Effective 1 September 2025, China’s Supreme People’s Court (SPC) has issued a judicial interpretation declaring that any agreement to waive mandatory social insurance contributions is legally invalid. This clarification reinforces the principle that social insurance is a non-negotiable legal obligation for both employers and employees. The SPC emphasised that such agreements—often made to reduce labour costs or increase take-home pay—undermine workers’ rights and long-term security.
Employee Rights and Employer Obligations
Under the new interpretation, employees now have the right to terminate their contracts and claim severance if their employer fails to enrol them in the mandatory social insurance system. Courts are instructed to support such claims, recognising the failure to contribute as a breach of labour rights. Employers are also required to retroactively pay any owed contributions, although they retain the right to recover the employee’s share of the premiums.
Promoting Fairness and Social Stability
The SPC’s decision comes in response to a growing number of disputes over unpaid social insurance, which have posed challenges to maintaining harmonious labour relations. The court noted that social insurance benefits—covering old age, illness, work-related injuries, childbirth, and unemployment—are fundamental to workers’ livelihoods. By enforcing stricter compliance, the interpretation aims to promote fairness, justice, and social stability, while supporting high-quality employment and economic development.
Employers across China must now review employment contracts, audit social insurance records, and ensure full compliance with the law to avoid legal liability. The SPC’s interpretation sends a clear message: non-compliance is no longer tolerated, and workers’ rights to social protection must be upheld. Legal professionals and HR departments are advised to stay informed and prepare for stricter enforcement measures. Leap29 supports businesses in China to manage expansion and support ever-evolving legislative changes.
Simon Duff – Director Leap29 shares his perspective.
“The new judicial interpretation sends a strong message that informal arrangements to bypass social insurance obligations are no longer tolerated. It is a necessary step to ensure that workers receive the protections they are entitled to—especially in times of illness, injury, or unemployment. This shift also levels the playing field for compliant businesses that have long upheld these standards. It is a move toward greater fairness and accountability in China’s labour market.”
