Contact: LeAnne Stefl

Effective 5 July 2020, Human Resource service companies registered in Beijing are prohibited from dispatching employees to companies registered in other cities nor pay social insurance for employees who are hired by companies registered in cities other than Beijing.

The official notice was issued on 30 June 2020 by the Beijing Social Insurance Fund Management Center, under the title “Notice Regarding Several Issues on Participation of Labour Dispatch Companies and Human Resources Service Companies in Social Insurance Scheme”.

Affected employers and employees

Employers who have employees based in Beijing, have no registered entity/branch in Beijing, and file social insurance and Individual Income Tax (IIT) for Beijing-based employees via a third party are affected by this notice.

Solutions to ensure social security for employees

Affected employers must find alternative solutions for their Beijing-based employees by setting up a legal entity in Beijing, or by transferring their employee/employees to a Beijing-licensed HR service companies. Employers who fail to find a solution will experience disruptions to their contribution and Individual Income Tax (IIT) filings for their Beijing-based employees, and will be subject to a fine and face legal proceedings.

HR service companies must then comply with the notice by submitting all the needed information about the employees participating in social insurance when registering via the online platform and social insurance system no later than 20 September 2020. The needed information includes all the following:

  • Type of employment
  • Work position
  • Salary
  • Term of contract
  • Unified social credit number of the companies the employees work for (organization’s number).

HR service companies can only open social insurance accounts for the following employees:

  • Employees that are hired and work for their agency; and/or
  • Labor dispatch employees; and/or
  • Labor outsourcing employees

Next steps to consider

Effective 5 July 2020, all human resource agent service companies registered in Beijing cannot dispatch employees to companies registered in other cities nor pay social insurance for employees who are hired by companies registered in cities other than Beijing.

This change affects employers who have employees based in Beijing, have no registered entity/branch in Beijing, and file social insurance and IIT for Beijing based employees via a third party are affected.

Affected employers must therefore identify alternative solutions for their Beijing-based employees by:

  • Setting up a legal entity in Beijing; or by
  • Transferring their employee/employees to a Beijing-licensed HR service company.

Employers who fail to find a solution will experience disruptions to their social insurance and IIT filings for affected employees, and will be subject to a fine and face legal proceedings.

Employers would be well advised to seek counsel on the approach that is most suitable for their circumstances.


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