Maternity pay confusion as Shanghai and Qingdao issue new rules - International Law Office

Authorities in Shanghai and Qingdao have each promulgated new rules on maternity pay. The new rules, which took effect on July 1 2011, are based on the Social Insurance Law, which stipulates that such compensation must be calculated and paid on the basis of the average wages of all employees of the same employer in the previous calendar year.

Both sets of rules provide that although a portion of the employee's compensation will be paid by the social insurance fund, up to a capped amount, the employer must pay an additional amount to the employee; this additional amount must bridge the gap between the capped amount (as paid by the fund) and the average wage of all company employees.

However, existing national regulations and local regulations in both cities state that female employees are entitled to full salary during maternity leave. Previously, employers were responsible for contributing the difference between the amount paid by the fund and the individual's full salary. Now, even if the employee's individual salary is lower than the average company wage (which is often the case for young female employees taking maternity leave), the company is responsible for ensuring that the employee receives the average company wage. Conversely, if the employee taking maternity leave is highly paid, the new regulations appear to state that the company need pay her only the average company wage, rather than her full actual salary, although this would conflict with existing national and local regulations. Inquiries to the authorities in each city suggest that they are handling this apparent conflict differently.

Although the rules apply only in Shanghai and Qingdao, since they are based on the national Social Security Law, it is possible that the national or other local governments will promulgate similar rules.

For further information on this topic please contact Andreas Lauffs or Jonathan Isaacs at Baker & McKenzie's Hong Kong office by telephone (+852 2846 1888), fax (+852 2845 0476) or email (andreas.lauffs@bakermckenzie.com or jonathan.isaacs@bakermckenzie.com).