1. New Development of National Law and Shanghai Local Regulation

The PRC Social Insurance Law (the “Social Insurance Law”), which was issued by the Standing Committee of the National People's Congress and became effective July 1, 2011, establishes national standardized social insurance systems in China, including basic pension, basic medical insurance, work-related injury insurance, unemployment insurance, and maternity insurance. Under Article 56 of the Social Insurance Law, the maternity allowance for a female employee’s maternity leave is no longer based on her own average monthly salary during the previous year. Instead, as of July 1, 2011, it must be calculated according to the average monthly salaries for all employees of the same employer during the previous year (the “employer’s average monthly salary”). This is good news for low-paid employees but bad news for highly compensated employees, and may add new costs and uncertainty for employers.