China: The New Social Insurance Law And Its Implementing Regulations Mandates Enrollment For Foreigners In China

Last Updated: 6 October 2011
Article by K. Lesli Ligorner, Gordon Feng and Qian Nie

On July 1, 2011 the PRC Social Insurance Law, issued by the Standing Committee of the National People's Congress ("SIL"), took effect and established the first national, basic social insurance framework for employees across the PRC. The SIL requires that employers enroll each employee in five insurance programs – the pension, medical, work-related injury, unemployment and maternity insurance programs.

One of the most controversial aspects of the SIL is the purported mandatory inclusion in the social insurance system of expatriates. Before the SIL, PRC law did not mandate that any foreigners to enroll in its social insurance system.

Nonetheless, many questions about the enrollment of foreigners remain unanswered. On September 9, 2011, the Ministry of Human Resources and Social Security ("MOHRSS") promulgated the Interim Measures on Participation in Social Insurance by Foreigners Working in China ("Interim Measures"), which will become effective on October 15, 2011. The Interim Measures provide some answers to the outstanding questions, but do not attempt to answer all of them.

First, the Interim Measures define a "foreigner" as a person who (a) is not a Chinese national; and (b) holds a work permit (i.e., work permit for foreigners, foreign expert certificate and permit for permanent foreign journalists) and a residence permit in the PRC, or PRC permanent residence permit; and (c) is employed lawfully in China.1 This definition includes foreigners who are employed overseas (outside the PRC) and are seconded to branches and representative offices registered in China, so secondees working in the PRC are also required to participate in all five of the social insurance programs under the SIL.2 Notably, neither the SIL nor the Interim Measures make clear whether employees who are seconded to a WFOE or joint venture (which is not considered a branch or representative office under PRC law) by an overseas affiliated company are required to participate in the social insurance programs.

Further, the definition of a "foreigner" in the Interim Measures fails to include nationals of Hong Kong, Macau and Taiwan ("HMT Residents"). Notably, the draft measures issued in June of this year expressly included HMT Residents, but this reference was omitted from the Interim Measures. There is a possibility that HMT Residents will be or are already covered under separate regulations issued by local cities and provinces. For example, under current local Shanghai regulations, the employer may choose to enroll HMT Residents employees in three insurance programs – pension, medical and work-related injury insurance programs.3 In contrast, consultations with the Tianjin Labor Bureau suggest that HMT Residents are required to participate in all five insurance programs, just as local PRC employees.4

Moreover, neither the SIL nor the Interim Measures suggest whether enrollment of a foreigner can be voluntary or if an opt out option may exist if, for example, the foreigner already has medical insurance or is enrolled in a home country pension program. Rather, the Interim Measures provide that foreign employees may be exempted from enrolling in PRC social insurance programs in accordance with the social insurance treaty between his/her home country and the PRC.5 To date, only Germany and South Korea have reached bilateral social insurance treaties with the PRC. Despite these treaties, however, a German or Korean employee is only exempted from the pension and unemployment insurance schemes under the PRC-Germany treaty or the pension insurance scheme under the PRC-Korea treaty, and the German or Korean employee must still enroll in the other PRC social insurance programs.

In order to strengthen the enforcement with respect to the enrollment of foreigners in the social insurance schemes, the SIL requires the authorities handling work permits for foreigners to share information regarding their employment with the social insurance administration, and the social insurance administration must also periodically check with other authorities to obtain information regarding the foreigners who have obtained employment authorization.6

A key issue for many foreigners is that they will not likely benefit from enrollment in these programs. For example, foreigners generally do not frequent PRC hospitals covered by the statutory medical insurance scheme, largely for language and standards of care reasons. (The clinics and hospitals set up for expatriates are not currently covered under the PRC social insurance scheme.) Further, foreigners are not limited by the "one child policy" as PRC nationals are, and whether female expatriates can receive maternity insurance, regardless of whether they have more than one child, remains unknown.

In addition, female employees receive a maternity allowance instead of their regular wages during maternity leave, and the rate for the maternity allowance has changed under the SIL. As of July 1, 2011, employers are required to calculate the maternity allowance according to the average monthly wage for all employees of the employer in the previous year ("Employer AMW").7 In the past, although it varies from city to city, the maternity allowance was usually linked to the employee's own wages rather the Employer AMW.

