On June 4, 2012, the General Office of the State Council promulgated the Administrative Regulations on Foreign Labor Service Cooperation (the “Regulations”)(1), which went into effect on August 1, 2012. The goal of the Regulations is to protect laborers who are sent overseas to work for foreign employers and to boost the development of foreign labor cooperation.  

For the purpose of the Regulations, “foreign labor service cooperation” means business services provided by domestic laborers who are sent to other countries or regions to work for foreign enterprises or institutions (“Foreign Employers”).

  1. Qualification of an Enterprise Engaging in Foreign Labor Service Cooperation (the “Enterprise”)

For an Enterprise to apply for the business qualification for foreign labor service cooperation, the following conditions must be satisfied:

  1. The Enterprise must be a legal person;
  2. The Enterprise’s contributed registered capital must be no less than RMB 6 million;
  3. The Enterprise must have at least three management staff members who are familiar with the business of foreign labor service cooperation; 
  4. The Enterprise must have a sound internal management system and an emergency handling system; and
  5. The Enterprise’s legal representative must have no criminal record.
  1. Approval Procedures to Obtain the Business Qualification Certificate for Foreign Labor Service Cooperation
    1. An Enterprise applying for the business qualification for foreign labor service cooperation should submit its application materials that satisfy the conditions specified in paragraph 1 above to the department in charge of commerce that is responsible for examination and approval;
    2. The department in charge of commerce that is responsible for examination and approval should review the application materials and decide whether to grant approval or not within 20 working days from the date on which it receives the application materials. If approval is granted, the certificate for the business qualification for foreign labor service cooperation shall be issued; and
    3. The Enterprise which obtained the certificate for the business qualification for foreign labor service cooperation shall register the certificate with the local Administration for Industry and Commerce.
  2. Obligations of a Qualified Enterprise

According to the Regulations, an Enterprise shall:  

  1. not permit other entities or individuals to organize laborers to work abroad in the name of that Enterprise;
  2. open a dedicated account in a bank designated by the department in charge of commerce and deposit not less than RMB 3 million into the account as a reserve fund for handling risks arising from foreign labor service cooperation (the “Reserve Fund”)(2) within five working days from the date of registration with the local Administration for Industry and Commerce. When the Reserve Fund is used up, the Enterprise shall top up the reserve fund to the original amount within 20 working days from the date on which the Reserve Fund was depleted;
  3. not organize laborers to engage in overseas work relating to gambling or pornography; 
  4. arrange for laborers to attend training on occupational skills, safety precaution knowledge, foreign languages required for working abroad, and knowledge such as the relevant laws, religious beliefs, and customs and habits of the countries or regions where the laborers will be located; 
  5. purchase personal accident insurance for the laborers for the period during which they will work abroad, unless it is agreed between the Enterprise and the Foreign Employer that the Foreign Employer shall purchase the insurance;
  6. go through exit formalities with the laborers and provide assistance for them to obtain overseas residence and work permits;
  7. track and understand overseas working and living conditions of the laborers, help to resolve the difficulties and problems encountered by the laborers in their working and living conditions, and report to the Foreign Employers reasonable requests of the laborers in a timely manner; and
  8. formulate contingency plans for emergencies.
  1. Contracts Relating to Foreign Labor Service Cooperation

An Enterprise should enter into written contracts on labor service cooperation with Foreign Employers. A contract on labor service cooperation shall set out clearly the following related to the protection of the interests of the laborers:

  1. The scope of work to be performed, work location, working hours, and vacation time;
  2. Contract terms;
  3. Remuneration of the laborers and the method of paying such remuneration;
  4. Payment of social insurance premiums for the laborers;
  5. Labor conditions, labor protection, vocational training, and protection against occupational hazards for laborers;
  6. Welfare benefits and living conditions of the laborers;
  7. Formalities for the laborers to obtain overseas residence and work permits;
  8. Personal injury insurance for the laborers;
  9. Economic compensation offered to the laborers due to the rescission of the contract entered into between the Foreign Employer and the laborers for reasons attributable to the Foreign Employer; 
  10. Assistance and relief offered to the laborers in the event of an emergency; and
  11. Default liability.  

An Enterprise shall enter into written service contracts with laborers, unless that Enterprise has entered into labor contracts with the laborers and will organize those laborers to work abroad.

  1. Fines

A fine of between RMB 50,000 and RMB 100,000 will be imposed on an Enterprise upon the occurrence of the following:

  1. Organizing laborers to work abroad without arranging training;
  2. Failure to purchase personal injury insurance for the laborers for the period in which they work abroad; or
  3. Failure to arrange accompanying management personnel.  

A fine of between RMB 100,000 and RMB 200,000 will be imposed on an Enterprise upon the occurrence of the following:

  1. Organizing laborers to work abroad without entering into contracts on labor service cooperation with Foreign Employers;
  2. Organizing laborers to work abroad without entering into service contracts or labor contracts with the laborers;
  3. Entering into contracts on labor service cooperation with Foreign Employers or foreign individuals that are not granted approval and organizing laborers to work abroad;
  4. Concealing relevant information or providing false information when entering into service contracts or labor contracts with the laborers;
  5. Failure to handle emergencies that take place abroad in a timely manner; or
  6. Failure to make proper arrangements for laborers who are sent abroad and are still working abroad when ceasing to engage in foreign labor service cooperation.