Laws & Regulations

Provisions of Shanghai Municipality on Raising Enterprises’ Back-pay Security Funds and Advancing Payment

(Promulgated on June 21,2007 by Decree No.72 of the Shanghai Municipal People’s Government)

 

Chapter I   General Provisions

Article 1 (Purpose and Basis)
These Provisions are formulated on the basis of the spirit of relevant documents of the State Council and the “Provisions of Shanghai Municipality on the Promotion of Employment ”, with a view to helping laborers solve temporary living difficulties to enterprises being in arrears with wages , and safeguarding social stability.
Article 2 (Definition)
Back pay referred to in these Provisions means the wages that an enterprise shall pay but has not paid, and the economic compensation that shall be but has not been paid to laborers at the time of dissolving or terminating a labor contract.
Article 3 (Application Scope)
These Provisions apply to enterprises paying the back-pay security fees and to laborers applying for advancing payment due to enterprises’ being in arrears with wages, within the area of this Municipality.
These Provisions do not apply to the building construction enterprise that practices the wage guarantee system.
Article 4 (Principle of Back-pay Security)
The back-pay security follows the principle of social mutual aid, emergency assistance and limited advanced payment, and laborers are encouraged to press for their back pay through legal channels to safeguarded their legitimate rights and interests.
Article 5 (Sources of Funds)
This Municipality sets up back-pay security funds, the sources of which include:
(1) Back-pay security fees paid by enterprises and the income from the interest incurred therefrom;
(2) Recovery of the amount of the wage arrears paid in advance;
(3) Subsidiaries from public finance; and
(4) Other revenues.

Chapter II  Administrative Organ
Article 6 (Competent Department)
Shanghai Municipal Administration of Labor and Social Security (hereinafter referred to as MALSS) is the city’s competent department in charge of back-pay security work and performs the following duties;
(1) Drawing up relevant administrative systems of back-pay security funds;
(2) Examining the applications of laborers for advancing back pay and deciding on granting advanced payment;
(3) Retrieving the advanced amount of back pay from the enterprises being in arrears with wages; and
(4) Discharging other duties as required by these Provisions
Article 7 (Management of Financial Affairs)
The management of two separate lines of revenues and expenditure shall be conducted for the back-pay security funds and a special financial account is to be established with funds earmarked for specified purposes only.
The expenditure needed for the back-pay security work shall be included in the municipal-level financial budget as prescribed.
Article 8 (Supervision)
The Shanghai Social Security Supervisory Committee shall supervise over the collection and payment of back-pay security fees and the use of back pay security funds.

Chapter III Collection and Payment
Article 9 (Collecting Payment Organ)
The social insurance agencies under the MALLS are specifically in charge of the work of collecting and paying back-pay security fees.
Article 10 (Fee-pay Subjects)
Enterprises in the area of this Municipality shall, according to these Provisions, pay the back-pay security fees within the time limit prescribed by the MALSS.
Enterprises branches with business license shall singly pay the back-pay security fees.
The back-pay security fee paid by an enterprise shall be entered into the coat.
Article 11 (Standard and Amount of Payment)
Enterprises and their branches shall pay the back-pay security fees once every year. The specific amount of payments shall be the amount of the minimum monthly wages published by the city authorities.
Article 22 (Adjustment and Publication of Payments Standard)
The MALSS shall put forward suggestions on adjusting the payment standards in good time and in accordance with the revenue and expenditure of back-pay security funds, and shall adjust the payment standards upon approval of the Municipal People’s Government and published them to the society.
 