Some local governments have issued their own rules to clarify the maternity allowance. For example, the Shanghai Municipal Government issued a notice on adjusting the maternity insurance policies, effective July 1, 2011, which provides that if the Employer AMW exceeds three times the local average monthly wage in the previous year ("Local AMW"), the social insurance fund will only pay a maternity allowance of up to three times the Local AMW, and the employer must make up the difference between the maternity allowance paid by the fund and the Employer AMW. Through consultations with the Shanghai Labor Bureau, we understand that currently an employer is not required to make up the difference between the employee's actual monthly wage and the Employer AMW if the employee's actual monthly wage exceeds the Employer AMW. Accordingly, from the employee's perspective, a low income employee may receive a maternity allowance during her maternity leave that exceeds her regular salary. On the contrary, a highly paid senior employee may receive far less as a maternity allowance than what she regularly earns. Considering that in general expatriates receive the higher salaries in most organizations, expatriates may receive considerably less under the SIL during their maternity leave.

Nonetheless, paying an employee less than her regular salary during her maternity leave potentially violates the PRC Law on the Protection of Women's Interests, which provides that a female employee's salary may not be lowered during her maternity leave.8 Thus, it is unclear whether the local implementing regulations under the SIL will trump the requirements of non-discrimination under the PRC Law on the Protection of Women's Interests, or whether the PRC Law on the Protection of Women's Interests will trump the local implementing regulations of the SIL.

Notably, the Interim Measures do provide that an expatriate may receive social insurance benefits after leaving the PRC, provided that he/she has become eligible for the benefits. If he/she has not become eligible, the employee may maintain his/her personal account for when he/she returns to the PRC, and the employee will receive credit for the prior contribution period upon the resumption of making contributions. Alternatively, the expatriate may, upon his/her written application, choose to withdraw the balance of his/her individual account in a lump sum payment and terminate enrollment in the social insurance scheme.9 The regulations to date do not permit the employer or expatriate to withdraw the employer's contributions to the social insurance scheme, which scheme makes up the largest percentage of the social insurance contributions for an employer and an expatriate.

Another ambiguity in the SIL and the Interim Measures is whether the contribution amounts for foreigners will match those for PRC nationals. At present in many jurisdictions, the same contribution rates that apply to PRC nationals apply to foreigners. However, we cannot rule out the possibility that local governments will revise the contribution rates for foreigners. The contribution rates vary from city to city. The chart below shows the current monthly contribution rates for employers and employees in Shanghai and Beijing.

The contribution base is an employee's average monthly salary over the last calendar year, with an upper limit at 300% and a lower limit at 60% (40% for some programs in Beijing), of the local average monthly salary. In addition, the percentage of work-related injury insurance varies depending on the risk level of an employer's business. As most foreigners are paid relatively high salaries compared to the applicable average monthly salary, generally foreigners and their employers will be required to contribute the maximum contributions, to the extent that the contributions will remain the same as those for PRC nationals.

What is clear is that employers will face increased labor costs with respect to their expatriate employees in the PRC – starting in October, when the Interim Measures take effect. And employers will need to determine whether they will cover these new costs for their employees by grossing up their salaries. Accordingly, employers should begin to budget for these additional payroll costs and begin to document the potential social insurance contributions for their expatriates in the employment documentation.


1 Interim Measures, art. 2.

2 Interim Measures, art. 3.

3 Notice regarding Participation in Urban Social Insurance System of Foreigners, Individuals holding permanent residence permit in foreign countries and residents of Taiwan, Hong Kong and Macau, issued by Shanghai Human Resources and Social Security Bureau, effective Oct. 10, 2009.

4 See Interim Regulation on the Collection and Payment of Social Insurance Premiums, effective Jan. 22, 1999; Provisions on the Administration of the Employment of Taiwan, Hong Kong and Macao Residents in the Mainland, effective Oct. 1, 2005; Provisions on the Participation in Social Insurance of Foreigners and Taiwan, Hong Kong and Macao Residents, issued by Tianjin Labor and Social Security Bureau, effective Jan. 1, 2008.

5 Interim Measures, art. 9.

6 Interim Measures, art. 4.

7 PRC Social Insurance Law, art. 56.

8 See PRC Law on the Protection of Women's Interests, issued by the Standing Committee of National People's Congress, effective October 1, 1992, art. 27.

9 Interim Measures, art. 5.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.

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.