The Interim Measures on Participation in Social Insurance by Foreigners Working in China(“Interim Measures”) were issued by the PRC Ministry of Human Resource and Social Security on 6 September 2011 and came into force on 15 October 2011. According to the Interim Measures, foreigners working in China are obliged to participate in the PRC social insurance scheme.
In practice, so far, the Interim Measures have not been fully implemented by local governments in many places. However, on 18 January 2012, the Suzhou Human Resource and Social Security Bureau (“Suzhou HRSSB”) issued a Notice on Implementing the Work of Participation by Foreigners Working in Suzhou in the Social Insurance Scheme (苏人保规  1号, “Suzhou Notice”), which expressly requires that all foreigners working in Suzhou shall participate in the social insurance scheme. The details are as follows:
- As of 18 January 2012, all foreigners working in Suzhou, shall participate in the PRC social insurance scheme, which includes five types of the social insurance, i.e. the pension, medical, work-related injury, unemployment and maternity insurance. Please note that the administrative area of Suzhou covers Suzhou City, Zhangjiagang City, Changshu City, Taicang City, Kunshan City and Wujiang City (“Suzhou”). The contribution rates and the calculation basis of the social insurance contributions applicable for foreigners are the same as those for Chinese employees.
- Foreigners who have been working in Suzhou before 15 October 2011 shall pay social insurance contributions to the social insurance funds starting from October 2011. In other words, contributions shall be made up retroactively by foreigners for the period starting from 15 October 2011. The retroactive contributions for these foreigners shall be made as follows:
Foreigners who have already participated in the social insurance scheme before October 2011
Make up contributions for unemployment and maternity insurance from the commencement of their employment (at the earliest October 2011) until participation
Original calculation basis
Foreigners who did not participate in the social insurance scheme but will participate by 29 February 2012
Make up contributions for all five types of social insurance from the commencement of their employment (at the earliest October 2011) until participation
Actual monthly salary (capped at three times of the average monthly salary of employees of Suzhou, i.e. currently RMB11,392)
Foreigners who have not participated in the social insurance scheme by 1 March 2012
Make up the contributions for all 5 types of social insurance from the commencement of their employment (at the earliest October 2011) until participation
To be determined according to the relevant rules
- Please note that according to the explanation of the Suzhou HRSSB, if a foreigner working in Suzhou fails to participate in the social insurance scheme before 1 March 2012, the calculation basis applicable for the calculation of the retroactive contributions might be higher than the currently applicable standard. Until now, the Suzhou HRSSB has not yet decided to impose late payment fees or penalties on enterprises who fail to make social insurance contributions for their foreign employees within the time limit. But this might change in the near future.
- The Suzhou Notice does not mention the treatment of German employees who can obtain an exemption certification in accordance with the Sino-German Social Security Agreement. According to the explanation of the Suzhou HRSSB, as long as a German employee can provide an exemption certificate, he/she can be exempted from participating in the pension and unemployment insurance. However in some areas such as Taicang, due to their computer system, in practice, currently a German employee may be exempted from all five types of social insurance if a relevant certificate is provided.