Chapter IV Application and advance payment

Article 13 (Conditions for Application)
Under either of the following conditions, a laborer him/herself may apply for advancing his/her back pay if an enterprise is insolvent or temporarily insolvent in paying wages in arrears:
(1) An enterprise enters into the liquidation procedures owing to declaration of bankruptcy, dissolution or cancellation, and the face of back pay is confirmed by the enterprise and the enterprise liquidating body or verified by the labor security administrative department or the labor dispute settlement organ; and
(2) An enterprise has stopped business operation owing to its operator going away or into hiding and the fact of back pay is verified by the labor security administrative department or the labor dispute settlement organ.
Apart from the above-mentioned conditions, where a serious conflict may arise owing to an enterprise being in arrear with wages, the laborers with back pay may also apply for advancing payment so long as the administrative organ in charge of handling the disputes has checked and ascertained the situation of disputes and the fact of back pay.
Article 14 (Restriction of Applicant’s Eligibility)
Under the conditions set out in Article 13 of these Provisions, the MALSS shall not advance the back pay to persons belonging to the following categories: 
(1) The legal representatives or operator of an enterprise being in arrears with wages;
(2) Close relatives living together with the persons mentioned in the previous item in such an enterprise;
(3) A person that holds over 10 per cent of the stock in such an enterprise;
(4) A person who has a monthly salary more than three times as much as the average monthly salary of employees in this Municipality; or
(5) A person whose accumulative amount of back pay is less than 200 yuan.
Article 15 (Material to be Submitted by Applicant)
The applicant shall submit his or her ID labor relationship certificate, fill in the application form for advancing back pay and furnish relevant materials capable of proving the fact of back pay.
Under the condition set out in Clause 2 of Article 13 of these Provisions, the applicant shall additionally furnish the relevant material issued by the administrative organ handling disputes to prove the need for advancing back pay.
Article 16 (Time Limit for Application)
A laborer who applies for advancing back pay shall make an application to the MALSS within 30 days after obtaining the materials proving the facet of back pay.
In respect of the laborer who makes an application beyond the prescribed time limit not for his or her own reason, the MALSS may extend the time limit for his or her application.
The MALSS may, depending on needs, set up a handling point at every district/county labor security supervision organ and other related organ to accept the laborer’s application for advancing back pay.
Article 17 (Examination and Advance Payment)
The MALSS shall conduct examination in a timely manner after receiving an application and make within 10 workdays an approval or disapproval decision on advance payment.
That the MALSS decides on disapproval of advance payment shall have no beating on the applicant’s right to request the enterprise to pay wages in arrears according to the provisions of labor supervision and labor dispute settlement and other relevant laws and regulations.
Article 18(Assistant Obligation)
When the MALSS needs to know about the situating of back pay in examining the application materials, the applicant, the enterprise being in arrears with wages, and relevant organs and organizations shall cooperate.
Article 19 (Standard for Advance Payment)
Where the number of months of back pay is less than 6 months, the back pay to be advanced shall be calculated according to the actual number of back-pay months; in case of exceeding 6 months, the calculating shall be made according to 6 months.
Where the monthly salary or economic compensation in arrears is higher than the standard of minimum monthly salary of employees in this Municipality in the current year, the amount of back pay advanced shall be calculated according to the standard of minimum monthly salary; in case of being below the standard of minimum monthly salary, the calculation shall be based on the actual amount of back pay.

Chapter V  Recovery
Article 20 (Transfer of the Right to Recover Back pay)
Where a laborer obtains the advanced back pay, the MALSS shall obtain the right to recover the advanced part of back pay from the enterprise.
That a laborer obtains advanced back pay shall have no bearing on his or her right to request according to law the enterprise to pay the remainder of the back pay.
Article 21 (Obligation to Repay)
An enterprise shall repay in a timely manner the amount of back-pay sum advanced by the back-pay security funds.
Article 22 (Remedial Channel for Non-performance of Obligation to Repay)
Where an enterprise delays or refuses repayment of the advanced amount of back pay, the MALSS may, according to law, apply to the people’s court for coercive enforcement or bring a lawsuit before the people’s court.
Article 23 (Recovery in Liquidation Procedure)
Where the amount of back pay is advanced under the condition set out in Article 13,Clause 1, Item (1) of these Provisions, the MALSS may participate in the property distribution through attending the creditors’ meeting or other forms, and have the preemptive right to repayment according to law.

