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Beijing Tightens Regulation on Social Insurance Filing Services by HR Agencies

The Beijing Social Insurance Fund Management Center has issued a new regulation regarding the filing of social insurance and individual income tax (IIT). Previously, companies without a registered entity or office branch in Beijing were able to hire Beijing locals via HR agencies. HR agencies registered in Beijing could dispatch local employees to companies registered in other cities and pay social insurance as well as IIT for said employees. 

Under the new Notice Regarding Several Issues on Participation of Labor Dispatch Companies and Human Recourses Service Companies in Social Insurance Scheme, effective July 5, 2020, the above practice is no longer allowed, thus prohibiting companies without a Beijing entity or office branch from hiring local employees. As a result, many HR agencies in Beijing will now have to stop all affected services and conduct internal reviews to compliantly report employees under their service to the government. 

Employers not complying with this regulation will risk being blacklisted and fined by the government. Their affected employees will face disruptions to social insurance and IIT filings and become unqualified for Hukou application. To avoid such complications, it’s advisable that companies, especially foreign ones, consider setting up a legal entity or branch office in Beijing to hire local employees compliantly. Another more affordable and quicker solution is to engage a licensed Employer of Record / Professional Employment Organization (PEO) with an entity in Beijing to hire and handle Beijing employees’ social insurance and IIT filings. 

GoGlobal Beijing has acquired its own China Dispatch License since April 2020 and can offer employment for employees across China, including Beijing, compliantly. 

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