New social insurance laws in 2020 for Hong Kong, Taiwan, Macao residents employed in Mainland China

December 20, 2019

BEIJING - China's Ministry of Human Resources and Social Security has issued Interim Measures on Social Insurance Contributions for Hong Kong, Taiwan and Macao Residents to take effect on January 1, 2020.

Lawyers Baker McKenzie say employers in Mainland China will be mandatorily required to make social insurance contributions (including contributions for pension insurance, medical insurance, maternity insurance, work injury insurance and unemployment insurance) for Hong Kong, Taiwan and Macau residents (HTM Resident employees) they employ.

BM says employers should enroll HTM Resident employees into the social insurance system by using the relevant HTM Resident employee's valid travel certificate/residence permit, employment contract, etc. as proof of employment.

Social security authorities will audit employers to check whether they have made social insurance contributions for their HTM Resident employees as required.

BM says HTM Resident employees can be exempted from pension insurance and unemployment insurance in Mainland China by providing certain documents to prove that they maintain their social insurance status in Hong Kong, Taiwan, or Macau.

The law firm warns that employers will need to adhere to the requirements of the HTM Measures.  In cities where companies have traditionally relied on local regulations and enforcement practice to not make social insurance contributions for HTM Resident employees (e.g. Shanghai), employers will need to comply with the national HTM Measures and may need to change their previous practices.
BM says it is worth noting that the HTM Measures do not distinguish between employees who are working in the PRC under an international secondment arrangement (i.e., employees who have not signed any local PRC employment contract) and employees who are directly hired by PRC entities.

Employers will therefore need to closely observe local regulation enforcement practice to assess whether making social insurance contributions for secondees is mandatorily required.

"While it remains to be seen whether secondees fall under the requirements of the HTM Measures, currently, making social insurance contributions for secondees is practically difficult (if not impossible) in Shanghai," BM says. (ATI).