On August 13, 2019, the 2019 ZhongYin Forum on Labor Law and Human Resources Compliance jointly organized by the Labor Law Practice Department of ZhongYin Law Firm and Wolters Kluwer was successfully held in Beijing. Yan Penghe, Director and Senior Partner of ZhongYin, attended the Forum and delivered a speech; Yang Baoquan, Senior Partner of ZhongYin, Geng Xin, Chief Expert of 51 Shebao, Wu Di, Vice President of Labor and Personnel Dispute Arbitration Court of Fengtai District, Beijing, and Chen Li, Senior Financial Adviser of Daisy Enterprise Management (Beijing) Co., Ltd. delivered keynote speeches respectively. Human resources executives and persons in charge of legal affairs from more than 180 enterprises including H.BROTHERS, Johnson & Johnson, JD.com, Volkswagen, Poly Cinemas.com, and China Shougang International Trade & Engineering Corporation participated in the Forum.

Yan Penghe, Director and Senior Partner of ZhongYin, delivers a speech

Host Bi Xiaoxun (left) and Hostess Zhao Ru (right)

Geng Xin: Trends of Social Security Policies and Strategies for Compliance Planning

Geng Xin, Chief Expert of 51 Shebao

Mr. Geng Xin believes that the development trends of social security policies are combining centralization and decentralization and tempering strictness with loose. The lower limit of payment base for basic pension insurance is uniformly set as 60% (of average salary of employees in the previous year), and the related authorities in Beijing and Sichuan have issued relevant documents to implement this policy; employer’s contribution ratio for urban employee’s basic pension insurance is uniformly set as 16%, and the “lowlands” such as Guangdong, Xiamen and Zhejiang whose payment base of urban employee’s basic pension insurance is low, will be filled. Each of the human resources and social security authority, the healthcare security authority, the tax authority, and the housing provident fund management center is responsible for a segmentation of social security, and HR must contact multiple authorities at the same time; the human resources and social security authority and the statistics authority separately publish salary data, and no longer jointly publish the average salary of employees. The transfer of social security of enterprises’ employees to tax authority has been postponed temporarily; the tax administration is becoming more interconnected, digitalized, and intelligent. The era of comprehensive compliance has arrived. How can enterprises make reasonable plans, achieve smooth transitions, and avoid sudden increase of compliance costs arising from the “black swan” incidents? Mr. Geng Xin emphasized that the best way to deal with “uncertainty” is to prepare in advance.

Wu Di: An Empirical Analysis on Reconstruction of Labor Relations under New Social Security Policies

Wu Di, Vice President of Labor and Personnel Dispute Arbitration Court of Fengtai District, Beijing

Starting from the documents issued by the State Council, Vice President Wu Di summarized the changes in and future development trends of labor relations under new social security policies. The Notice of the State Council on Establishing a Central Adjustment System for Basic Pension Insurance Funds for Enterprises’ Employees has adjusted the method of calculating average salary of employees in each province, and at the same time clarified that provincial governments should effectively assume the main responsibility for ensuring that basic pensions are paid in full and on time and making up the gap in the pension insurance fund. It is foreseeable that in the future, enterprises will face with greatly strong efforts to collect insurance contributions. China's economic growth is in a period of new growth drivers replacing old growth drivers and has entered a stage of globalization of innovative resources. “Internet +” has changed the traditional way of organizing the industry chain and is reorganizing the industrial ecology by centering on platform. On August 13, the Guidance of the General Office of the State Council on Promoting the Compliant and Sound Development of the Platform Economy was issued. In terms of social security compliance, the government actively promotes universal participation in social insurance, and works hard to study and improve the social security policies for platform enterprises’ employees, flexible employment, and other employment. Chengdu has issued documents to make detailed provisions on participation in social insurance by people engaging in new economy and new industrial formats.

Chen Li: How Can Enterprises Optimize Labor Costs after Collection of Social Insurance Contribution as Tax

Chen Li, Senior Financial Adviser of Daisy Enterprise Management (Beijing) Co., Ltd.

Through formulas and algorithms, Ms. Chen Li explained the impacts of the three major tax policies (i.e., tax reduction of two trillion, collection of social insurance contribution as tax, and reform of personal income tax) on enterprises. The most direct impact is on cash flow of enterprises. Based on her experience, Ms. Chen Li makes ingenious suggestions that: in order to better cope with the impact of tax policies and reduce compliance costs, according to the “Law of the Jungle”, with direction being premise, enterprises should make adjustments in real time with changes in government policies; when financial risks occur, the most important things it to stop loss in a timely manner. Moreover, in order to control labor costs, the invoice flow, capital flow, contract flow, and cargo flow must be unified, and the contractual amount, social insurance payment base, actual cash flow, and personal tax reporting standards must match each other. Based on the foregoing countermeasures, Ms. Chen Li proposed a layered solution with the goal of document formation, effective implementation, and actual reduction of cost. CEO is responsible for overall planning to adjust the organizational structure, park policy, equity incentive, and the like; HR executive is responsible for adjusting manpower structure; financial staff is responsible for adjusting cost structure; finally, an enterprise may make a plan suitable for itself based on its own special situations.

Yang Baoquan: Enterprises’ Overall Burden Reduction Strategy and Cost Optimization after Collection of Social Insurance Contribution as Tax

Yang Baoquan, Senior Partner of ZhongYin

Based on years of experience in handling cases, Attorney Yang Baoquan believes that one of the most important things for enterprises to mitigate risks and optimize costs is to plan ahead. Specifically, there are three considerations: first, standard employment is no longer the only way, and the flexible employment will become a mainstream trend; second, attention must be paid to non-compliances such as fine for punching late and expiration of annual leave, to prevent employment risks; third, compliance in insurance and housing fund, taking the housing provident fund as an example, since national law requires the housing provident fund contribution to be paid for an employee at 5%-20% on the average monthly salary of such employee in the previous year, both a higher payment ratio and a lower payment base are risky. Mr. Yang Baoquan also proposed three strategies for enterprises’ overall burden reduction and cost optimization, including making full use of special policies, optimizing compensation structure, and optimizing employment method.

Attorney Kou Yingjie (the first from left) presides over the interactive session

The four lecturers refined and shared the valuable experience in their respective work, benefiting the participants a lot. At the end of the Forum, the four lecturers exchanged and interacted with the participants, and gave detailed answers to common questions such as “Is it risky that salary and social insurance contribution are paid by different companies?”, “How to deal with employees refusing to follow employer’s arrangement in the event of department cancellation or office relocation?”. In the future, ZhongYin Law Firm will hold Forums and lectures on different topics based on market demand, with a view to providing new ideas for clients' compliance operation and risk prevention, and will strengthen communication with clients, in order to provide a new way for ZhongYin attorneys to grasp market trends.