Following the (national) Provisional Regulations on Labor Dispatch of March 1, 2014 (“ Labor Dispatch Regulations ”), a number of cities and  provinces have issued their own measures on the enforcement of the Labor Dispatch Regulations.  On June 30 and July 7, 2014 respectively, the Shanghai labor authorities issued two separate measures regarding enforcement of the national labor dispatch rules.  Among the specific items contained in those measures, Shanghai has set a deadline of October 31, 2014, for companies that use labor dispatch employees in excess of 10% of their workforce to file a “workforce adjustment plan” with the labor authorities.  Similar to Beijing, the Shanghai labor authorities will issue an acknowledgement of receipt upon submission.  Shanghai also requires companies to provide a specific timeline for how they will reduce their use of labor dispatch as part of the workforce adjustment plan.  

In addition, Shanghai labor authorities have specified that companies which fail to follow the “equal pay for equal work” principle for labor dispatch workers, or that fail to follow the mandatory “employee consultation” procedure to determine which job positions will qualify as “auxiliary position” (one of the only three positions for which labor dispatch can be used) may face administrative penalties, if such issues exist and are not timely corrected.  Companies that have not followed the relevant rules should consider correcting their practices soon to avoid penalties.

On July 14, 2014, the Suzhou labor authorities (in Jiangsu Province) have also issued their own measures related to workforce adjustment plans, which set an early deadline of August 31, 2014, for company submissions. The measures require detailed information to be included in the plan such as information on the current use of labor dispatch, detailed measures to reduce the use of labor dispatch, step plans, monthly implementation arrangements, and expected issues and solutions, etc.  These requirements seem more detailed than the workforce adjustment plan requirements in most other major cities.  In addition, the measures state that “disguised” labor dispatch through outsourcing arrangements is prohibited.  Therefore, if the company includes outsourcing as one of the measures it will take to reduce labor dispatch, the authorities may closely scrutinize such arrangement or request more information.

Similar to other cities, both Shanghai and Suzhou have not specified penalties or other consequences for not submitting a workforce adjustment plan by the stipulated deadline. Therefore, it remains to be seen how strictly the local labor authorities will enforce these rules.