The Dilemmas Of China’s Industrial Injury Compensation Advance Payment System And Ways Forward

Industrial Injury Compensation Advance Payment System refers to the system where after an industrial injury happens to an employee, he or she cannot get the industrial injury insurance compensation because the related employer has not paid the insurance fee, and the employer or the related third person also does not pay the compensation according to the law, then the Industrial Injury Fund or other funds pay the compensation in advance and the related agency recourses against the employer or the third person later, or recovers the loss of the fund by other means.On October 28, 2010, China’s Standing Committee of the National People’s Congress released the Social Insurance Law, and the Law came into force on July 1, 2011. The Industrial Injury Compensation Advance Payment System is stipulated in the Article 41 and 42 of the Law. According to them, the resource of China’s industrial injury compensation is the Industrial Injury Fund. Therefore, this system is called the Industrial Injury Fund Advance Payment System.The establishment of this system was an important complementary to China’s original Industrial Injury Insurance System. With this system, employees suffering from industrial injury could get the compensation and the treatment more timely. Therefore, their rights and interests could be better protected. We could say, the establishment of this system is a “legislation highlight”.However, during the four years of implementation, many problems have arisen, and the system has faced difficulties. It is criticized as an “enforcement difficuly”. The problems include: the scope of applicants is ambiguous, because employers seem to have the right to apply; employees from entities involving illegal employment have no ways to get advance payment; the application procedures are too complicated, involving many steps like industrial injury identification, labor relationship identification and providing certificates issued by public security organs and social security organs, and the whole procedures take too much time; and the security of the fund is threatened because the special fund of advance payment has not been established, and recovery of the money paid is difficult. The main reason is that there are flaws in the Advance Payment System’s applicant scope, application procedures and fund security mechanism. Other countries and areas, like German and Chinese Taiwan, have considerable experience in the design and implementation of the Industrial Injury Compensation Advance Payment System. Therefore, we should refer to their experience, firstly, to standardize the applicant qualification, making it clear that employers have no right to apply and giving employees from entities involving illegal employment the right to apply; secondly, to simplify application procedures, waiving the requirements of injury identification and providing certificates issued by public security organs and social security organs and thirdly, to improve the fund security mechanism of China’s Industrial Injury Compensation Advance Payment System, and the means include: establishing the special fund of advance payment, improving recovery machanism, and increasing penalties on illegal companies.