for Likewise, details on the agreements with France
foreign employees. and Serbia, including their implementation dates
and range of exemptions, will be announced once
For example, in cities such as Beijing, Tianjin, each country completes their respective domestic
Shenzhen, and Nanjing, among many others, legal procedures.
social insurance payments are compulsory for
foreign employees, who are treated in the same Basic process for applying for
way as domestic workers. Contrarily, Shanghai premium exemptions
does not currently require foreign employees to
contribute towards social insurance. Exemption does not apply automatically, and
companies with foreign employees are required to
While not all regional authorities have apply to related bureaus for exemption. Though
implemented rules in accordance with the process of applying for insurance premium
international social security agreements, exemptions varies across regions, and according
increasing the difficulty in obtaining exemptions to the specific agreement under which it is
for eligible expatriates, employees from countries performed, it follows a standard formula.
that have agreements with China are eligible for
social insurance exemptions. The entity that employs the foreign employee
in China must submit original certification of
To date, eight such agreements have been insurance issued by a relevant entity in the
implemented between China, and the following country of origin to the local Chinese social
countries: Germany, Korea, Denmark, Canada, insurance bureau. This will then be verified
Finland, Switzerland, the Netherlands, and and a copy will be held on record. Following
Spain. China has also made agreements with verification of this documentation, and possible
France, Serbia, and Japan; these agreements are further verification and certification, the
not yet in effect. employee in question will be exempt from the
relevant social insurance payments.
Applicable countries
The time limit of the exemption period may vary.
All existing agreements define the groups of For employees from the Netherlands, for example,
employees eligible for exemption, and lay out the the maximum length of the exemption period is
categories of social insurance for which employees five years. If the dispatch period is more than five
are exempt from paying. In turn, Chinese years, the time limit for exemption will not be
employees sent to the participating country will extended for more than one year.
also be exempt from making the relevant social
insurance contributions there. Difficulties of implementation
Social insurance exemptions are only While social insurance exemption agreements
available to a defined group of labor categories, offer cost benefits to enterprises based in China,
and not to all foreign employees. The eight businesses should act in caution regarding
bilateral agreements with China for social how they go about availing them. Although
insurance payment exemptions that have been bilateral agreements for exemption are made
implemented are as follows: at a national level, regional governments must
implement the system locally. This invariably
The agreement with Japan will cover the National results in inconsistencies and varying levels of
Pension and Employees’ Pension Insurance. It implementation at a local level, complicating the
will apply to dispatched personnel, employees process for companies and foreign employees.
on board ships and aircraft, civil servants,
and diplomatic and consular personnel. The Helen Kong, Manager of Human Resources
implementation date will be announced once Administration and Payroll Services at Dezan Shira
South China Business Journal 5
