Alert - Measures and Amendments for Labor Dispatching in China Have Changed

On July 1, 2013, both “Implementing Measures for the Administrative Permission of Labor Dispatching” and the amendment of China’s labor contract law became effective.

In China, “dispatched worker” has the same definition as “outsourced labor,” describing the person who will be sent by the dispatch agency to the company to provide a service.

The new measure and amendment outline several rules, procedures, and penalties related to labor dispatch agencies, such as Fesco, which are designed to limit the abuse of the dispatched worker.

For the employers that have continued to use dispatched employees they will need to pay attention to the rules as below:

• The employers can only use the dispatched workers for temporary, auxiliary, and substitute positions. The new amendment adds the specific definitions of these positions to be more restrictive regarding outsourcing labor services.
• The number of dispatched workers should not exceed a certain ratio.
• Dispatched workers must be paid the same as employees who are directly hired by the company for the same position.
• The penalty will be up to RMB 10,000 per dispatched worker if the agency and the company break the rules.
• The amendments will not apply to foreign representative offices.

Under the amendment and the new measure, the employers need to be more cautious in reviewing the relationship with the dispatched workers and in checking whether the dispatch contracts are implemented in accordance with the new rules.

In addition, the employers need to pay attention to whether the dispatch agency is in compliance with the new regulations to avoid the risks of potential penalties.