Who bears the responsibilities for work-related injuries during the “gap period”?

Generally speaking, an employer should complete the social insurance registration for new employee from the date of employment, by which can avoid the risk that the employer has to bear all liabilities when a new employee suffers a work-related injury before the employer completes the registration (referred to as the “gap period”). However, in practice, different companies have different practices. Some complete such registration on the date of employment; some complete such registration in a specified period every month, such as from 15^th to 20^th in each month, so those employees whose employment date is latter than 20^th of the current month, their social insurance registration would be completed in the next month; and for several manufacturing companies with frequent personnel turnover, they are used to completing such registration after a new employee has been employed for 1 month, or even after the probationary period. From the perspective of risk control, if an employee suffers a work-related injury before his employer completes such registration, whether the employer could demand compensation from the work-related injury insurance funds?

Article 58 of the “Social Insurance Law” stipulates that, ” An employer shall complete social insurance registration with the social insurance agency for its employee within 30 days from the date of employment. ” In view of this provision, there is a viewpoint that if an employer has completed such registration within the statutory time limit, which is 30 days from the date of employment, it could demand compensation from the work-related injury insurance funds. However, if such viewpoint is implemented, some employers may take advantage of it, for example, they may intentionally delay such registration, or under rare circumstance, an employer did not plan to participate in the social insurance for employees, but when an employee suffers a work-related injury within 30 days from the date of employment, in order to demand compensation from the work-related injury insurance funds, it complete such registration within the statutory time limit.

After searching various local regulations, it is found that only the “Regulations of the Guangdong Provincial Work Injury Insurance Fund Provincial Coordination Business” adopts this viewpoint with preconditions. Article 164 of this regulation stipulates that, if an employer has a good record of participating in social insurance, and continuously pay the social insurance fee in accordance with relevant laws and regulations, or an employer is a newly established entity, for those employers, if a newly recruited employee suffers a work-related injury before the registration has been completed, and the employers make up the payment of social insurance within the statutory time limit, the social insurance benefits could be calculated from the date of the employee’s work-related injury was occurred.

In judicial practice, only a few cases represent such viewpoint. Such as (2017) Su 8602 Xing Chu No. 1153, the court held that the employer completes the registration within 30 days from the date of employment, which is a reasonable and normal processing period, so such behavior is not a remedy, and the work-related injury insurance funds should pay the disability subsidies. However, because the employee did not claim medical expenses in this case, it cannot be inferred that the judgment unconditionally supports an employer to demand all compensations from the work-related injury insurance funds under such circumstance.

In practice, the current mainstream viewpoint is that, if an employer pays the relevant insurance fee and late payment fine (if any), then the newly incurred expenses could be borne by the work-related injury insurance funds. The basis of this viewpoint is Article 62 of the “Regulations on Work-related Injury Insurance”, which states that, “Upon participation in work-related injury insurance by the employer and retrospective contribution of work-related injury insurance premiums and late payment fine, the work-related injury insurance fund and the employer shall make payment for newly incurred expenses pursuant to the provisions of these Regulations.” According to Article 3 of the “Opinions of the Ministry of Human Resources and Social Security on Several Issues Relating to Implementation of the Regulations on Work Injury Insurance (II)”, the “newly incurred expenses” include: (1) in the case of persons who suffer a work-related injury, medical treatment expenses for work injury, rehabilitation expenses for work injury, hospital stay and meal subsidy, transportation, accommodation and meal expenses for medical treatment sought outside the coordination region, assistive aids configuration expenses, living care expenses, disability allowance for workers certified with grade 1 to grade 4 disability newly incurred after insurance participation, as well as one-off work injury medical treatment subsidy paid at the time of rescission of labor contract; and (2) in the case of persons who are killed in a work-related accident, compensation for dependents who satisfy the criteria which is newly incurred after insurance participation.

In summary, it is recommended that employers promptly participate in social insurance for their employees. If it is indeed difficult to make timely payments and some positions have a relatively high risk of work-related injuries, employers could purchase an employer liability insurance or other commercial insurance to reduce those risks.