Interim Provisions on Labor Dispatch in China

Below you can find the translated English version of the Interim Provisions on Labor Dispatch in China. The provisions were issued by the Ministry of Human Resources and Social Security and became effective on March 1st, 2014.

Table of Contents

Chapter 1 – General Provisions

Article 1 These Provisions are formulated in accordance with the Labor Contract Law of the People’s Republic of China (hereinafter referred to as the “Labor Contract Law”), the Regulation on the Implementation of the Labor Contract Law of the People’s Republic of China (hereinafter referred to as the “Regulation on the Implementation of the Labor Contract Law”) and other applicable laws and administrative regulations for purposes of regulating labor dispatch, protecting the lawful rights and interests of workers, and promoting the development of harmonious and stable labor relations.

Article 2 These Provisions shall apply to the provision of labor dispatch services by labor dispatch entities and to the employment of dispatched workers by enterprises (hereinafter referred to as the “employers”).
These Provisions shall apply to the employment of dispatched workers by legally-established partnership organizations such as accounting firms and law firms, foundations, private non-enterprise entities, and other organizations.

Chapter 2 – Scope and Proportion of Employment

Article 3 Employers may employ dispatched workers in temporary, auxiliary, or substitutable positions only.
For the purpose of the preceding paragraph, “temporary positions” means the positions that exist for not more than six months; “auxiliary positions” means the positions of non-main business that provide services for the positions of main businesses; and “substitutable positions” means the positions that can be held by substitute workers during a certain period of time when the employees of the employers who originally hold such positions are unable to work because they are undergoing full-time study, or on leave or for any other reason.
To determine auxiliary positions in which dispatched workers are to be employed, an employer shall put forward proposals and suggestions after discussion by the employees’ congress or by all employees, conduct equal consultations with its trade union or employees’ representatives, and shall make an announcement internally.

Article 4 An employer shall strictly control the number of dispatched workers employed which shall not exceed 10% of the total number of its workers.
For the purpose of the preceding paragraph, the total number of workers means the sum of the number of employees who have entered into labor contracts with the employer and the number of dispatched workers employed by the employer.
An employer that calculates the proportion of the dispatched workers employed refers to an employer that can enter into labor contracts with workers in accordance with the Labor Contract Law and the Regulation on the Implementation of the Labor Contract Law.

Chapter 3 – Conclusion and Performance of Labor Contracts and Labor Dispatch Agreements

Article 5 A labor dispatch entity shall enter into written labor contracts with the dispatched workers for a fixed term of two years or more in accordance with the law.

Article 6 A labor dispatch entity may agree on a probation period with a dispatched worker in accordance with the law. However, it may agree with the same dispatched worker only on one probation period.

Article 7 A labor dispatch agreement shall specify:
(1) the title and nature of the positions in which the dispatched workers are to be employed;
(2) job location;
(3) the number of the dispatched workers and the period of dispatch;
(4) the amount and payment method of labor remuneration determined under the principles of “equal pay for equal work”;
(5) the amount and payment method of the social insurance premiums;
(6) working hours, vacation and leave;
(7) related benefits for the dispatched workers during work-related injury, birth-giving, or illness;
(8) work safety and hygiene as well as training;
(9) economic compensation and other fees;
(10) the term of the labor dispatch agreement;
(11) the payment method and criteria for labor dispatch service fees;
(12) liability for breach of the labor dispatch agreement; and
(13) other matters that should be included in the labor dispatch agreement as prescribed by laws, regulations, and rules.