Chapter VI  Legal Liability
Article 24 (Investigation and Handling of Enterprise Being in Arrears with Wages) 
Where an enterprise is in arrears with the wages of laborers without any reason or fails to pay economic compensating according to law, the labor security administrative department shall investigate and handle the case according to the “Regulations on Labor Security Supervision ” and other relevant provisions of this Municipality.
Article 25 (Legal Liability for Non-payment of Back-pay Security Fees)
Where an enterprise fails to pay back-pay security fees s prescribed, the MALSS shall order it to pay such fees within a time limit; in case of failure to pay such fees within the deadline, a 2 per mille overdue fine per day shall be surcharged and a fine of not less than 1000 yuan and not more than 3000 yuan shall be imposed in addition. The overdue fine shall be incorporated into the back-pay security funds.
Article 26 (Legal Liability for Providing False Material)
Where any person seeks advance payment of wages in arrears by presenting false materials or fabricating facts, the MALSS shall order such person to return the payment; if the wrongful act constitutes a crime, the wrongdoer shall be prosecuted for criminal liability as provided by law.
Article 27 (Liability of Staff Breach of Law)
Where a staff member concerned with the execution of back-pay security abuses power, plays favoritism and commits irregularities and neglect of duties, the relevant department shall give him/her disciplinary sanctions; if the wrongful act constitutes a crime, the wrongdoer shall be prosecuted for criminal liability as provided by law.
 
Chapter VII  Supplementary Provisions

Article 28 (Annual Report and Auditing)
The MALSS shall report to the Municipal People’s Government every year on the collection and payment of back-payment of back-pay security fees and the use of the back-pay security funds,.
The auditing department shall, according to law, audit and supervise the revenue and expenditure of the back-pay security funds.
Article 29 (Effective Date)
These Provisions shall come into effect as of October 1,2007.The “Trial-Implementation Procedures of Shanghai Municipality on Back-Pay Funds of Small Enterprises”(SMPG G[1999]No.043) printed and distributed by the Shanghai Municipal People’s Government on November 25,1999, and the “Implementation Suggestions in Collection of Back-pay Security Funds if This Municipality’s Small Enterprises’” (SMPG G[2000]No.038) approved and transmitted by Shanghai Municipal People’s Government on August 8, 2000 shall be repealed at the same time.
 

