Corporate social insurance payments lowered

Underpaying social insurance is still a leading cause of unrest, said Jonathan Isaacs, a partner at the Hong Kong office of Baker & McKenzie. “We've seen many strikes and other forms of disputes where employees will collectively submit complaints to the labor bureaus for this reason,” he said.

The central government issued a high-level notice last year that called for the need to enforce social insurance requirements more stringently.

But now, it seems the economic downturn has forced the government to be more pro-corporate. There has been a shift in how it deals with labor relations and this Circular lifts the pressure slightly for some companies, especially those going through a rough patch, Isaacs said.

ChinaDaily reported that the government estimates companies across the country will be able to save over Rmb100 billion ($15.48 billion) each year.

Pension insurance premiums

The Circular caps the percentage of basic old-age (pension) insurance premiums of employees paid by the company at 20% for the areas where the rate already exceeds 20%. It lowers the rate to 19% in certain provinces that are able to afford nine consecutive months' worth of pension allocation.

Some cities, such as Dalian, a port city in Liaoning province, had removed all caps at one point. This led to a huge uproar from companies, which argued that this would cause their costs to soar through the roof, said Isaacs.

Zhang doesn't consider the Circular's reduction too significant. For instance, he said, although the pension payment rate in Shanghai was reduced by 2.5% in the past two years (it was 22.5% in 2014 and 21% in 2015), today, an employee must still contribute 43% of his monthly wage—nearly half his salary.

And 20% is still considered high on the employer's side too. Foreign businesses generally provide higher salaries, so the social insurance payments calculated on the basis of their workers' average monthly wages means U.S. and EU employers can't really afford this burden, he said.

Several local governments have issued their implementing notices on the specifics of payment collection. “According to what we've collected so far, Shanghai, Tianjin, Gansu, Yunnan, Jiangsu, Zhejiang, Fujian, Beijing and Chongqing are among those that have released their respective local policies,” said Zhang. But [as of May 10,] some, including Hunan, Hubei, Xinjiang and Shandong, have yet to issue theirs,” he said.

Unemployment insurance payments

The Circular also drops the rate of unemployment insurance contribution from the current 2% to a range between 1% and 1.5%.

It's a reasonable percentage, said Zhang. Unemployed individuals only receive Rmb2000 monthly and the government has already collected enough money in its account to be able to afford the scheme for the two years the Circular is in place, he said.

But many workers are expected to lose out during China's shift from an economy driven by exports and traditional, heavy manufacturing to one more based on services and high-end production.

There's still some disconnect there, said Baker & McKenzie's Isaacs. He explained that this broader transition will have a sizeable impact on Guangdong, where many low-end manufacturing factories have already downsized or shut down in recent years.

“I don't know if the provincial government's really been able to create enough jobs—these workers mostly have a high school education and switching them over to a service or high-end sector overnight would be unrealistic,” he said, adding that many will need to move to lower-end retail services or go back to their hometowns.

In its most recent notice, Guangdong changed its unemployment insurance rates from 2% to 1%.

HR compliance

Recent events—labor disputes in particular—confirm that companies need be in full compliance. Not only would a business bear knock-on legal costs when dealing with strikes, but every day an operation is shut down can cause significant financial harm. The Yue Yuen factory, which manufactures and supplies shoes for Nike and Adidas, reported direct losses of $27 million from its high-profile plant strike on April 14, 2014.

Human resources departments can consult with local bureaus on the correct calculation methods. A government supervising committee also initiates company investigations in response to complaints or reports from employees, and conducts annual random inspections.

Practitioners tend to agree that domestic companies, even state-owned enterprises, are more prone to underpaying social insurance and tend to place a smaller focus on compliance in this regard. As for foreign firms, Dentons' Zhang said that despite instances of misconduct here and there, Japanese, U.S. and EU investors usually are most compliant from what he has seen during his 15 years of practice.

A business' responsibility to pay workers' insurance contribution is confirmed from the very beginning—a social insurance account must be registered with the labor bureau and the bank within 30 days of a company's incorporation.

