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China's top court issued a judicial interpretation on Friday, clarifying that any contractual agreement that excludes social insurance contributions is invalid.

The Supreme People's Court emphasizes that paying social insurance is a legal obligation for both employers and employees, noting that the clarification is a result of some employers evading payments and some employees opting out of the system in practice.

"For example, we've found a few companies not contributing to social insurance in order to reduce labor costs, with some workers requesting employers to provide the social insurance contributions directly to them as subsidies in order to receive higher wages," said Zhang Yan, a judge in the top court's First Civil Division.

She reiterated that Chinese courts should support claims by employees who request for termination of their work contract or seek compensation due to the employer's failure to contribute to social insurance.

Wu Jingli, deputy chief judge of the division, also stressed the importance of paying social insurance, as legally enjoying social insurance benefits is a fundamental right for each worker, adding that the interpretation will be effective from Sept 1.

"Paying social insurance fees in the long term can help employees manage income disruptions during risks like old age, illness, work-related injuries, childbirth and unemployment, securing their basic living needs," she specified.

Chen Yifang, chief judge of the division, revealed an increase in cases related to social insurance over the past few years. These cases posed challenges to fostering harmonious labor relations and urged legal workers to address the issue, she said.

She noted that the interpretation is a response to public concern, promotes stable employment through quality adjudication and drives high-quality economic development.

"Employment is fundamental to people's livelihoods and development. Safeguarding employees' rights is vital for ensuring full and high-quality employment, as well as upholding fairness, justice and social stability," she added.