(Promulgated on June 21,2007 by Decree No.72 of the Shanghai Municipal People’s Government) Chapter I General Provisions Article 1 (Purpose and Basis) These Provisions are formulated on the basis of the spirit of relevant documents of the State Council and the “Provisions of Shanghai Municipality on the Promotion of Employment ”, with a view to helping laborers solve temporary living difficulties to enterprises being in arrears with wages , and safeguarding social stability. Article 2 (Definition) Back pay referred to in these Provisions means the wages that an enterprise shall pay but has not paid, and the economic compensation that shall be but has not been paid to laborers at the time of dissolving or terminating a labor contract. Article 3 (Application Scope) These Provisions apply to enterprises paying the back-pay security fees and to laborers applying for advancing payment due to enterprises’ being in arrears with wages, within the area of this Municipality. These Provisions do not apply to the building construction enterprise that practices the wage guarantee system. Article 4 (Principle of Back-pay Security) The back-pay security follows the principle of social mutual aid, emergency assistance and limited advanced payment, and laborers are encouraged to press for their back pay through legal channels to safeguarded their legitimate rights and interests. Article 5 (Sources of Funds) This Municipality sets up back-pay security funds, the sources of which include: (1) Back-pay security fees paid by enterprises and the income from the interest incurred therefrom; (2) Recovery of the amount of the wage arrears paid in advance; (3) Subsidiaries from public finance; and (4) Other revenues. Chapter II Administrative Organ Article 6 (Competent Department) Shanghai Municipal Administration of Labor and Social Security (hereinafter referred to as MALSS) is the city’s competent department in charge of back-pay security work and performs the following duties; (1) Drawing up relevant administrative systems of back-pay security funds; (2) Examining the applications of laborers for advancing back pay and deciding on granting advanced payment; (3) Retrieving the advanced amount of back pay from the enterprises being in arrears with wages; and (4) Discharging other duties as required by these Provisions Article 7 (Management of Financial Affairs) The management of two separate lines of revenues and expenditure shall be conducted for the back-pay security funds and a special financial account is to be established with funds earmarked for specified purposes only. The expenditure needed for the back-pay security work shall be included in the municipal-level financial budget as prescribed. Article 8 (Supervision) The Shanghai Social Security Supervisory Committee shall supervise over the collection and payment of back-pay security fees and the use of back pay security funds. Chapter III Collection and Payment Article 9 (Collecting Payment Organ) The social insurance agencies under the MALLS are specifically in charge of the work of collecting and paying back-pay security fees. Article 10 (Fee-pay Subjects) Enterprises in the area of this Municipality shall, according to these Provisions, pay the back-pay security fees within the time limit prescribed by the MALSS. Enterprises branches with business license shall singly pay the back-pay security fees. The back-pay security fee paid by an enterprise shall be entered into the coat. Article 11 (Standard and Amount of Payment) Enterprises and their branches shall pay the back-pay security fees once every year. The specific amount of payments shall be the amount of the minimum monthly wages published by the city authorities. Article 22 (Adjustment and Publication of Payments Standard) The MALSS shall put forward suggestions on adjusting the payment standards in good time and in accordance with the revenue and expenditure of back-pay security funds, and shall adjust the payment standards upon approval of the Municipal People’s Government and published them to the society. Chapter IV Application and advance payment Article 13 (Conditions for Application) Under either of the following conditions, a laborer him/herself may apply for advancing his/her back pay if an enterprise is insolvent or temporarily insolvent in paying wages in arrears: (1) An enterprise enters into the liquidation procedures owing to declaration of bankruptcy, dissolution or cancellation, and the face of back pay is confirmed by the enterprise and the enterprise liquidating body or verified by the labor security administrative department or the labor dispute settlement organ; and (2) An enterprise has stopped business operation owing to its operator going away or into hiding and the fact of back pay is verified by the labor security administrative department or the labor dispute settlement organ. Apart from the above-mentioned conditions, where a serious conflict may arise owing to an enterprise being in arrear with wages, the laborers with back pay may also apply for advancing payment so long as the administrative organ in charge of handling the disputes has checked and ascertained the situation of disputes and the fact of back pay. Article 14 (Restriction of Applicant’s Eligibility) Under the conditions set out in Article 13 of these Provisions, the MALSS shall not advance the back pay to persons belonging to the following categories: (1) The legal representatives or operator of an enterprise being in arrears with wages; (2) Close relatives living together with the persons mentioned in the previous item in such an enterprise; (3) A person that holds over 10 per cent of the stock in such an enterprise; (4) A person who has a monthly salary more than three times as much as the average monthly salary of employees in this Municipality; or (5) A person whose accumulative amount of back pay is less than 200 yuan. Article 15 (Material to be Submitted by Applicant) The applicant shall submit his or her ID labor relationship certificate, fill in the application form for advancing back pay and furnish relevant