Article 8 A labor dispatch entity shall perform the following obligations with respect to dispatched workers:
(1) Truthfully informing the dispatched workers of the matters provided for in Article 8 of the Labor Contract Law, the rules and regulations that should be complied with, and the content of the labor dispatch agreement.
(2) Establishing training rules to provide the dispatched workers with training on job-related knowledge and safety education.
(3) Paying the labor remuneration and other benefits to the dispatched workers in accordance with the relevant provisions of the state and the labor dispatch agreement.
(4) Paying social insurance premiums and handling relevant social insurance formalities for the dispatched workers in accordance with the relevant provisions of the state and the labor dispatch agreement.
(5) Urging the employers to provide the dispatched workers with labor protection and work safety and hygiene conditions in accordance with the law.
(6) Issuing certificates of rescission or termination of labor contracts in accordance with the law.
(7) Providing assistance in settling disputes between the dispatched workers and the employer.
(8) Other matters as prescribed by laws, regulations, and rules.

Article 9 An employer shall, in accordance with Article 62 of the Labor Contract Law, provide the dispatched workers with position-related welfare benefits, and may not discriminate against the dispatched workers.

Article 10 Where a dispatched worker is injured in a work-related accident while working for an employer, the labor dispatch entity shall apply for determination of a work-related injury in accordance with the law, and the employer shall assist it in the investigation and verification in respect of the determination of work-related injury. The labor dispatch entity shall assume the work-related injury insurance liability, but it may agree with the employer on the compensation methods.
Where a dispatched worker applies for diagnosis or assessment of an occupational disease, the employer shall be responsible for dealing with the matters relevant to the diagnosis or assessment of the occupational disease, and truthfully provide the materials required for the diagnosis or assessment of the occupational disease, such as the occupational history and the history of exposure to occupational hazards of the dispatched worker, and the testing results of occupational hazard factors at the workplace and the labor dispatch entity shall provide other materials necessary for the diagnosis or assessment of the occupational disease of the dispatched worker.

Article 11 Where the administrative license of a labor dispatch entity is not renewed upon expiration or its Labor Dispatch Business License is canceled or revoked, the labor contracts that it has already concluded with the dispatched workers in accordance with law shall continue to be performed until expiration. The labor contracts may be rescinded if both parties reach a consensus through negotiations.

Article 12 Under any of the following circumstances, an employer may return a dispatched worker to the labor dispatch entity:
(1) The employer falls under the circumstance as prescribed in Article 40 (3) or Article 41 of the Labor Contract Law.
(2) The employer is declared bankrupt, has its business license revoked, is ordered to close down, or is canceled in accordance with the law, or decides to dissolve in advance or to discontinue business upon expiration of its operation term. Or
(3) The labor dispatch agreement is terminated upon expiration.
During the period when the dispatched worker has no job after being returned, the labor dispatch entity shall pay remuneration to him/her on a monthly basis at a rate not lower than the minimum wage standards specified by the local people’s government.

Article 13 Where a dispatched worker falls under any of the circumstances as prescribed in Article 42 of the Labor Contract Law, the employer shall not return the dispatched worker to the labor dispatch entity concerned in accordance with the provisions of Item (1) of Paragraph 1 of Article 12 hereinbefore the period of dispatch expires; and if the period of dispatch expires, the dispatched worker can be returned only when the period of dispatch is extended until the relevant circumstance disappears.

Chapter 4 – Rescission and Termination of Labor Contracts

Article 14 A dispatched worker may rescind the labor contract concluded with a labor dispatch entity upon 30 days prior written notice to such entity. A dispatched worker in his/her probation period may rescind the labor contract with the labor dispatch entity upon three days’ prior notice. The labor dispatch entity shall promptly inform the employer concerned of the dispatched worker’s notice to rescind the labor contract.

Article 15 Where a dispatched worker who is returned by an employer in accordance with Article 12 herein disagrees with the labor dispatch entity’s maintaining or improving the conditions stipulated in the labor contract when being re-dispatched, the labor dispatch entity may rescind the labor contract.
Where a dispatched worker who is returned by an employer in accordance with Article 12 herein disagrees with the labor dispatch entity’s lowering the conditions stipulated in the labor contract when being re-dispatched, the labor dispatch entity may not rescind the labor contract, unless the dispatched worker so requests.

