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Significant Changes to Dispatched Labour in China


1.       What is the main issue of the amendment to the Labour Contract Law (“Amendment”)?


The Amendment to the Labour Contract Law, which will come into effect from 1 July, 2013, mainly focuses on labour dispatch.


2.       What are the new changes of the “use of labour dispatching”?


The Amendment clearly limits the use of labour dispatching to temporary, auxiliary and substitutable positions only.



3.       The Amendment sets a cap on the number of the dispatched employees working for a company. Then, is the cap the same for every company?


No, the cap is different for each company. It depends on the total headcount of an employer and the specific percentage will be regulated by the Ministry of Human Resources and Social Security.



4.       Will the treatment be the same between the dispatched employees and direct hire employees?


Yes. The Amendment requires that companies using dispatched employees comply with the principle of “equal pay for equal work” between dispatched employees and direct hire employees.













Malicious Failure to Pay Wages to an Employee: China Issues New Interpretation


1.       What is the judicial interpretation released by the Supreme People’s Court on 22 January 2013 mainly about?


The Interpretation provides more details on the crime of malicious failure to pay wages, which was first introduced by the PRC Criminal Law Amendment (VIII) that took effect on 1 May 2011.


2.       What  is meat by “wage” as used in the PRC Labour Law and PRC Labour Contract Law?

The word “wage” does not only men basic salary. It also includes, in respect of work done by an employee, any bonus, subsidies, allowance, overtime pay and any other remuneration paid under special circumstances.


3.       How does the Interpretation clarify the stipulation?


Under the PRC Criminal Law Amendment (VIII), where the judiciary determines that in cases where an employer has been “maliciously failing to pay wages” to an employee, or has been holding a “substantial amount” of an employee’s “wage” in arrears after an order for payment has been issued by the “relevant authority”, the appropriate sentence should be not more than 3 years of imprisonment or criminal detention, and /or a fine. Where the non-payment has caused “serious consequences” to the employee, the employer’s directly responsible person and other directly liable persons may be sentenced to imprisonment of not less than 3 year but not more than 7years, and the employer may also be fined.



4.       What is meant by a “substantial amount” of wages in arrears?


An employer commits an offence if it owes an employee more than 3 months’ wages in arrears and the outstanding amount it not less than a certain threshold. The relevant threshold will be determined by the local High Courts in the particular locality in accordance with the different economical development levels.



5.       What will amount to “maliciously failing to pay wages”?


Concealment of assets, malicious settlement of debts, false debts, false bankruptcy, false closing down of business or any other way of transfer/disposal of assets;

Abscondment and concealment;

Concealing and destroying accounts, employee roster, payroll records, attendance records and other employment related materials;

Any acts that indicate the employer’s intention to evade its obligation to make payment of wages.

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