Questions and Answers…

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Social Insurance in Shanghai

In this post, social insurances indicates  employment related social insurances only. (There are also other social insurances in China, which may be related to farmers or students.)

1. Defination of Social Insurance System

It is a social security system built by compulsive law to protect labourer when they are getting old, sick, unemployed, etc.

2. Types of Social insurance

Five types:  employment injury insurance, basic endowment  insurance, medical  insurance, unemployed insurance and maternity insurance.

3. Types of Workers

In Shanghai, with ”hu kou”（户口), the policy divides workers into  local workers and migrant worker, and migrant worker could subdivide into City&Town migrant worker and rural migrant worker.

All kinds of  workers has at least three kinds of social insurance-employment injury insurance,  endowment insurance and medical insurance. Local worker and City & town migrant workers (16-45 years old ) may have other 2 kinds of social insurances that mentioned above.

4.The difference of different types of workers when paying social insurance

The Caculation of “Social insurance” could  be applied to the fomula:Payment base* percentage (provided by local government)

(1)Comprehensive Insurance

It’s a type of social insurance for migrant workers, especially for rural migrant workers. The employer shall pay all of it.

Payment base of Comprehensive Insurance=Shanghai employees’ average monthly income of last year * 60%=3896RMB(average monthly salary of year 2010)*60%=2338RMB

Percentage=12.5%

Thus, the comprehensive insurance =2338RMB*12.5%=293RMB

(2) City Social Insurance

Except for rural migrant workers, other kinds of worker may be covered by City social insurance or town social insurance. If the company is registered at a town of Shanghai, then the workers of it could only have town social insurance; and if the company is registered at downtown, then the workers shall have city social insurance.

The way of caculation:

First of all, payment base of city social insurance shall be limited to a range of :

Shanghai employees’ average monthly income of last year * 60%  ~Shanghai employees’  average monthly income of last year* 300%

( It is from 2338 RMB to 11688RMB between  April 1st 2011 and March 31st 2012  )

Secondly, Payment base shall also be equal to your actual average monthly income of last year

Thirdly, following are the percentage employer and employee shall pay for city social insurance.

(3)Town Social Insurance

Payment base=Shanghai employees’ average monthly income of last year * 60%=2338RMB

Percentage=25%( Employer 25%, Employee o%)

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Legal Risks During Recruitment…

Someone emailed me to ask about the recruitment, then I realise I need to write something about it, because this is a very important part before concluding a labour contract, lots of potential legal risks, but few rules or regulations.

Risk 1: Vague Recruitment Requirements on Recruitment Advertisement

          Recruitment Requirements are something the employer could count on when it wants to fire an employee during probation period. Thus, the employer needs:

          1) to detail the common requirements on recruitment ad, such as good health, honest, education, working experience, working time, etc.

          2) to detail the specific requirements of the position, such as certain certificate or certain working experience.

         3) let the interviewee sign the “recruitment requirement” and keep it.

Risk 2: Providing Fake Information

        Providing fake information is a dangerous thing to do, no matter for employer or employee, which may lead to invalidation of the labour contract and compensation. Thus, as an employer, you shall:

       1) print the resume and make sure the interviewee sign on it;

       2) prepare a registration form to let the interviewee fill it in. The form may include the basic personal information and  the information you want to know from the interviewee, but it is not showed on resume.

       3) tell the truth of your company, for example, don’t exaggerate the scale of your company;

Risk 3: Discrimination

        No discrimination about age, gender, nation, deformity, non infectious virus carrirer…

       Even you have discrimination about something, don’t show it on your recruitment ad or your interview, otherwise, you might be sued for it.

Risk 4:  Didn’t Do Health Test

          If you hire someone with some disease, you may have to pay the sick leave wage  for their treatment period.

         However, pregany or non infectious virus carrier shall not be considered as not healthy.

Risk 5: Forget to Promulgate Employee handbook

        How to prove you have promulgated your employee handbook? Prepare a signature page at the end of employee handbook and let the employee sign on it.

What’s the purpose of letting the interviewee or employee sign on the documents mentioned above?

Saving the evidence, you shall know the employer is liable for providing evidences  in China when labour disputes arising.