By Katherine Jo

中国已降低企业社保支出要求，以减轻财务压力并促进合规。

促使这一新政推出的是大量违规和支付金额低于法定要求的现状，而这已成为劳工纠纷的主要因素。

人力资源和社会保障部与财政部联合发布的《关于阶段性降低社会保险费率的通知》（以下称为“通知”）已于 2016 年 5 月 1 日生效，其中降低了对养老金和失业保险费的企业社保付费要求，这两项分别改为上限 20% 和从 1.5% 降至 1%。住房公积金费率仍然低于 12%。

“在中国，许多公司并不按照国家法律为员工支付社保，而此通知则降低了企业缴费基准。”大成律师事务所上海高级合伙人兼中国区劳动法专业领域的负责人张根旺说道，“雇主必须基于员工在过去 12 个月间的平均每月工资支付社保，但许多公司仅按照最低工资来缴费。”

贝克麦坚时律师事务所香港办事处的合伙人 Jonathan Isaacs 表示，社保缴纳不足仍然是劳工事件的主要原因。“许多罢工和其他形式的纠纷都是因此而起，员工们集体向劳动局提交投诉。”他说道。

中央政府去年发布了高级别通知，要求强制实施更严格的社保要求。

但如今，经济下行状况已迫使政府更偏向于企业。Isaacs 表示，对于劳工关系的处理方式也发生了转变，此通知稍加解除了某些公司的压力，尤其是正经历难关的公司。

《中国日报》报道称，政府预估全国公司每年将可节省 1,000 亿元人民币（约合 154.8 亿美元）。

养老保险费率

按照此通知，在公司为员工支付的基本养老保险费率已超出 20% 的地区，这些公司的缴费比率上限降为 20%。在可承担连续九个月养老金发放的省份，此比例降至 19%。

某些城市（例如辽宁省的港口城市大连）一度废除了所有上限。Isaacs 说道，这引发了巨大争议，公司表示这将导致成本急剧增长，无力承担。

张根旺并不认为此通知规定的费率降低有重大影响。他表示，以上海而言，虽然过去两年中养老保险缴费费率降低了 2.5%（2014 年为 22.5%，而 2015 年为 21%），但如今员工仍需缴纳每月工资的 43%，将近一半薪资。

而且雇主方仍认为 20% 偏高。他还表示，外国企业一般会支付较高的工资，因此基于员工平均每月工资计算的社保缴费相当高，美国和欧盟雇主实际上也无法承担。

多地政府已发布有关缴费细则的实施通知。“根据我们至今收集的信息，上海、天津、甘肃、云南、江苏、浙江、福建、北京和重庆都已发布相应的本地政策，”张根旺说道，“但截至 5 月 10 日，湖南、湖北、新疆和山东等省份尚未发布实施细则。”

失业保险缴费

此通知还规定失业保险缴费费率从目前的 2% 降至 1%-1.5%。

张根旺表示，“这一比例较为合理。失业人员每月仅领取 2,000 元人民币，而政府账中已收取充足资金，来在实施此通知的两年间承担这一发放方案。”

但中国正从由出口和传统重工业驱动经济转型为更加基于服务和高端生产业，大量工人可能会随之失业。

贝克麦坚时律师事务所的 Isaacs 表示，其中仍然存在缺口。他解释道，这一广泛转型将对广东省产生巨大影响，在该省，许多低端制造工厂已在近几年缩小规模或关闭。

“我不知道广东省政府能否真正创造充足的工作机会，这些失业工人大多仅有高中文化，基本上无法将他们快速导向服务业或高端行业，”他说道，“许多人仍然需要转向低端零售服务业或重回家乡。”

在最新通知中，广东省将其失业保险费率从 2% 降至 1%。

人力资源合规

最近的相关事件（尤其是劳工纠纷）印证了公司必须确保完全合规。处理罢工不仅会产生间接法律成本，而且会导致日常停业，造成严重的经济损失。为 Nike 和 Adidas 制造和供应鞋履的裕元工业表示，2014 年 4 月 14 日引起关注的工厂罢工导致其直接损失 2,700 万美元。

人力资源部门可咨询相关本地机关，了解正确的费率计算方法。政府监管委员会还会针对员工投诉或报告来发起公司调查，并执行年度随机检查。

执业者大多认为，国内公司（包括国有企业）更倾向于少缴社保费用，而且不太注重此方面的合规事项。大成律师事务所的张根旺表示，根据其 15 年的执业经验，外国公司虽然偶有不当行为，但日本、美国和欧盟投资者的合规度通常最高。

企业支付员工保险缴费的责任应从一开始就加以确认，必须在公司成立的 30 天内向劳动局和银行注册登记社保账户。

（作者：赵修敏）

China has reduced corporate social security contribution requirements in an effort to ease strain on finances as well as encourage compliance.

The move comes against the backdrop of cases of bending the rules and contributing less then statutorily required, a practice cited as a major trigger of labor disputes.

The Circular on Reducing Social Insurance Premium Rates in Stages (Circular), jointly issued by the Ministry of Human Resources and Social Security and the Ministry of Finance, took effect on May 1 and lowers enterprises' social insurance payment requirements for pension and unemployment, which have been capped at 20%, and reduced to 1% from 1.5%, respectively. Housing funds will remain under 12%.

