Since the PRC Labor Contract Law came into effect on 1 January
2008, many Chinese companies have used a large number of seconded
employees i.e. employees that are hired by a labor agency and then
seconded to work for the companies. This has been in order to
circumvent the requirements of the law on signing indefinite
employment contracts with employees under certain conditions and to
make employment more flexible. However, this kind of special
employment has caused a number of problems in recent years. For
example, many seconded employees did not get pay commensurate with
their work. Also health and safety rights of seconded employees
were not always well protected.
Now the PRC Government wants to alter the current predicament.
On 6 July 2012, a draft of the Amendments to the PRC Labor Contract
Law, discussed at the 27th Conference of the Standing Committee of
the PRC People's Congress, was published for public discussion
According to the Draft Amendments, seconded employees can only
be employed in work positions which are temporary, auxiliary or
substituting in nature. Currently Article 66 of the PRC Labor
Contract Law already has similar stipulations. However, such
requirements on the nature of the work positions were not
mandatory. The Draft Amendments aim to change this.
The Draft Amendments also define the terms
"temporary", "auxiliary" and
"substituting" work positions. A "temporary"
work position refers to a position which lasts no longer than six
months. An "auxiliary" work position refers to a position
which provides services to those carrying out work inherent to the
enterprise. A "substituting" work position refers to a
position which is temporarily vacant due to an employee taking
leave or study, etc. This means that in future, no Chinese
employers will be allowed to use seconded employees for their
principal business activities for an extended term.
The PRC Peoples' Congress will further discuss the Draft
Amendments in their next session and the amendments are expected to
be passed before the end of the year. Therefore, foreign invested
companies using seconded employees may wish to pay attention to
such coming changes and to make some arrangements in advance if
Please note that the above restriction on the use of seconded
employees should not apply to representative offices which are
established by foreign companies in China. Representative offices
of foreign companies are not independent legal entities under PRC
law and therefore, are not allowed to hire Chinese employees
directly but must hire them through a labor agency.
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