materials capable of proving the fact of back pay. Under the condition set out in Clause 2 of Article 13 of these Provisions, the applicant shall additionally furnish the relevant material issued by the administrative organ handling disputes to prove the need for advancing back pay. Article 16 (Time Limit for Application) A laborer who applies for advancing back pay shall make an application to the MALSS within 30 days after obtaining the materials proving the facet of back pay. In respect of the laborer who makes an application beyond the prescribed time limit not for his or her own reason, the MALSS may extend the time limit for his or her application. The MALSS may, depending on needs, set up a handling point at every district/county labor security supervision organ and other related organ to accept the laborer’s application for advancing back pay. Article 17 (Examination and Advance Payment) The MALSS shall conduct examination in a timely manner after receiving an application and make within 10 workdays an approval or disapproval decision on advance payment. That the MALSS decides on disapproval of advance payment shall have no beating on the applicant’s right to request the enterprise to pay wages in arrears according to the provisions of labor supervision and labor dispute settlement and other relevant laws and regulations. Article 18(Assistant Obligation) When the MALSS needs to know about the situating of back pay in examining the application materials, the applicant, the enterprise being in arrears with wages, and relevant organs and organizations shall cooperate. Article 19 (Standard for Advance Payment) Where the number of months of back pay is less than 6 months, the back pay to be advanced shall be calculated according to the actual number of back-pay months; in case of exceeding 6 months, the calculating shall be made according to 6 months. Where the monthly salary or economic compensation in arrears is higher than the standard of minimum monthly salary of employees in this Municipality in the current year, the amount of back pay advanced shall be calculated according to the standard of minimum monthly salary; in case of being below the standard of minimum monthly salary, the calculation shall be based on the actual amount of back pay. Chapter V Recovery Article 20 (Transfer of the Right to Recover Back pay) Where a laborer obtains the advanced back pay, the MALSS shall obtain the right to recover the advanced part of back pay from the enterprise. That a laborer obtains advanced back pay shall have no bearing on his or her right to request according to law the enterprise to pay the remainder of the back pay. Article 21 (Obligation to Repay) An enterprise shall repay in a timely manner the amount of back-pay sum advanced by the back-pay security funds. Article 22 (Remedial Channel for Non-performance of Obligation to Repay) Where an enterprise delays or refuses repayment of the advanced amount of back pay, the MALSS may, according to law, apply to the people’s court for coercive enforcement or bring a lawsuit before the people’s court. Article 23 (Recovery in Liquidation Procedure) Where the amount of back pay is advanced under the condition set out in Article 13,Clause 1, Item (1) of these Provisions, the MALSS may participate in the property distribution through attending the creditors’ meeting or other forms, and have the preemptive right to repayment according to law. Chapter VI Legal Liability Article 24 (Investigation and Handling of Enterprise Being in Arrears with Wages) Where an enterprise is in arrears with the wages of laborers without any reason or fails to pay economic compensating according to law, the labor security administrative department shall investigate and handle the case according to the “Regulations on Labor Security Supervision ” and other relevant provisions of this Municipality. Article 25 (Legal Liability for Non-payment of Back-pay Security Fees) Where an enterprise fails to pay back-pay security fees s prescribed, the MALSS shall order it to pay such fees within a time limit; in case of failure to pay such fees within the deadline, a 2 per mille overdue fine per day shall be surcharged and a fine of not less than 1000 yuan and not more than 3000 yuan shall be imposed in addition. The overdue fine shall be incorporated into the back-pay security funds. Article 26 (Legal Liability for Providing False Material) Where any person seeks advance payment of wages in arrears by presenting false materials or fabricating facts, the MALSS shall order such person to return the payment; if the wrongful act constitutes a crime, the wrongdoer shall be prosecuted for criminal liability as provided by law. Article 27 (Liability of Staff Breach of Law) Where a staff member concerned with the execution of back-pay security abuses power, plays favoritism and commits irregularities and neglect of duties, the relevant department shall give him/her disciplinary sanctions; if the wrongful act constitutes a crime, the wrongdoer shall be prosecuted for criminal liability as provided by law. Chapter VII Supplementary Provisions Article 28 (Annual Report and Auditing) The MALSS shall report to the Municipal People’s Government every year on the collection and payment of back-payment of back-pay security fees and the use of the back-pay security funds,. The auditing department shall, according to law, audit and supervise the revenue and expenditure of the back-pay security funds. Article 29 (Effective Date) These Provisions shall come into effect as of October 1,2007.The “Trial-Implementation Procedures of Shanghai Municipality on Back-Pay Funds of Small Enterprises”(SMPG G[1999]No.043) printed and distributed by the Shanghai Municipal People’s Government on November 25,1999, and the “Implementation Suggestions in Collection of Back-pay Security Funds if This Municipality’s Small Enterprises’” (SMPG G[2000]No.038) approved and transmitted by Shanghai Municipal People’s Government on August 8, 2000 shall be repealed at the same time.

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