New Favorable Social Security Policies Issued for the Epidemic in China

The resurgence of the epidemic situation in China caused lockdowns in several cities and impacted a lot of businesses. To help companies to overcome difficulties, in April and May 2022, the Chinese Government released some favorable policies on payments of social insurance fees and housing fund contributions. Below please find the summary of the new policies.

Deferring Payment of Social Insurance Fees

On 25 April, the Ministry of Human Resources and Social Security and the State Taxation Administration announced the Notice on Temporarily Deferring Payment of Social Insurance Fees in Particularly Difficult Industries. On 31 May 2022, the Ministry of Human Resources and Social Security, the National Development and Reform Commission, the Ministry of Finance and the State Taxation Administration further jointly announced the Notice on the Issues Regarding Expansion of Policies on Temporarily Deferring Payment of Social Insurance Fees (hereinafter the two Notices are collectively referred as “Social Insurance Policies”). We would like to summarize the policies as follows:

1. Companies suffering from operational difficulties in 5 particularly difficult industries (catering, retail, tourism, civil aviation, road, water and railway transportation industries) as well as in 17 industries that are seriously affected by the epidemic (such as automotive and textile industries, most of which are manufacturing and social and culture industries) may apply for deferring payment of the employer’s part of pension fund during the period from April 2022 until the end of 2022 and the employer’s part of unemployment insurance and work-related injury insurance contributions during the period from April 2022 until March 2023. 

2. The medium, small and micro scale companies, as well as  public institutions and social organizations, foundations, social service agencies, law firms, accounting firms and other social organizations, that suffer from temporary operation difficulties in the locations seriously affected by the epidemic may apply for deferring payment of the employer’s part of pension fund, unemployment insurance and work-related injury insurance contributions during the period from April 2022 until the end of 2022. 

3. The above-mentioned companies can enjoy the treatment of deferral of payment upon the approval of the competent social insurance administrative authorities. But they must duly withhold and pay the employee’s part of social insurance contributions according to the law. They also must make up the deferred payments of the pension fund, unemployment insurance and work-related injury insurance contributions within one month after expiration of the deferral period. No late payment fees will be imposed on these companies during the deferral period. The unemployment insurance and work-related injury insurance benefits of the employees and other benefits related to the unemployment insurance and work-related injury insurance will not be affected. However, during the deferral period, if any employee of these companies starts to enjoy pension benefits or changes his/her job, the company must make up the deferred payments of the pension fund immediately. If a company decides to be dissolved, the company must make up the deferred payments before the deregistration. 

Deferring Payment of Housing Fund Contributions

On 20 May 2022, the Ministry of Housing and Urban-Rural Development, the Ministry of Finance and the People’s Bank of China jointly issued the Notice on Supporting Policies of Temporarily Deferring Payment of Housing Fund Contributions (Jian Jin [2022] No.45). According to this notice, companies affected by the epidemic can apply for deferring payment of housing fund contributions until 31 December 2022 and make up the deferred payments afterwards. During the deferred period, the normal withdrawal of housing fund and application for housing fund loans by employees shall not be affected. The detailed implementation rules shall be subject to local policies.

So far, several locations, including but not limited to Beijing, Shanghai, Ningbo and Hangzhou have issued local implementing rules. For example, in Shanghai, if a company is not able to pay the housing fund contributions duly and fully due to impact of the epidemic, upon consulting with the trade union or the employees’ representatives, the company may apply for deferring payment of the housing fund contributions at the competent housing fund administrative center. However, if an employee changes his/her job or withdraws the housing fund by deregistering the housing fund account, the company shall make up the deferred payments immediately. In Beijing, consultation with the trade union or the employees’ representatives about deferring payment of the housing fund contributions is not required when a company applies for deferring payment. Further, the policies at both the State and local levels do not specify whether the company can apply for deferring payment of both the employer’s and employee’s parts of housing fund contributions or only the employer’s part of housing fund contributions. Therefore, if a company wants to apply for deferring payment of the housing fund contributions, the company may check its local policies in advance.