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Amendment to Employment Contract Law


1. What are the highlights of the Amendments to Labor Contract Law adopted by the 3oth Meeting of the Standing Committee of the National People’s Congress?

(1) Employees can only be seconded for temporary, auxiliary or substitute positions;

(2) The policy of “same work, same pay” must be specified in contracts;

(3) The formation of a secondment service company requires a minimum registered capital of RMB2 million and approval from the labor bureau;

(4) The employee secondment rate of total employees must be limited to certain proportion to be determined by labor authorities.

(5) Violation of these rules may result in fines, confiscation of illegal incomes and revoking of approval.

2. What are the restrictions for a secondment services company under the terms of the amendment?

(1) Only second employees to temporary, auxiliary or substitute positions;

(2) Have a registered capital of no les that RMB2 million and a sound labor secondment management system. It shall be approved by the labor bureau before registered with AIC.

(3) Have the policy of “same work, same pay” specified in the contract between the secondment  services company and the employeeand the contract between the secondment service company and the employer.

(4) Not exceed the employee secondment to total employees proportion set forth by labor administrative authorities.

3. What will happen, if a secondment service company fails to follow the provisions mentioned above?

If a secondment service company carries out seconment business without approval from the labor bureau, it may be forced to cease business. All illegal incomes form this act will be confiscated. Fines up to RMB50,000 or five times the liiegal incomes will also be imposed on the secondment service company.


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