Companies in China are exempted from the payment of pension insurance, work-related injury insurance and unemployment insurance from February to June 2020.

Which is the impact?

Here below an example of the current rates of these three categories of social insurance that shall not be paid in the following five months:  

Type of Insurance	Pension		*Work-related injury		Unemployment
Borne By	Employer	Employee	Employer	Employee	Employer	Employee
Shanghai	16%	8%	0,3%	-	0,5%	0,5%
Beijing	16%	8%	0,4%	-	0,8%	0,2%

*rates for service companies, not manufacturing

Note

According to the local regulations, employees and companies shall pay social insurance on a monthly basis. ? ?

Social Insurance is divided into five categories: ?

1. Pension: it ensures the employees to be able to maintain some income after their retirement. ?
2. Medical Insurance: it ensures employees to defray some of the costs of medical expenses in the event of illness or injury. ?
3. Work-related injury Insurance: contributed by employers only according to the nature / risk of the work carried out. ? 
4. Unemployment Insurance: it ensures employees to be able to receive unemployment benefits in the event an individual becomes unemployed (contribution of at least one year). ?
5. Maternity Insurance: contributed by employers only in the event an employee becomes pregnant. ?

In addition to the five social insurances, employees and employers are also required to pay into a housing fund to enhance the capability of employees to purchase real estate: this fund can be used to make the initial down- when purchasing a house. ? ?

The payment of above-mentioned social insurance/housing fund is mandatory and the percentage of each insurance varies from city to city; the insurances, borne both by the employee and the employer (in different percentages), shall be calculated on the basis of the average of employee's previous year total gross income nonetheless it exists an upper and lower limit that is updated every year.  

Remember! Shanghai's social insurance contribution base standards (which determine the upper and lower limit) will be adjusted on July 1 (not March) and will be effective from July 1, 2020 (instead of April).

Until then the lower limit, CNY 4,699.00, and the upper limit CNY 23,565.00, will remain valid.