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Don’t ask your HR about how to fire an Ayi in China

• Is hiring or firing an Ayi (Someone who do your cleaning, cooking or baby sitting)  bound to Labour Rules?

            No,  the relation between the family and its Ayi is not a labour relation. CONTINUE READING…

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How does Labour Law protect foreigners?

In  every labour contract, there are statutory clauses and promissory clauses. The statutory clauses shall be stipulated  in accord with labour law, and the promissory clauses could be stipulated by contractual parties with free will as long as they don’t violate other laws in China.

The difference  between Chinese labourer and Foreign labourer when concluding a labour relation in China is the foreign labourer has more promissory areas. Due to statutory rules are used to protect labourer, the Chinese labourer is protected more.

*When I talked about statutory areas,  I don’t mean the entire area is statutory, it’s just there are certain rules in this area shall be complied with. For example,  about the working time, the law just draws up the maximum working hour per day and per week, any agreement lower than this maximum limitation is allowed.

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Rules for Administration of Employment of Foreigners in China

（Promulgated by the Ministry of Labour， Ministry of Public Security， Ministry of Foreign Affairs and Ministry of Foreign Trade and Economic Cooperation， on 22 January 1996 and effective as of 1 May 1996.） CONTINUE READING…

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Which law is applicable?

National Rules and Loacal Rules:

       The labour rules in China are a big family. There are national rules which could apply to entire China, and also there are local rules which only apply to local labour relation. Sometimes, the local rules may conflict with national rules. Even according to legislation  law, we shall apply to national rule when there are conflicts, the local authorities prefer local rules.

New Rules and Old Rules

       Due to there are a lot of revolutions of labour law in China,  we shall know which rules are applicable—new rules or old rules?

       New rules are only apply to the labour relations  after they are promulgated.

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The difference between part time and full time labour relation.

Part Time labour  is also governed by labour contract law, but it is quite different from full time labour：

• The working hour system of part time labour:

            1. The remuneration is generally calculated on hourly basis;

            2. The average working hours of a worker per day shall not be more than four hours and the cumulative working hours per week for the same employer shall not be more than 24 hours; CONTINUE READING…

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not satisfying Recruitment Requirements ≠ incapable of doing one’s job

You all know from my last post that the employer could cancel the labour contract during probation period if the employee could not satisfy the recruitment requirements. However, satisfying the recruitment requirements is not equal to capability of doing one’s job.

Recruitment requirements are the requirements illustrated in recruitment advertising,  not some requirements the employer could come up with  during the probation time. Thus, don’t try to fire any employee by reason of incapability of doing one’s job unless this reason  is stipulated in your recruitment advertising.

Unfortunately, the enterprises always ignore the importance of recruitment advertisement. I have to suggest that the more concrete the recruitment ads are, the better it will be.

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Probation Cancellation needs explanation…

Most of the enterprises think they could fire the employee during probation period if they can prove this employee is not qualified for this job , however, this is a misunderstanding of the Labour Contract Law.

Actually, according to Labour Contract Law, the employer could only cancel the labour contract when the following circumstances occurred:

1. the employee  has been proved not to satisfy the recruitment requirements during the probation period;
2. the employee  is in serious violation of the bylaws of the employer;
3. the employee  causes any severe damages to the employer due to his grave negligence to duties or seeking private benefits;
4.  the employee establishes a labor relationship with other employers at the same time and may seriously influence his completion of the work in this entity, or he refuses to make a correction after the employer has pointed it out;
5.  If the employee concludes or modifies, by way of deception or coercion or taking advantage of the other employer’s  difficulties, makes the employer to conclude or to make an amendment of a labor contract that is contrary to that employer’S true will,  the labour contract is invalidated.
6. the employee  is subject to criminal liabilities according to law.
7.  The employee  falls ill or is injured for a non-work-related reason, and is not able to bear the original post after the expiration of the medical treatment period as prescribed, nor can he assume any other position as arranged by the employer.
8. The employee  is incapable of doing his job and remains so upon training or upon adjustment to his post.

 If the employer terminates the labor contract during the probation period, it shall make an explanation to the employee.

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