On January 24, 2014, the PRC Ministry of Human Resources and Social Security (“MOHRSS”) finalized and promulgated its Interim Provisions on Labor Dispatch (“Interim Provisions”) by way of MOHRSS Decree No. 22, which will come into effect starting March 1, 2014.
In addition to addressing issues such as labor contracts for dispatch workers and social insurance for cross-region dispatch workers, the Interim Provisions further restricts the use of dispatch workers for domestic and foreign China-based employers.
Attached to this alert please find the bilingual text of the Interim Provisions (note: the English translation was prepared by LexisNexis and is for reference purposes only).
Below please also find a summary of certain key articles from the Interim Provisions related to the new restrictions on the use of dispatch workers:
Job Scope for Dispatch Workers:
Article 3 provides that dispatch workers can only be used for temporary, auxiliary or substitute jobs, the definitions for which are the same as those listed in Article 66 of the Labor Contract Law.
Further, Article 3 also provides that if an employer decides to use dispatch workers for auxiliary jobs, such employer is required to hold discussions with its employees’ assembly, or all employees, to put forward any relevant proposals and/or suggestions or resolve any issues by way of equal consultations with the labor union or employees’ representatives, and also post internal announcements regarding any decisions on the same.
Percentage Limit on Dispatch Workers:
Article 4 requires employers to strictly control their total number of employed dispatch workers and limits an employer’s total amount of dispatch workers to 10% of its total labor force.
Article 28 further requires employers to formulate their labor force adjustment plans so as to lower the percentage of their total dispatch workers in order to meet the 10% requirement within two years of the Interim Provisions taking effect. Employers are also required to register their labor force adjustment plans with the relevant local labor authority (i.e., the local labor bureau), and may not hire any new dispatch workers until they meet the requirements as set forth in Article 4.
Further, Article 25 provides that representative offices (“ROs”) of foreign companies and foreign financial institutions (as well as employers that hire sailors as part of crews set to work over international waters) are exempted from the restrictions noted in Articles 3 and 4.
What This Means to You:
As a company looking to employ dispatch workers, you are now restricted to the use of dispatch employees in the above-specified ways and, more specifically, as follows:
Article 3 provides your employees with greater say in your use of dispatch workers and pushes for a more collaborative and specified atmosphere regarding the use and employment of dispatch workers. The job descriptions for positions in which dispatch workers may be employed (which are the same as the descriptions specified in Article 66 of the Labor Contract Law) are emphasized further through the promulgation of the Interim Provisions, and your company will be held to a stricter standard with regard to holding mandatory discussions on the use of dispatch workers with your employees’ labor union or representatives.
Furthermore, Articles 4 and 28 further restrict your company’s total employment of dispatch workers to 10% or less of your total workforce (previously, there was no limitation in this regard), and allow you a two-year grace period to meet the 10% requirement. In addition, your company will have to register your labor force adjustment plans with the local labor bureau and also may not hire any additional dispatch workers until the 10% (or lower) limitation is met.
Please note, if your company operates in China as a RO or a foreign financial institution, then the restrictions noted in Articles 3 and 4 will not apply.