Social Insurance for Expats in China

China expat employment contracts lawyers

Our clients often ask us whether as China employers they must contribute to social insurance for their expat employees. The answer is that it depends on the employer’s location.

The Provisions on the Employment of Foreigners in China (《外国人在中国就业管理规定》), mandate that expat participation in social insurance programs must comply with applicable Chinese law. But before the Interim Measures for the Participation in Social Insurance of Foreigners Employed in China (《在中国境内就业的外国人参加社会保险暂行办法》) were passed in 2011, there were no national guidelines. As with many things in China, the lack of central government guidance meant that each locale dealt with this issue by coming up with its own rules and that is still the case.

Shanghai, for example, does not require employers pay social insurance for expats. Since 2009, the governing guideline for Shanghai has been the Shanghai Municipal Human Resources and Social Security Bureau’s Circular on Several Issues Regarding Participation in Social Insurance for Urban Workers by Foreign Workers in Shanghai, Workers with Foreign Permanent (Long-Term) Residency and Taiwan, Hong Kong, and Macao Residents (《关于在沪工作的外籍人员、获得境外永久(长期)居留权人员和台湾香港澳门居民参加城镇职工社会保险若干问题的通知》)(沪人社养发[2009]38号).  According to this Circular, an employer does not have to make social insurance payments for an expat and even where the employer and the expat have agreed on the employer’s contributing such benefits, the employer’s obligation is limited to pension, medical and work-related injury insurance, with maternity and unemployment insurance not covered.

As mentioned above, in 2011, China’s Ministry of Human Resources and Social Security passed the Interim Measures for the Participation in Social Insurance of Foreigners Employed in China. Under these Measures, an employer must pay for all five types of social insurance (pension, medical, work-related injury, maternity and unemployment insurance) for an expat. Shanghai, however, has not adopted this national standard and it is not mandatory for Shanghai employers to contribute social insurance for their expat employees. Shanghai’s position is that until the Central Government issues detailed national measures, it will not change its current rules regarding social insurance for expats.

Other cities, such as Beijing and Shenzhen, do not “see eye to eye” with Shanghai regarding expat social insurance. In both Beijing and Shenzhen, employers are generally required to pay all five types of social insurance (pension, medical, work-related injury, maternity and unemployment insurance) for an expat. But Shenzhen further complicates things by treating expats as employees without a Shenzhen hukou for purposes of social insurance. The exact types of social insurance which must be paid for expats depends on the class of medical insurance an employer provides. An expat with “class one” or “class two” medical insurance must receive all five types of social insurance, while an expat with class three medical insurance gets four types of social insurance (pension, medical, work-related injury and unemployment insurance).

Bottom Line: The short answer then to what employers need to pay in social insurance for their expat employees is the lawyer’s favorite: “it depends.” The slightly longer answer is that we need to check with the relevant authorities for the specific locale because there simply is no one right answer.

12 responses to “Social Insurance for Expats in China”

  1. On account of working in Shanghai, I never had to face this issue. The big question was if expats had to pay social insurance, could expats apply for and receive social benefits? Nobody in my circle had an answer, but realists scoffed at the question. It would be very interesting to hear accounts of expats who paid social insurance and were able to receive social benefits. Anybody?

    • I was just talking to a friend who for ten years was in house counsel in Shanghai with a European company that paid his social insurance, and he’s counting on getting $25 a month when he retires. LOL.

    • When they introduced the social insurance system for expats, they also included information on how to get your benefits back. I think I got a pamphlet or something with that type of information a long time ago when I had originally filled in my forms for a social insurance number/card/etc. For example – if you leave China for good, you can essentially cash in at that point and get some money back. This is also the case for health insurance should you not have used it or not have used it much, when it terminates you get a big (or can be big..scaling with the cost of the plan) chunk of cash afterwards.

  2. On account of working in Shanghai, I never had to face this issue. The big question was if expats had to pay social insurance, could expats apply for and receive social benefits? Nobody in my circle had an answer, but realists scoffed at the question. It would be very interesting to hear accounts of expats who paid social insurance and were able to receive social benefits. Anybody?

    • I was just talking to a friend who for ten years was in house counsel in Shanghai with a European company that paid his social insurance, and he’s counting on getting $25 a month when he retires. LOL.

    • When they introduced the social insurance system for expats, they also included information on how to get your benefits back. I think I got a pamphlet or something with that type of information a long time ago when I had originally filled in my forms for a social insurance number/card/etc. For example – if you leave China for good, you can essentially cash in at that point and get some money back. This is also the case for health insurance should you not have used it or not have used it much, when it terminates you get a big (or can be big..scaling with the cost of the plan) chunk of cash afterwards.

  3. I literally just got a new little blue ‘social employment and security card’ today, long after I told my current employer that they indeed needed to arrange social insurance for me as well (as I found out at my last company). It sucks as it also eats a percent out of my own income. Chengdu is one of those ‘needs to pay’ cities..
    Separately, a question about this part of the article, “As with many things in China, the lack of central government guidance meant that each locale dealt with this issue by coming up with its own rules and that is still the case.” Does that also include local government regulations such as city/province-specific regulations on say, paternity leave? I know there is a significant difference between Shanghai, Beijing, Chengdu, Wuhan etc — but I’m curious whether a company *must* adhere to the local labour regulations, or whether a company’s internal policy could trump those?

  4. I literally just got a new little blue ‘social employment and security card’ today, long after I told my current employer that they indeed needed to arrange social insurance for me as well (as I found out at my last company). It sucks as it also eats a percent out of my own income. Chengdu is one of those ‘needs to pay’ cities..
    Separately, a question about this part of the article, “As with many things in China, the lack of central government guidance meant that each locale dealt with this issue by coming up with its own rules and that is still the case.” Does that also include local government regulations such as city/province-specific regulations on say, paternity leave? I know there is a significant difference between Shanghai, Beijing, Chengdu, Wuhan etc — but I’m curious whether a company *must* adhere to the local labour regulations, or whether a company’s internal policy could trump those?

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