Article 16 Where a labor dispatch entity is declared bankrupt, has its business license revoked, is ordered to close down, or is canceled in accordance with the law, or decides to dissolve in advance or to discontinue business upon expiration of its operation term, the labor contracts concerned shall be terminated. The employer shall negotiate with the labor dispatch entity about the proper placement of the dispatched workers.

Article 17 Where a labor dispatch entity rescinds or terminates a labor contract with a dispatched worker under any of the circumstances as prescribed in Article 46 of the Labor Contract Law or Article 15 or 16 herein, it shall pay economic compensation to the dispatched worker in accordance with the law.

Chapter 5 – Social Insurance with Respect to Cross-Regional Labor Dispatch

Article 18 Where a labor dispatch entity dispatches a worker from one region to another, it shall purchase social insurance for the dispatched worker at the place where the employer concerned is located, and pay social insurance premiums in accordance with the relevant provisions of the place where the employer is located, and the dispatched worker is entitled to the social insurance benefits in accordance with the relevant provisions of the state.

Article 19 Where a labor dispatch entity has a branch at the place where the employer concerned is located, the branch shall go through the formalities for insurance purchase and pay social insurance premiums for the dispatched worker
Where a labor dispatch entity has no branch at the place where the employer concerned is located, the employer shall go through the formalities for insurance purchase and pay social insurance premiums for the dispatched worker on behalf of the labor dispatch entity.

Chapter 6 – Legal Liability

Article 20 Any labor dispatch entity or employer that violates the relevant provisions of the Labor Contract Law and the Regulation on the Implementation of the Labor Contract Law on labor dispatch shall be dealt with in accordance with Article 92 of the Labor Contract Law.

Article 21 Where a labor dispatch entity rescinds or terminates a labor contract with a dispatched worker in violation of these Provisions, Article 48 or Article 87 of the Labor Contract Law shall apply.

Article 22 Where an employer violates the provisions of paragraph 3 of Article 3 herein, the relevant department of human resources and social security shall order it to make corrections, and give it a warning; and if any damage has been caused to the dispatched worker, the employer shall be liable for compensation in accordance with the law.

Article 23 Any labor dispatch entity that violates Article 6 herein shall be dealt with in accordance with Article 83 of the Labor Contract Law.

Article 24 Any employer that returns a dispatched worker in violation of these Provisions shall be dealt with in accordance with paragraph 2 of Article 92 of the Labor Contract Law.

Chapter 7 – Supplementary Provisions

Article 25 The employment of dispatched workers by institutions such as foreign enterprises’ resident representative offices and foreign financial institutions’ representative offices in China and the employment of international oceangoing seafarers in the form of labor dispatch by seafarer employers shall not be subject to the restrictions on the proportion of dispatched workers employed in temporary, auxiliary or substitutable positions.

Article 26 For the purpose of these Provisions, “labor dispatch” excludes the circumstance where an employer sends its employee to work abroad or for a family or a natural person.

Article 27 The employment of workers by an employer in the form of labor dispatch in the name of contracting or outsourcing shall be governed by these Provisions.

Article 28 Where, before these Provisions come into force, the number of dispatched workers employed by an employer exceeds 10% of the total number of its workers, the employer shall develop a plan for employment adjustment, and reduce the proportion to the required proportion within two years from the effective date of these provisions; however, the labor contracts and labor dispatch agreements that have been concluded in accordance with the law prior to the issuance of the Decision of the Standing Committee of the National People’s Congress on Amending the Labor Contract Law of the People’s Republic of China and will not expire within two years after the effective date of these Provisions may continue to be performed in accordance with the law until expiration.
The employer shall submit its plan for employment adjustment to the local administrative department of human resources and social security for recordation.
No employers may employ new dispatched workers before they have reduced the number of dispatched workers who are employed before the effective date of these Provisions to the required proportion.

Article 29 These Provisions shall come into force on March 1, 2014.

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