Top 9 Questions Regarding Social Insurance Contribution for Foreigners Working in Shanghai China 
August 26, 2022
In China, all foreign employees working in China are obliged to pay social insurance, Shanghai is the exception before due to one local document (No. 38) implemented in 2009 that foreign employees in Shanghai MAY pay the social insurance. This gives an option to many foreigners working in China and their employers to choose not register into the social insurances.
1. After 15th August, 2021, is the company obligated to contribute social insurance premiums for all the foreign employees hired in China?
Answer: Considering the Shanghai local documents No. 38 “Interim Measures for Foreigners employed in China to participate in social Insurance” is going to be expired on 15th August 2021, and will not to be extended anymore, all foreigners working in Shanghai, China including individuals from HK, Macao, Taiwan shall all contributed China social security starting from 15th August 2021. Except for countries that have bilateral mutual exemption agreements with China, in this case, foreign employees who are already engaged in the social security in such countries, are able to opt out of the pension and unemployment insurances in China, the other three social insurances still need to be contributed in China.
What need points out especially is, foreign employees who are not received the work visa in China cannot be treated as labor relationship, employer has no social security contribution obligation in such case.
2. Can foreign employees claim employer to pay the social insurance premiums between 15th October 2011 to 15th August 2021?
Answer: In view of the interim Measures for Foreigners hired in China to Participate in Social Insurance, which came into effect on October 15, 2011, if foreign employees complain about making up the social insurance payment, there is a risk for employers to make up the social insurance payment for foreign employees.
3. Can the employer defend the social security obligation with foreign employees by mutual agreement?
Answer: If the labor contract signed by the foreign employee and the company clearly stipulates that the foreign employee does not require to pay Chinese social security, such agreement will be generally recognized in the labor supervision practice before January 2020, but after January 2020, such agreement will be deemed as “violating the law” and invalid. In 2020, there is a real social security case regarding such case. In this case, the foreign employee complained about the employer’s supplementary payment of social security. The employer defended the case according to the mutual agreement in the labor contract, but the employer was eventually pay nearly 500,000 RMB of social security fees, and the supplementary payment period started from October 2011.
4. Can the employer invoke the 2-year limitation defense when the foreign employee requires to pay the social security?
Answer: The two-year limitation is in the provisions of the Labor Security Supervision Regulations. According to local regulation in China, If the employer has not paid the social security for a long time, such behavior is treated illegal in China, and the two-year limitation is not applicable. In China, it is each local social security bureau’s responsibility to performs the social security audit duty, so it is also not applicable to the provisions of the Labor Security Supervision Regulations.
5. If foreign employees require to make up the social security payment, should they make up the payment according to the “three insurance” or “five insurance”?
Answer: Employer shall make the five social insurances when contributing the makeup social security for foreigners working in China.
6. Can foreign employees require severance payment and leave the company on the name of no social security contribution?
Answer: base on the judicial practice in Shanghai, employees’ severance payment is based on the terms and conditions in the labor contract that signed with the employer as well as the local regulations and polices, if there are no written agreement states that did not pay social security staff can stand for economic compensation or severance payment, in most of the cases, such request from employees will not be accepted.
7. When the foreign employee reaches the legal retirement age, can the foreign employee claim the loss of pension because the employer has not paid social security?
Answer: according to this city’s adjudication caliber, “employer who hire foreign employees in China must apply for work permit, and sign labor contract according to law. During the period of employment, the salary paid by the employer shall not be lower than the local minimum wage standard. Working time,annual leaves, rest, vacation, labor safety and health and social insurance shall be implemented according to local regulations. Other labor rights and obligations agreed or performed in addition to the above provisions may be determined in accordance with the written labor contract, individual agreement or other agreement between the parties and the content actually performed.” The tendency of loss of social security treatment still belongs to the category of agreed rights and obligations. If foreign employee and employer in China do not agree on pension treatment responsibility or agree to pay pension separately, the appeal of the employee is unlikely to be supported.
8. Can employees from HK, Macao, Taiwan claim to pay the social security premiums since 1st October, 2005?
Answer: According to the local regulation in China, if employer hiring employees working in China from Taiwan, Hong Kong and Macao, the employer is still obligated to pay the social security.
9. Are foreign, Taiwan, Hong Kong and Macao employees required to pay housing provident fund?
Answer: according to “regulation of housing accumulation fund management”, foreign employees and employees from Taiwan, Hong Kong and Macao do not have urban household registration, and employers do not have the legal obligation to contribute to the housing provident fund for hiring foreign employees in China.
JSC will remain in consistent communication with the social security bureau in Shanghai and share the latest information with you once we receive any updates about the policy and implementation to ensure compliance for foreign companies doing business in China.
Frequently asked questions for payroll and hiring employees in China.
PEO refers to a professional employment organization, in China it’s also called employee outsourcing, labor dispatch. Foreign companies can hire staff in China through a PEO agency without setting up a legal entity in China.
You need to set up a company in China and then set up a separate Social Insurance and Housing Fund Account. After the company has been set up, you can contribute the benefits to the employees who have signed a contract with you.