“Many companies in China do not pay social insurance in accordance with PRC law and the aim of this Circular is to lower the basis of contribution,” said Anderson Zhang, a senior partner and head of the China employment law practice group at Dentons in Shanghai. “Employers must contribute social insurance based on a worker's average monthly salary in the past 12 months, but many do so only based on the minimum wage,” Zhang said.

Underpaying social insurance is still a leading cause of unrest, said Jonathan Isaacs, a partner at the Hong Kong office of Baker & McKenzie. “We've seen many strikes and other forms of disputes where employees will collectively submit complaints to the labor bureaus for this reason,” he said.

The central government issued a high-level notice last year that called for the need to enforce social insurance requirements more stringently.

But now, it seems the economic downturn has forced the government to be more pro-corporate. There has been a shift in how it deals with labor relations and this Circular lifts the pressure slightly for some companies, especially those going through a rough patch, Isaacs said.

ChinaDaily reported that the government estimates companies across the country will be able to save over Rmb100 billion ($15.48 billion) each year.

Pension insurance premiums

The Circular caps the percentage of basic old-age (pension) insurance premiums of employees paid by the company at 20% for the areas where the rate already exceeds 20%. It lowers the rate to 19% in certain provinces that are able to afford nine consecutive months' worth of pension allocation.

Some cities, such as Dalian, a port city in Liaoning province, had removed all caps at one point. This led to a huge uproar from companies, which argued that this would cause their costs to soar through the roof, said Isaacs.

Zhang doesn't consider the Circular's reduction too significant. For instance, he said, although the pension payment rate in Shanghai was reduced by 2.5% in the past two years (it was 22.5% in 2014 and 21% in 2015), today, an employee must still contribute 43% of his monthly wage—nearly half his salary.

And 20% is still considered high on the employer's side too. Foreign businesses generally provide higher salaries, so the social insurance payments calculated on the basis of their workers' average monthly wages means U.S. and EU employers can't really afford this burden, he said.

Several local governments have issued their implementing notices on the specifics of payment collection. “According to what we've collected so far, Shanghai, Tianjin, Gansu, Yunnan, Jiangsu, Zhejiang, Fujian, Beijing and Chongqing are among those that have released their respective local policies,” said Zhang. But [as of May 10,] some, including Hunan, Hubei, Xinjiang and Shandong, have yet to issue theirs,” he said.

Unemployment insurance payments

The Circular also drops the rate of unemployment insurance contribution from the current 2% to a range between 1% and 1.5%.

It's a reasonable percentage, said Zhang. Unemployed individuals only receive Rmb2000 monthly and the government has already collected enough money in its account to be able to afford the scheme for the two years the Circular is in place, he said.

But many workers are expected to lose out during China's shift from an economy driven by exports and traditional, heavy manufacturing to one more based on services and high-end production.

There's still some disconnect there, said Baker & McKenzie's Isaacs. He explained that this broader transition will have a sizeable impact on Guangdong, where many low-end manufacturing factories have already downsized or shut down in recent years.

“I don't know if the provincial government's really been able to create enough jobs—these workers mostly have a high school education and switching them over to a service or high-end sector overnight would be unrealistic,” he said, adding that many will need to move to lower-end retail services or go back to their hometowns.

In its most recent notice, Guangdong changed its unemployment insurance rates from 2% to 1%.

HR compliance

Recent events—labor disputes in particular—confirm that companies need be in full compliance. Not only would a business bear knock-on legal costs when dealing with strikes, but every day an operation is shut down can cause significant financial harm. The Yue Yuen factory, which manufactures and supplies shoes for Nike and Adidas, reported direct losses of $27 million from its high-profile plant strike on April 14, 2014.

Human resources departments can consult with local bureaus on the correct calculation methods. A government supervising committee also initiates company investigations in response to complaints or reports from employees, and conducts annual random inspections.

Practitioners tend to agree that domestic companies, even state-owned enterprises, are more prone to underpaying social insurance and tend to place a smaller focus on compliance in this regard. As for foreign firms, Dentons' Zhang said that despite instances of misconduct here and there, Japanese, U.S. and EU investors usually are most compliant from what he has seen during his 15 years of practice.

A business' responsibility to pay workers' insurance contribution is confirmed from the very beginning—a social insurance account must be registered with the labor bureau and the bank within 30 days of a company's incorporation.

