China Employment Law Update - February 2017

Executive Summary

1. The Implementation of special provisions in relation to the protection of female employees revised by the Province of Guangdong.
2. Recent changes to China's social insurance system.
3. Policy issued by The Ministry of Human Resources and Social Security ("MOHRSS") to ensure the implementation of the Sino-Finnish Social Security Agreement

Guangdong Province implements newly revised measures for special provisions to protect female employees

The province of Guangdong has taken further measures to improve the protection of female employees. The measures which came into effect on 1 February 2017 made changes to the framework which supports female employees. The main changes are as follows:

• Sexual discrimination: the employer must not include clauses in employment contracts which limit female employees' legitimate rights and interests in relation to marriage and childbirth. It is also prohibited to discriminate against female employees in relation to salaries, promotions and so forth.

• Break during menstruation: For the first time, female employees will be legally entitled to apply for breaks if she has continuously worked for 4 hours or more in a standing position whilst she is menstruating. At this stage, the Regulations are not clear on the length of the break.

• Sexual harassment: the employer shall strengthen measures in the workplace to prevent and stop sexual harassment of female employees. In the event of sexual harassment, the employer should properly handle complaints brought by any female employees who have been sexually harassed and protect the female employee's privacy.

• Miscarriage: if a female employee suffers a miscarriage when she is 7 or more months pregnant, the employee must be given maternity leave of 75 days.

• Nursing leave: When maternity leave ceases the female employee may apply for nursing leave until the child is one year old, which is subject to the employer’s approval. The employee's salary during the nursing leave will be subject to negotiation between the two parties.

• Nursing time: Nursing time will allow a female employee up to a one hour break a day for the purposes of nursing or expressing milk until the child is one year old. For multiple births, an additional one hour per day for each infant born other than the first child must be granted. Nursing time and roundtrip times within the company for nursing purposes shall be counted as normal working hours and must be paid for.

If the employer does not comply with the measures, the Human Resources and the Social Security Authority and the Work Safety Inspection Authority have the power to impose sanctions in order to compensate the damages suffered by the employee. The employer will also be liable to compensate female employees. Managers or any other person who is in direct charge can also be liable for any such infringement.

Two Recent Changes to China's Social Insurance System

1. On 19 January 2017, the General Office of the State Council published the Notice on the Pilot Program of Consolidating Maternity Insurance and Employees' Basic Medical Insurance (the "Program"), which aims to optimize insurance funds, to enhance management efficiency and to lower management and operational costs.

The pilot program will launch in June 2017 for a period of approximately twelve months. Handan of Hebei Province, Jinzhong of Shanxi Province, Shenyang of Liaoning Province, Taizhou of Jiangsu Province, Hefei of Anwei Province, Weihai of Shandong Province, Zhengzhou of Henan Province, Zhuhai of Guangdong Province, Chongqing, Neijiang of Sichuan Province, and Kunming of Yunnan Province will be subject to the pilot programme.

The pilot program requires a unified registration. This means that employees participating in the employee basic medical insurance plan will automatically be covered by maternity insurance. The pilot program also unifies fund collection, payment and management. For example, the maternity insurance fund shall be included in the basic medical insurance fund. Employers will contribute to the employees' basic medical insurance at a new premium rate to cover both basic medical insurance and maternity insurance. Individuals will not pay any maternity insurance premiums. The Program also unifies the management of medical services and puts in place a new information system in relation to medical insurance and maternity insurance. Maternity insurance benefits for employees remain unchanged.

2. On 16 February 2017, the Ministry of Human Resources and Social Security and the Ministry of Finance issued the Circular on Relevant Issues concerning the Periodic Reduction of Unemployment Insurance Premium Rate.

As of 1 January 2017, provinces where the overall unemployment insurance premium rate is 1.5% are allowed to reduce the rate to 1% until 30 April 2018. In each province, the premium rate applicable to entities and individuals shall be unified, and the rate paid by individuals shall not be higher than the rate paid by entities.

Provinces where the overall unemployment insurance premium rate has already been lowered to 1% will remain the same.
Consequently, provinces should make specific plans to make timely payment of benefits, to increase the payment of unemployment benefits and to promote of employment of unemployed people, etc. Such plans must be approved by the provincial government and must then be reported them to the Ministry of Human Resources and Social Security and the Ministry of Finance.  

MOHRSS has issued a policy to ensure the implementation of the Sino-Finnish Social Security Agreement

 On 17 January 2017, the Ministry of Human Resources and Social Security ("MOHRSS") issued the Circular on Implementing the Agreement between China and Finland on Social Security (the "Circular"), confirming that the Agreement between the Government of China and Finland in relation to Social Security (the "Agreement") was effective as of 1 February 2017.

According to the Circular, the Agreement details the scope of reciprocally exempted insurances which might otherwise be available locally to individuals posted from Finland to China or vice versa. Such insurances include:

(i) in China, the basic endowment insurance and unemployment insurance for employees and

(ii) in Finland, the annuity and unemployment insurance for the elderly, disabled employees and members of the deceased employees under the annuity plan relating to incomes.

Exemptions apply to employees who have been posted abroad, self-employed individuals, employees working on sea-going vessels, flight crew who work on aircrafts, diplomatic personnel, consular officers and civil servants. The exemption may last up to five years for employees who have been posted abroad and self-employed individuals. The Circular also provides for the administrative measures for exemption of relevant social insurance contributions in accordance with the Agreement.

In addition to Finland, China has signed similar bilateral social insurance agreements with France, Germany, the Republic of Korea, Denmark, Canada, Switzerland and the Netherlands.