The Interim Measures on Participation in Social Insurance by Foreigners Working in China (the “Interim Measures“) were issued by the Ministry of Human Resources and Social Security on 6 September 2011 which came into force on 15 October 2011. The draft of the Interim Measures was previously released for public comment on 10 June 2011.
The salient provisions of the Interim Measures are summarized as follows:
- Despite the various controversies during the consultation period, the Interim Measures adopt the principle that foreigners working in China (except for nationals of foreign countries that have entered into bilateral or multilateral social insurance exemption treaties with China) shall participate in PRC social insurance scheme, including basic pension insurance, basic medical insurance, work injury insurance, unemployment insurance and maternity insurance.
- “Foreigners working in China” are defined under the Interim Measures as those non-PRC nationals who hold (a) work permits (e.g. Alien Work Permit, Foreign Expert Certificate, and Resident Foreign Journalists Certificate) and alien residence permits, or (b) Alien Permanent Residence Permit, and are lawfully employed in China, including:
- foreigners who are legally employed by enterprises, public institutions, social groups, privately owned non-enterprise units, foundations, law firms and accounting firms etc., lawfully incorporated or registered in China (“PRC Employers“); and
- foreigners who enter into employment contracts with overseas employers and are then seconded to work in branch or representative offices lawfully incorporated or registered in China (“PRC Engaging Units“).
- The PRC Employer/PRC Engaging Unit shall, on its own initiative, arrange for social insurance registration for the relevant foreigner working in China within 30 days upon issuance of his/her work permit.
- The provision that citizens from Hong Kong Special Administrative Region (“HK“), Macau Special Administrative Region (“Macau“) and Taiwan who are working in the mainland China shall also participate in the social insurance scheme which appears in the draft of the Interim Measures has been taken out from the final version. As a result, whether citizens from HK, Macau and Taiwan who are working in the mainland China are required to participate in the social insurance scheme remain unclear. It is yet to see whether any specific regulations regarding citizens from HK, Macau and Taiwan will be issued and how local social insurance authorities will implement the Interim Measures in this respect.
- If a foreign employee leaves China before reaching his/her retirement age, he/she may:
- retain his/her personal social insurance account, which may be re-activated for social insurance contribution purpose if he/she returns to and takes up an employment in China again; or
- terminate his/her PRC social insurance account by serving a written application, and receive one-off payment of the balance of his/her personal social insurance account.
- If a foreign employee passes away, the balance of his/her personal social insurance account can be inherited pursuant to the relevant laws.
- If a foreign employee has become qualified to enjoy his/her PRC social insurance benefits on a monthly basis (e.g. pension) after leaving China, he/she shall provide a certificate confirming he/she is alive to the relevant PRC social insurance authority at least once every year. Such a certificate should be (i) issued by the PRC embassy or consulate, or (ii) notarized by the relevant authority of the country in which he/she resides and legalized by the relevant PRC embassy or consulate. Such a certificate can be exempted if the foreign employee is able to attend at the relevant PRC social insurance authority in person to prove that he/she is still alive.