New implementing rules re-enforce China's desire to limit the use of dispatched staff (ie, staff engaged via a third-party labour dispatch company rather than being employed directly). The new rules set out detailed approval procedures for labour dispatch permits and increase the supervision of labour dispatch companies.

The new implementing rules are set out in the Rules for Implementing the Administrative Licensing of Labour Dispatch ("Rules"), which were issued on 20 June 2013. The new rules implement the last round of amendments to China's Labour Contract Law ("Amendments"), a development that was covered in our January 2013 e-bulletin.

Both the Amendments and the Rules will be effective 1 July 2013.

Background

From 1 July 2013, all labour dispatch companies will be required to hold a labour dispatch permit. However, companies engaged in labour dispatch prior to 1 July 2013 will have a grace period until 1 July 2014. During the grace period they will be able to continue with existing labour dispatch contracts, but will be unable to take up new dispatch business until the permit is obtained.

Rules

Procedures on application for labour dispatch permit

The Rules specify the documentation and procedures for applications for labour dispatch permits. Applications must be submitted to the local labour bureau, which may take up to 20 working days for review and approval. The review period may be extended to 30 working days upon approval by the head of the labour bureau.

Term and renewal

A labour dispatch permit will be valid for three years. An application for renewal of a labour dispatch permit must be submitted to the local labour bureau at least 60 days before expiry. If a labour dispatch company misses this deadline then it will need to apply for a new labour dispatch permit.

Annual reports

Each labour dispatch company is required to submit an annual report to the labour bureau in the first quarter of each year. The report must disclose certain details of its operation of labour dispatch business for the preceding year.

Implication for companies using dispatch staff

The Rules do not directly address companies using dispatch staff. However, the above annual reports will contain detailed information about the labour dispatch services provided by the labour dispatch companies to their clients. Accordingly, the report may well alert the local labour bureau to compliance issues arising within companies using dispatch services.