China’s social security system consists of five different types of insurance, plus one mandatory housing fund. The five insurances are pension, medical, work-related injury, unemployment, and maternity insurances, while housing fund contributions are included because the costs come from both the employer and the employee. Social security is a complicated but unavoidable issue in employer-employee relationship management for businesses operating in China.
Brief Introduction to Social Security in China
China’s current individual employment contract-based social security system gradually emerged in the late 1990s and the 2000s. Prior to that, the government provided a welfare system (pension, health-care, and housing) for urban workers.
The new system emerged through a series of specific regulations and provisions in the 1994 Labor Law and 2008 Labor Contract Law. It was not until 2011 that these separate parts were codified into a comprehensive national framework under the Social Insurance Law, in which the basic principles of China’s social security system are outlined. Generally speaking, China’s social security system is made up of five different kinds of insurance, plus one mandatory housing fund.
Exemptions for Some Foreigners
Social insurance exemption for foreigners can be a valuable asset for employers and foreign employees to save on unnecessary costs. However, many companies hiring eligible employees are not aware of the benefits available to them, while those who do are often unsure as to how to go about applying.
Social insurance exemptions are only available to a defined group of labor categories, and not to all foreign employees. The applicable countries are German, Korea, Denmark, Canada, Finland, Switzerland, Netherlands, Spain.
Process for Applying for Exemptions
Exemption does not apply automatically, and companies with foreign employees are required to apply to related bureaus for exemption. Though the process of applying for insurance premium exemptions varies across regions, and according to the specific agreement under which it is performed, it follows a standard formula.
The entity that employs the foreign employee in China must submit original certification of insurance issued by a relevant entity in the country of origin to the local Chinese social insurance bureau. This will then be verified and a copy will be held on record. Following verification of this documentation, and possible further verification and certification, the employee in question will be exempt from the relevant social insurance payments.
The time limit of the exemption period may vary. For employees from the Netherlands, for example, the maximum length of the exemption period is five years. If the dispatch period is more than five years, the time limit for exemption will not be extended for more than one year.
If you have further inquires, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website www.tannet-group.net, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143512, or emailing to firstname.lastname@example.org. You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020, Dongmen Rd South, Luohu, Shenzhen, China.
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