The Trend of Labor Dispatch in China

The Employment Contract Law of People's Republic of China , which explicitly specifies the qualification of labor dispatch service providers, the administrative license of labor dispatch service, the principle of "equal pay for equal work" to the dispatched employee compared with regular staffs, and three required natures of the position applicable to the labor dispatch service.

The modification concerns the issue of labor dispatch in the Employment Contract Law of People's Republic of China (the "Employment Contract Law"), which explicitly specifies the qualification of labor dispatch service providers, the administrative license of labor dispatch service, the principle of "equal pay for equal work" to the dispatched employee compared with regular staffs, and three required natures of the position applicable to the labor dispatch service.

Article No. 57 of the Employment Contract Law, as modified by the Decision, set out the requirements of the qualification of labor dispatch service provider, as follows: labor dispatch service providers should have (1) the registered capital of no less than RMB 2,000,000, increased from the original amount of RMB 500,000; (2) a service-related place of business and facilities; (3) the management system of labor dispatch service that is subject to related laws and administrative regulations; and (4) other conditions required by laws and administrative regulations.

Dispatch service providers shall apply for and obtain an administrative license in accordance with the relevant regulations from a local labor administrative department; if approved, it shall apply for business registration subject to related laws and regulations; if not, no company or individual is allowed to provide labor dispatch service. The company that has been providing labor dispatch service before the date of implementation of the Decision shall obtain the administrative license and apply for the change of business registration before June 30, 2014.

The Employment Contract Law originally stipulates that the dispatched employee shall be relocated to a temporary, ancillary and replaceable position without giving any specific definition. Article No. 66 of the Employment Contract Law, as modified by the Decision, emphasizes that "the regular employment form in our country is the form of employment contract. The form of labor dispatch shall be supplementary, only applicable to those positions which are temporary, ancillary and replaceable".

"The prescribed temporary position means that the position shall exist no more than six months; the ancillary position specifies that the position provides a subordinate function to the core business; and the replaceable position dictates that the function of this position can be performed by another staff during the period in which the original can not fulfill his/her duties due to full-time study, vacation or any other reason. The accepting company shall strictly control the number of dispatched employees to a certain ratio of its total staffs, subject to specific regulations issued by the labor administrative department of State Council."

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