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Setup and Payment of Mandatory Benefits
Each company incorporated in China and employing Chinese staff should setup an account at the social insurance bureau and the housing fund bureau through which it can make the contributions necessary on behalf of its employees. To set up these accounts, various documents should be stamped and submitted to the bureaus for their records. Subsequently the accounts need to be maintained, adding new employees and removing terminated employees.
Below we explain how to setup and maintain accounts in Beijing. Note that the situation can be different in other cities across the nation
Procedure for registration at the social insurance bureau
I. A social security number for the company should be obtained.
II. After receiving the company social security number, details of the employees should be inputted into software provided by the social insurance bureau. One key piece of information will be the salary details for each employee as this will determine the base on which monthly contributions shall be made.
III. Information inputted into the software should be saved onto a U-Key and physically taken to the social insurance bureau. This completes registration for medical insurance (one component of the five mandatory insurances).
IV. After receiving confirmation that medical insurance registration has been completed, various forms can be filled out to register each employee for the other four mandatory insurances. They need to be submitted to the social insurance bureau between the sixth and 25th of the month.
V. A contract should be completed with the company's bank to ensure that the monthly social security contributions can be directly remitted to the social insurance bureau each month. Note that the first payment of social security contribution must be made via a check issued from the company - it cannot be automatically debited until the second month.
VI. A visit to the bureau will be necessary every month if the company has any new hires or people leaving the company, as registration and deregistration cannot be handled online in Beijing (at the time of writing). Fines can be levied by the social insurance bureau for late payment of contributions by an employer, although these are rarely imposed. More of a concern for employers is the fact that if one of their staff has an accident at work and the necessary contributions have not been made then there a possibility that the company will be liable for the costs and expenses incurred.
To read the full version of this article, please purchase the September 2010 issue of China Briefing, which can be found in the Asia Briefing Bookstore. Companies requiring assistance may contact any Dezan Shira & Associates' nine national offices at china@dezshira.com for advice or visit www.dezshira.com.
