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2011 Important Labor Laws and Regulations Review

Author: Lawyer Lu Jialiang

1¡¢Social Insurance Law of the P.R.C

Promulgating Date: 10/28/2010
Effective Date: 07/01/2011
Promulgating Institution: Standing Committee of the NPC

Main Content: The State uniformly stipulates the basic pension insurance, basic medical insurance, work-related injury insurance, unemployment insurance, and maternity insurance, makes regulations on the issues in the process of operation of social insurance system such as collection and payment of social insurance premiums, operation of social insurance funds, social insurance agencies and social insurance supervision, and sets relevant legal liabilities on breach of the Social Insurance Law.

Main Impacts on Employers:
£¨1£© The coverage of social insurance is enlarged. Rural migrant workers, farmers whose land is expropriated, and foreigners employed in China shall be included in the corresponding social insurance system.
£¨2£© An employee who is injured during work due to committing negligent crime or violating security administration can be determined to have suffered a work-related injury.
£¨3£© The maternity allowances shall be calculated and paid to an employee according to the average monthly wages of the employees of her employer in the previous year.
£¨4£© In the event that an employer fails to handle social insurance registration, the social insurance administrative department shall order rectification within a prescribed time period; and if it fails to do so within the prescribed time period, impose a fine of 1-3 times the amount of the social insurance premiums payable upon it.
£¨5£© In the event that an individual has any social insurance dispute with his/her employer, he/she may apply for mediation or arbitration or lodge a lawsuit in accordance with law.

2¡¢Decision of the State Council on Amending the Regulation on Work-related Injury Insurance

Promulgating Date: 12/20/2010
Effective Date: 01/01/2011
Promulgating Institution: State Council

Main Content: For purposes of solving the new problems arisen in the practice and improving the work-related injury insurance system, the following main amendments are made on the Regulation: 1, enlarging the applicable scope of the work-related injury insurance; 2, adjusting the scope of determination of work-related injury; 3, simplifying the procedures of determination, appraisal and disputes settlement of work-related injury; 4, reducing the benefit items that employers shall pay, while increasing the benefit items that work-related injury fund shall pay.

Main Impacts on Employers:
£¨1£© In the event that an employee is injured while going to or returning from work in an traffic accident, a urban railway system accident, a passenger ferry accident or a railway accident that he/she is not mainly responsible for, he/she shall be determined as having a work-related injury.
£¨2£© The pretage of administrative reconsideration is canceled. When a dispute on work-related injury arising, relevant employers and individuals may apply for administrative reconsideration or directly institute an administrative lawsuit at people`s court according to law.
£¨3£© The standard of one time work-related death allowance is increased to 20 times of nationwide disposable income of urban residents in the previous year, and the one time disability allowance is increased accordingly. Thus, if an employer fails to pay work-related injury insurance, its cost of breaking the law is increased.
£¨4£© The work-related injury insurance fund becomes to pay one time work-related injury medical allowance, meal allowance in hospital and travel and boarding expenses for seeking medical treatment outside the pooling region, which are paid by employers in the past.

3¡¢Several Provisions on Implementing the Social Insurance Law of the P.R.C

Promulgating Date: 06/29/2011
Effective Date: 07/01/2011
Promulgating Institution: Ministry of Human Resource and Social Security

Main Content: For the purpose of implementing the Social Insurance Law of the P.R.C, these Provisions make detailed stipulations concerning basic pension insurance, basic medical insurance, work-related injury insurance and other social insurance related issues.

Main Impacts on Employers:
£¨1£© An employer shall pay work-related injury insurance for its part-time employees, even if anther employer has already paid work-related injury insurance for the part-time employees.
£¨2£© In the event that an employer refuses to issue a labor relationship termination certificate after terminating its labor contract with an employee, which makes the employee unable to enjoy social insurance benefits, the employer shall assume the liability for damage.
£¨3£© In the event that an employer fails to withhold social insurance premiums, the collection agency of social insurance premiums shall order it to pay within a certain time period and charge a daily overdue fine at the rate of 0.05% from the due date.
£¨4£© In the event that an employer has serious difficulties in production or business operation due to force majeure, upon the approval of the social insurance administrative department of the provincial people's government, it may postpone the payment of social insurance premiums for a certain period of time which is generally less than one year.

4¡¢The Decision of Standing Committee of the National People's Congress on Amending the Individual Income Tax Law of the P.R.C

Promulgating Date: 06/30/2011
Effective Date: 09/01/2011
Promulgating Institution: Standing Committee of the NPC

Main Content: The individual income tax threshold is raised to RMB 3500. Income from wages and salaries is subject to the excessive and progressive tax rates ranging from 3 percent to 45 percent.

Main Impacts on Employers:
By raising the tax threshold and adjusting the tax rates, the burden of taxation for low-income people is reduced, while the burden of taxation for high-income people is increased. How to design a reasonable salary structure may become an important task for the HR professionals.

5¡¢Tentative Measures on Participation in Social Insurances of Foreigners Employed in China

Promulgating Date: 09/06/2011
Effective Date: 10/15/2011
Promulgating Institution: Ministry of Human Resource and Social Security

Main Content: With respect to foreigners employed in China, the scope of participation in social insurance, the procedures of paying social insurance premiums, the method of enjoying social insurance benefits, the handling of the issues that an employer infringes upon the foreigner's legal rights and interests and etc.

Main Impacts on Employers:
£¨1£© After Oct.15, 2011, foreigners employed in China must participate in the social insurance. An employer legally registered in China shall pay social insurance premiums for its legally employed foreigners. A branch or representative office registered in China by an overseas employer shall pay social insurance premiums for foreigners who have concluded employment contracts with the overseas employer and then been assigned to China.
£¨2£© In the event that any employer employs a foreigner, it shall conduct the social insurance registration for the foreigner within 30 days since the issuance of his/her employment certificate.
£¨3£© In the event that an employer or a Domestic Labor Using Party infringes upon the foreigner's legal rights and interests, he /she may apply for the social insurance administrative authority or social insurance premiums collecting agency to handle the issue according to the law.