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New Changes regarding Labour Dispatch Rules in China

1. Q: When will the rules in Labour Contract Law regarding labour dispatch be changed?

A: Adopted at the 30th session of the Standing Committee of the 11th National People's Congress on Dec. 28th 2012, the new rules regarding labour dispatch will be effective from 1st July 2013 by the way of Amendments to China’s Labour Contract Law.

2. Q: What’s the aim for the new amendment?

A: The aim of the new rules regarding labour dispatch is aimed to emphasize the supplemental nature of labor dispatch and prevent labor dispatch from being a substitute for direct employment.

3. Q: What are the important changes for a labor dispatch company in the new amendment compared with the former rule?

A: In accordance with the new amendment, a company which want to engage in labor dispatch service, must obtain a permit from the relevant labor authority first, its registered capital must be no less than RMB2,000,000 and must have permanent business premises and facilities that are suitable for the conduct of their business. However, in the PRC Labor Contract Law which came into effect in 2008, there is no such requirement of labor dispatch permit and the registered capital just required RMB500,000.

So, labor dispatch companies will need to apply this labor dispatch permit and ensure that their registered capital and business premises comply with the new requirements.

4. Q: What kind of positions can engage dispatched workers?

A: In accordance with the new amendment, employment by labor dispatch is only a supplemental form of employment, just “temporary, auxiliary or substitute positions” can engage dispatched workers. “Temporary positions” means positions those are not longer than six months; “auxiliary positions” are those that support the main business line; and “substitute positions” are for covering employees on vacations or study leave.

5. Q: Are there new requirements to employers who take dispatch workers?

A: Firstly, the employer can not engage too many dispatch workers. In accordance with the new amendment, there is a percentage of the dispatch workers and the total number of employees, the number of dispatched employees engaged by an employer may not exceed such percentage. However the exact percentage, is yet to be stipulated by the labor administrative authority under the State Council.

  Secondly, the employer must comply the principle of “equal pay for equal work”.


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