Payment into housing reserve for migrant workers

In the evolution of social insurance, 2018 is a significant year. A series of signals, including tax authorities collecting premiums for social insurance and centralization of old-age insurance, indicate that the state has raised its compliance requirements further for the segment. Although the “one reserve” in the “five insurances and one reserve” does not spike currently, compliance requirements for housing reserve are no less stringent than for social insurance. In particular, an enterprise neglecting to make contributions to the housing reserve for migrant workers possibly faces unexpected legal risks.

As a concrete example, Company A, which had been operating locally for over two decades, faced relocation following a requisitioning of the land it occupied. On learning of the news, its employees promptly arranged for various claims before the company in the hope of securing substantial additional compensation. Among them were several employees whose household registrations were in the countryside when they joined the company and, as such, were migrant workers.

In October 2004, the authorities of Company A’s home province decided to abolish the distinction through household registrations on a province-wide basis. The company attempted to make contributions to the housing reserve for the migrant workers, but the housing reserve management centre’s response was that these were not necessary. At the request of its employees, the company again applied to open accounts and make contributions to the housing reserve for themselves in November 2016, at which time it was successful. Last December, the employees suddenly filed a report with the housing reserve centre to demand that the company make up for the shortfall in the housing reserve for the period between their entry into the company and November 2016. The housing reserve centre accepted the report and issued a notice ordering rectification, demanding the company make back-payments into the housing reserve for the workers, with dues for the earliest employees stretching back to the time when the Administrative Regulations for Housing Reserves (ARHR) took effect in April 1999. An initial estimate showed that Company A had to make back-payments up to several million renminbi.