Liaoning Provincial Regulations on the Protection of Labor Rights and Interests(the “Regulation”) was released on May 30, 2013 and will take effect on August 1, 2013.

The Regulation provides detailed stipulations on labor dispatch issue. In particular, it is regarded as an employment relationship between the dispatched worker and the employer and they should enter into an employment contract, in any of the following circumstances: (1) where the labor dispatch service provider does not renew the labor dispatch agreement with the hosting company, the hosting company continues accepting the dispatched worker’s service for more than 1 month after the expiration of the employment contract; (2) the labor dispatch position is not compliant with the statutory requirements as temporary, auxiliary or substitute; (3) the temporary labor dispatch position is kept for more than 6 months; (4) the hosting company or its holding company sets up, or the two entities jointly set up a labor dispatch service company to dispatch the employees to the hosting company or its holding company; (5) other circumstances in violation of laws and administrative regulations related to labor dispatch.

It is worthy mentioning that the Regulation sets a time limit to discipline the employee’s misconduct by the employer, who should make decisions on the employee’s misconduct within one year since the misconduct was known, or should have been known by the employer. Any misconduct that the employer has not disciplined within the time limit should no longer be investigated or looked into retroactively.

Furthermore, the entry, termination or expiration of employment contract should be filed with the local Human Resources and Social Security Authority for the record by the employer within the time limit stipulated in the Regulation.

KWM Comments:

One point of the Regulation under the spotlight is that it will be deemed as having established an employment relationship if the hosting company accepts the labor dispatched workers in violation of the laws etc.,Under such circumstance, the hosting company should enter into an employment contract with the dispatched worker. Therefore, employers in Liaoning province should comply with relevant laws regarding labor dispatch to avoid the risk of the conclusion of employment contract with the dispatched worker.