The Draft was enacted shortly after the enactment of Implementation Measures on Labor Dispatching License (see our Newsletter of June 2013). It is part of MHRSS’ recent intensive effort to standardize labor dispatch activities in China.

The Draft reiterates the temporary, auxiliary and substitutive nature of labor dispatch positions. Also, for the first time, it clarifies that the restriction on the nature of dispatched employees does not apply to representative offices.

To reaffirm the new amendments to PRC Employment Contract Law ("ECL Amendments"), the Draft sets the maximum ratio for dispatched employees at 10%, which means that the number of dispatched employees engaged by any company must not exceed 10% of its total number of employees.

The ECL Amendment has shocked a large number of employers and dispatched employees, but the Draft provides a grace period for employers to bring their employment structure in line with the current ECL:

  • Any labor dispatch established before the ECL Amendment became effective on July 1, 2013, will continue to be in force until the term expires, which is up to two years.
  • Any existing labor dispatch that does not follow the "equal pay for equal work" principle must rectify this immediately.
  • Any employer with a number of dispatched employees exceeding the 10 per cent ceiling cannot recruit new dispatched employees, even for auxiliary positions.

Under the Draft, non-compliance will result in a fine of between RMB 5,000 and RMB 10,000 per dispatched person and, if the labor dispatch agency has violated laws and regulations, its labor dispatch license will be revoked.

Date of issue: August 7, 2013. Deadline for submitting comments: September 7, 2013.