By Katherine Jo

中国已降低企业社保支出要求，以减轻财务压力并促进合规。

促使这一新政推出的是大量违规和支付金额低于法定要求的现状，而这已成为劳工纠纷的主要因素。

人力资源和社会保障部与财政部联合发布的《关于阶段性降低社会保险费率的通知》（以下称为“通知”）已于 2016 年 5 月 1 日生效，其中降低了对养老金和失业保险费的企业社保付费要求，这两项分别改为上限 20% 和从 1.5% 降至 1%。住房公积金费率仍然低于 12%。

“在中国，许多公司并不按照国家法律为员工支付社保，而此通知则降低了企业缴费基准。”大成律师事务所上海高级合伙人兼中国区劳动法专业领域的负责人张根旺说道，“雇主必须基于员工在过去 12 个月间的平均每月工资支付社保，但许多公司仅按照最低工资来缴费。”

贝克麦坚时律师事务所香港办事处的合伙人 Jonathan Isaacs 表示，社保缴纳不足仍然是劳工事件的主要原因。“许多罢工和其他形式的纠纷都是因此而起，员工们集体向劳动局提交投诉。”他说道。

中央政府去年发布了高级别通知，要求强制实施更严格的社保要求。

但如今，经济下行状况已迫使政府更偏向于企业。Isaacs 表示，对于劳工关系的处理方式也发生了转变，此通知稍加解除了某些公司的压力，尤其是正经历难关的公司。

《中国日报》报道称，政府预估全国公司每年将可节省 1,000 亿元人民币（约合 154.8 亿美元）。

养老保险费率

按照此通知，在公司为员工支付的基本养老保险费率已超出 20% 的地区，这些公司的缴费比率上限降为 20%。在可承担连续九个月养老金发放的省份，此比例降至 19%。

某些城市（例如辽宁省的港口城市大连）一度废除了所有上限。Isaacs 说道，这引发了巨大争议，公司表示这将导致成本急剧增长，无力承担。

张根旺并不认为此通知规定的费率降低有重大影响。他表示，以上海而言，虽然过去两年中养老保险缴费费率降低了 2.5%（2014 年为 22.5%，而 2015 年为 21%），但如今员工仍需缴纳每月工资的 43%，将近一半薪资。

而且雇主方仍认为 20% 偏高。他还表示，外国企业一般会支付较高的工资，因此基于员工平均每月工资计算的社保缴费相当高，美国和欧盟雇主实际上也无法承担。

多地政府已发布有关缴费细则的实施通知。“根据我们至今收集的信息，上海、天津、甘肃、云南、江苏、浙江、福建、北京和重庆都已发布相应的本地政策，”张根旺说道，“但截至 5 月 10 日，湖南、湖北、新疆和山东等省份尚未发布实施细则。”

失业保险缴费

此通知还规定失业保险缴费费率从目前的 2% 降至 1%-1.5%。

张根旺表示，“这一比例较为合理。失业人员每月仅领取 2,000 元人民币，而政府账中已收取充足资金，来在实施此通知的两年间承担这一发放方案。”

但中国正从由出口和传统重工业驱动经济转型为更加基于服务和高端生产业，大量工人可能会随之失业。

贝克麦坚时律师事务所的 Isaacs 表示，其中仍然存在缺口。他解释道，这一广泛转型将对广东省产生巨大影响，在该省，许多低端制造工厂已在近几年缩小规模或关闭。

“我不知道广东省政府能否真正创造充足的工作机会，这些失业工人大多仅有高中文化，基本上无法将他们快速导向服务业或高端行业，”他说道，“许多人仍然需要转向低端零售服务业或重回家乡。”

在最新通知中，广东省将其失业保险费率从 2% 降至 1%。

人力资源合规

最近的相关事件（尤其是劳工纠纷）印证了公司必须确保完全合规。处理罢工不仅会产生间接法律成本，而且会导致日常停业，造成严重的经济损失。为 Nike 和 Adidas 制造和供应鞋履的裕元工业表示，2014 年 4 月 14 日引起关注的工厂罢工导致其直接损失 2,700 万美元。

人力资源部门可咨询相关本地机关，了解正确的费率计算方法。政府监管委员会还会针对员工投诉或报告来发起公司调查，并执行年度随机检查。

执业者大多认为，国内公司（包括国有企业）更倾向于少缴社保费用，而且不太注重此方面的合规事项。大成律师事务所的张根旺表示，根据其 15 年的执业经验，外国公司虽然偶有不当行为，但日本、美国和欧盟投资者的合规度通常最高。

企业支付员工保险缴费的责任应从一开始就加以确认，必须在公司成立的 30 天内向劳动局和银行注册登记社保账户。

（作者：赵修敏）