Changing rules in China around social security participation for foreign workers and maternity pay requirements have implications for employers operating in the country, according to a recent Towers Watson survey.
China’s central government issued social security participation rules for foreign workers late last year, and several local governments have begun implementing these rules. Under the rules, both employers and employees are required to contribute to social security, unless they are covered under a bilateral agreement between their home country and China.
The Towers Watson study indicates that companies in those cities that have implemented the rules make contributions; those where the rules aren’t formally enforced do not contribute. For example, 70% of companies in Beijing were found to be making contributions for foreign workers. In Shanghai, where the local government has not yet implemented the central government’s rules, less than 20% of companies make contributions.
The central government also published an updated policy earlier this year to increase benefits for female employees during maternity leave. Under the new policy, female workers are entitled to a maternity leave of 98 days (14 weeks), an increase from the previous 90 days.
The updated national regulation continues the existing national maternity policy, where social security pays female workers the company average pay during maternity leaves, regardless of an employee’s actual pay. For employees whose actual pay is higher than the company average pay, it is up to a local government to determine whether employers are required to top up maternity pay. Different local governments in China may have different approaches to implementation.
The survey finds that companies have different maternity pay practices depending on whether they follow national regulation and/or local guidance. In Beijing, for instance, more than one-third of companies follow the national regulation instead of local implementation guidance and don’t make up the pay gap if an individual’s pay is higher than the pay from social insurance.
Towers Watson advises employers to closely monitor whether local authorities have issued implementation guidance for social security and comply with contribution requirements for foreign workers. Similarly, employers should review and comply with local maternity leave policies. Employers should also consider topping up social insurance maternity pay for highly paid female workers to prevent salary loss, and to attract and retain employees.