China: China has enacted its first Social Security Law

Last Updated: 21 January 2011
Article by Jeanette Yu and Julia Tänzler-Motzek

The Social Security Law of the People's Republic of China ("Law") was passed during the 11th session of the Standing Committee of the National People's Congress of China on 28 October 2010. The Law will take effect as of 1 July 2011. Before its promulgation, the social security policies were scattered throughout a range of rules and regulations at both national and local levels. The Law is the first comprehensive law of the PRC to address social securities and their related administrative issues. In addition to consolidating various existing social security rules and regulations, the Law also introduces some new provisions and policies.

To view the article in full, please see below:

Full Article

The Social Security Law of the People's Republic of China ("Law") was passed during the 11th session of the Standing Committee of the National People's Congress of China on 28 October 2010. The Law will take effect as of 1 July 2011. Before its promulgation, the social security policies were scattered throughout a range of rules and regulations at both national and local levels. The Law is the first comprehensive law of the PRC to address social securities and their related administrative issues. In addition to consolidating various existing social security rules and regulations, the Law also introduces some new provisions and policies.

The key aspects of the Law are as follows:

Basic Social Security Scheme

The Law, for the first time, expressly clarifies that in China the social security system basically contains five types of insurances, that is (i) pension; (ii) basic medical insurance; (iii) unemployment insurance; (iv) work-related injury insurance and (v) maternity insurance, all of which are mandatory for both the employer and the employee of PRC companies. The Law expressly specifies that contributions to the pension, basic medical insurance and unemployment insurance shall be paid by both the employer and the employee while the contribution to the work-related injury insurance and the maternity insurance shall only be paid by the employer. The Law does not specify the contribution rates and the basis of calculation for each kind of social securities which leaves room for local governments to formulate their own policies in line with their local economic realities.

Transfer of Individual Social Security Relationships

In the past, if the employee changed his work location, it was not possible to transfer the social security relationship of an employee from one city to another. This restriction discouraged employees who work out of their hometowns to participate in the social security scheme. This restriction has now been lifted under the Law. An individual will be allowed to transfer his or her pension, basic medical and unemployment insurance relationships with him or her when the individual decides to move to another city to take up new employment. The social security contribution years will be calculated accumulatively regardless of the change in the work location of the individual concerned. As a result, this new significant change which is brought about by the Law will greatly facilitate the mobility of human resources within the PRC. Under the PRC employment law, the employer is obliged to help the employee to transfer his/her social security relationship in case the employment contract terminates or expires.

Participation in Social Securities by Foreigners

In the past, it was not entirely clear whether expatriate employees need to participate in the Chinese social security scheme. In practice, foreigners if they preferred could have participated in the pension, basic medical insurance and work-related injury insurances based on a contractual agreement with the employer in some cities such as Shanghai, Suzhou and Tianjin. This situation will change after the Law takes effect on 1 July 2011 as the participation in social securities by foreigners will be handled by taking reference of the provisions of the Law. This means that foreigners working in China will be able to participate in the Chinese social security scheme.

Reduction of Work-related Injury Costs to be borne by Employer

According to the current regulations, an employer is obliged to pay to its employee who has suffered a work-related injury a hospital food allowance, transportation and accommodation fees for medical treatment outside the city where the employee works as well as a lump-sum medical subsidy when the employee's employment contract terminates. According to the Law, in the future, all the above fees and expenses will be covered by the work-related injury insurance fund.

Collection of Social Security Contributions enforced

Compared with the current regulations, the Law expressly empowers the social security collection body with more authorities to collect social security contributions when an employer who fails to make payments in full and on time refuses to rectifiy the situation within the requested time limits. These new authorities are as follows:

  1. access to the deposit account of the employer with banks or other financial institutions;
  2. right to deduct the outstanding social security contributions directly from bank account(s) of the employer upon the approval of the relevant administrative authority;
  3. right to require the employer to provide a warranty in case the balance of the employer's bank account is insufficient to pay the outstanding social security contributions; and
  4. right to apply to the People's Court to detain, seize and auction off the assets of the employer at the value equal to the outstanding social security contributions and deduct the outstanding amounts from the proceeds of the auction.

Employer's Liabilities for Breach of Social Security Law increased

After the Law takes effect, if the employer fails to make social security registration and refuses to make a rectification within the ordered time limits, in addition to a standard penalty of anywhere between RMB 500 to RMB 3,000 imposed directly on the responsible persons which are directly in charge and involved, the employer will also be subject to a penalty which is calculated based on one to three times of the outstanding social security contributions.

Further in addition to a late payment fee of 0.05% of per day, according to the Law, the authority may now also impose a penalty in the amount which is equivalent to one to three times of the amount of the outstanding social security contributions.

In summary, the Law clarifies the obligations of the employers under the social security scheme and also aims to improve employers compliance in the scheme by increasing the penalties and the power of the authorities to enforce such penalties in case of breach. The promulgation of the Law will raise the employees' awareness of their rights in respect of the social securities and allow them more freedom to work in different cities. As to the provision of the social securities for foreigners, it is still unclear whether such provision will be voluntary or mandatory.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 20/01/2011.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.