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Employer Action Code: Act
Employer social insurance contributions made mandatory for some employees in Shanghai
Effective July 1, 2009, employers in Shanghai are required to contribute to social insurance plans (retirement, medical, maternity, unemployment and work-related injury) for eligible non-Shanghai resident employees. This regulation, which was issued on June 12, 2009 by the Shanghai Human Resource and Social Security Bureau, is expected to result in higher costs to employers in Shanghai, as social insurance contributions there are higher than in many other locations in China.
Key Details
The main features of this regulation are as follows:
- It is obligatory for non-Shanghai resident employees under the age of 45 to participate in Shanghai social insurance.
- Employees who are not residents of a city/town in other provinces must have a professional technical title, or a national qualification certificate of technician or senior technician to be eligible. In the absence of either, they must at least have the expertise required for their position by their employer.
- The question of the portability of the social pension is still unclear. This is an important issue to a mobile labor population – some non-Shanghai resident employees have been contributing to social pensions in their home province, may transfer to work in other locations after a few years in Shanghai, or not plan to retire in Shanghai eventually.
Previously, a non-Shanghai resident employee was not eligible to participate in Shanghai social insurance, and could only purchase transitional social insurance arrangements until the employee obtained a Shanghai Resident Card for them.
July,
2009
The information included in this report is general information only and should not be relied upon without further review by the appropriate professional advisers. Watson Wyatt is not a law firm or an accounting firm and is not engaged in providing legal, accounting or tax services or advice.
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