China: Public Comments Sought On PRC Labour Dispatch Provisions

Last Updated: 23 August 2013
Article by Duncan A.W. Abate, Andy S. Yeo, Helen H. Liao and Hong Tran

Keywords: public comments, PRC, labour dispatch provisions

Do you or your company use, or intend to use, dispatched workers seconded from a labour agency? If yes, then the following is something you should know.

Subsequent to the issuance of the Implementing Measures for the Administrative Licensing of Labor Dispatch Services (the "Measures") on 22 June 2013 (see our last legal update, "New Labour Dispatch Rules Take Effect"), the Ministry of Human Resources and Social Security (MOHRSS) issued on 7 August 2013 another set of proposed new regulations relating to labour dispatch, the Circular of the Ministry of Human Resources and Social Security on Seeking Public Comments on the Several Provisions on Labor Dispatch (Draft for Comments) (the "Draft Provisions").

Public comments are invited to be submitted by 7 September, 2013. So act fast if you don't like what you read below.

Needless to say, this is only a Public Consultation Draft and therefore its provisions have not taken legal effect yet, and the following comments assume that they will take effect in their current form when finally passed.

Outsourced Work Personnel could be Deemed as Dispatched Workers

Do watch out if you have outsourced certain work functions because the staff of the service provider could be deemed as workers dispatched to you. The key point is control: if you maintain direct management and control over such staff, then the Draft Provisions could apply to you.

Definition of Labour Dispatch

The Draft Provisions, for the first time, clearly define a "Labour Dispatch" as being an employment arrangement whereby an employer, as a business, employs and seconds the labour dispatch staff to work for another employer, and the work process of those labour dispatch staff is directly managed by the latter employer.

"Auxiliary" Position of Labour Dispatch Clarified

The Draft Provisions, with a view to specifying what constitutes an "auxiliary" position which qualifies for using dispatched workers, clarify that an "auxiliary" position refers to a position which involves only non-core business and provides service to core business-related positions.

Moreover, the Draft Provisions require that an entity to which a dispatched staff is dispatched (host entity) shall, based on its industry and business, put forward a list of such "auxiliary" positions for which it proposes to use "Labour Dispatch". The said list shall be consulted with the trade union or the employees congress, and publicised within the host entity, and shall be subject to the supervision of such body.

No Intra Group Labour Dispatch Agency Allowed

The Draft Provisions disallow any employer or its affiliated entity to invest or co-invest in setting up a labour dispatch agency which dispatches workers to such employer or affiliate entity.

Maximum Percentage of Labour Dispatch Staff

The Draft Provisions explicitly provide that the number of dispatched staff in "auxiliary" positions shall not exceed 10 percent of the total number of the workforce. The total workforce refers to the aggregate of the direct hires and the labour dispatch staff on the "auxiliary" positions of the host entity.

In addition, the above maximum percentage rule does not apply to the Chinese representative offices of foreign entities (including media, diplomatic and financial organisations).

Transitional Provisions

In order that the Amendment to the PRC Labour Contract Law (the "Amendment") is implemented smoothly and adverse impact on the employment relationship caused by the adjustment of the employment arrangement is reduced, the Draft Provisions provide that any employment contract and labour dispatch service agreement signed before the effective date of the Amendment (i.e., 1 July 2013), is permitted to remain in effect until the date of expiry thereof. The host entity is not permitted to return the dispatched staff on the grounds of non-compliance with the provisions in respect of (a) "temporary, auxiliary or replaceable" positions; (b) the number of dispatched staff having exceeded the prescribed maximum percentage; or (c) the labour dispatch service provider failing to obtain the administrative licence.

However, where there is any term or condition of the employment contract in the labour dispatch service agreement which is not compliant with the rule in respect of "equal work equal pay" provided in the Amendment, the appropriate modification shall be made.

Furthermore, the host entity is prohibited from using any new dispatched staff in the "auxiliary" positions even if the prescribed maximum percentage has not been reached, where the number of dispatched staff in positions other than the "temporary and replaceable" ones has already exceeded the prescribed percentage maximum prior to the effective date of the Amendment.

Penalty for Non-compliance Detailed

The Draft Provisions further elaborate the penalty for breaching the labour dispatch restrictions (e.g., the prescribed positions and the maximum percentage). It is provided that where a host entity in violation of the labour dispatch restrictions still refuses to rectify within one month after being imposed with an administrative punishment, it will be deemed that the host entity and the dispatched staff concerned have established a de facto employment relationship.

Rules related to Cross-Region Labour Dispatch

The Draft Provisions provide that in the event of a cross-region labour dispatch arrangement, the standard entitlements (i.e., labour remuneration, labour conditions and social insurance) applicable to the host entity shall generally prevail if there is any discrepancy between the entitlements applicable to the host entity and those applicable to the labour dispatch company, unless the latter is more favourable to the dispatched staff and there is an agreement between the labour dispatch company and the dispatched staff in relation to adopting the entitlements applicable to the labour dispatch company.

The Draft Provisions further provide that in the context of a cross-region labour dispatch arrangement, the branch company or subsidiary of the labour dispatch company shall be responsible to contribute the social insurance locally for the relevant dispatched staff. If the labour dispatch company does not have any branch company or subsidiary in the region where the host entity is located, such labour dispatch company itself shall be responsible for the contribution of social insurance in the region where it is located, instead of engaging any other company to do so on behalf of itself.

Intra Group Secondments Excluded

The Draft Provisions expressly exclude from its scope workers who are appointed or dispatched from a company to work for its superior entity or related company pursuant to organisational arrangements.

Other Matters

Apart from the above, the Draft Provisions also address some other aspects of the respective rights and obligations of the labour dispatch company and host entity as follows:

  • The joint and several liability borne by the labour dispatch company and host entity on any damage caused to the dispatched staff is emphasised;
  • The host entity is liable to provide the labour dispatch company with the labour authority's approval in respect of the application of the non-standard working hours schemes (e.g., the flexible working hours scheme), and to notify the dispatch staff concerned;
  • The host entity, before accepting any dispatched staff, is obliged to check if the labour dispatch company has signed a labour contract with the dispatched staff. Otherwise, it may be deemed that a de facto employment relationship exists between the host entity and the dispatched staff;
  • The circumstances under which the host entity is entitled to return the dispatched staff and the payment of statutory economic compensation are further elaborated.
  • We note that there are a few provisions in the Draft Provisions which are not compliant with the PRC Labour Contract Law. For example, it is provided that the labour dispatch company shall be liable to pay the relevant dispatched staff the statutory economic compensation, even if the host entity has returned him or her on the ground of summary dismissal. We foresee that such provisions will likely be amended in the finalised Provisions.

Learn more about our Hong Kong office, PRC offices and Employment & Benefits practice.

Previously published on 21 August 2013

Visit us at

Mayer Brown is a global legal services organization comprising legal practices that are separate entities (the Mayer Brown Practices). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; Mayer Brown JSM, a Hong Kong partnership, and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2013. The Mayer Brown Practices. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein. Please also read the JSM legal publications Disclaimer.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions