China: China Issues Interim Provisions On Labour Dispatch

Last Updated: 16 February 2014
Article by Duncan A.W. Abate, Andy S. Yeo, Helen H. Liao and Hong Tran

Keywords: China, interim provisions, labour dispatch, draft provisions, MOHRSS

Subsequent to the issuance of 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) ("Draft Provisions") on 7 August 2013 (see our legal update, "Public Comments Sought on PRC Labour Dispatch Provisions" , of 21 August 2013), the Ministry of Human Resources and Social Security (MOHRSS) issued on 24 January 2014 the finalised regulations relating to labour dispatch (namely, the Interim Provisions on Labour Dispatch), which will become effective as of 1 March 2014.

The Interim Provisions on Labour Dispatch (the "Interim Provisions") have not adopted most of the proposed provisions set out in the Draft Provisions. As one of the supporting regulations to the Amendments to the PRC Labour Contract Law (the "Amendments") (see our legal update, "Amendments to PRC Labour Contract Law Passed by NPC", of 9 January 2013), it further characterises the labour dispatch arrangement as an auxiliary mode to mainstream employment arrangements, specifies the utilisation limit of labour dispatch arrangements, elaborates on the statutory circumstances and restrictions for returning a labour dispatch staff back to the labour dispatch company, and fixes the duration of the transitional period for compliance with the statutory utilisation limit of labour dispatch arrangements. The relevant details are set out below:

I. "Auxiliary" Position of Labour Dispatch Clarified and the Statutory "Democratic Process" Required

The Interim Provisions address the definitions of "temporary", "auxiliary" and "replaceable" positions to which the labour dispatch employment arrangement can only be applied. These are exactly consistent with what the Amendment provides.

Unlike the definitions of the other two categories, viz. "temporary" and "replaceable" positions, the definition of "auxiliary" positions is not that straightforward and seems to be ambiguous. In the Interim Provisions, it is provided that an "auxiliary" position refers to a position which involves only non-core business and provides service to core business-related positions. Without clarifying what may constitute "core business" and "non-core business", the Interim Provisions instead require that an entity to which a dispatched staff is dispatched (i.e., the host entity), when deciding the specific "auxiliary" positions, shall put forward a relevant proposal and suggestion by discussing with the employees' congress or the entire body of employees. The said proposal shall also be discussed in consultation with the trade union or the employee representatives, and publicised within the host entity.

The aforesaid procedural requirements appear to be similar to the statutory "democratic process" provided in Article 4 of the PRC Labour Contract Law. Presumably, the consent of the employees is not necessary as long as the said statutory "democratic process" has been gone through.

II. Maximum Percentage of Labour Dispatch Staff Fixed

The Interim Provisions provide that a host entity shall strictly control the number of dispatched staff to not exceed 10 percent of the total number of the workforce. The total workforce refers to the aggregate of the direct hires who execute labour contracts with the host entity and any labour dispatch staff currently engaged by the host entity.

The above maximum percentage rule, as well as the restrictions relating to "temporary", "auxiliary" and "replaceable" positions do not apply to the Chinese representative offices of foreign entities (including financial organisations), and seamen-employing units which engage international ocean seamen by means of labour dispatch.

III. Statutory Circumstances and Restrictions on Returning Labour Dispatch Staff Back to Staffing Agency Expanded

Further to Article 65 of the PRC Labour Contract Law, the Interim Provisions specify that the host entity may also return the labour dispatch staff back to the staffing agency (i.e., the labour dispatching unit) under the circumstances set out in Article 40 (3) (i.e., major change in objective circumstances) and Article 41 (i.e., mass layoffs due to financial difficulties) of the PRC Labour Contract Law.

Furthermore, where the host entity is declared bankrupt, has its business licence revoked, or is ordered to be closed down or expunged according to the law; or where the host entity decides to dissolve or discontinue the business upon the expiry of its operation period; or where the relevant labour dispatch service agreement is expired; the host entity is entitled to return the labour dispatch staff back to the staffing agency. In such circumstances, the staffing agency will be required to pay such labour dispatch staff the monthly salary in an amount equal to or above the local statutory minimum wage.

However, the Interim Provisions explicitly introduce the same statutory restrictions on employment termination as those enjoyed by regular employees. That is, if a labour dispatch staff falls within any circumstance set out in Article 42 of the PRC Labour Contract Law, then the host entity may not return him/her back to the staffing agency, even if the dispatch term has expired.

The above circumstances include: (i) suffering from work-related injury or occupational disease; (ii) suffering from non-work-related injury or non-occupational disease but still within the statutory medical treatment period; and (iii) female employees during the period of pregnancy, maternity leave and nursing.

IV. Social Insurance Contribution Rules Related to Cross-region Labour Dispatch

The Interim Provisions provide that in the context of a cross-region labour dispatch arrangement, the branch of the labour dispatch company shall be responsible for contributing the social insurance locally for the relevant dispatched staff. If the labour dispatch company does not have any registered branch in the region where the host entity is located, the host entity itself shall, on behalf of the labour dispatch company, be responsible for the contribution of social insurance in the region where it is located. The labour dispatch staff shall be entitled to the social insurance benefits in the region where they work.

V. Penalty for Non-compliance

Different from the Draft Provisions which provide that it may be deemed that the host entity and the dispatched staff concerned have established a de facto employment relationship when there is any non-compliance with the labour dispatch restrictions (e.g., the prescribed positions, the maximum percentage, returning the labour dispatch staff back), the Interim Provisions simply provide that the penalty for both the labour dispatch company and the host entity would be executed in accordance with Article 92 of the PRC Labour Contract Law.

Under Article 92 of the PRC Labour Contract Law, where any labour dispatch company or host entity breaches the law relating to labour dispatch, it may be ordered by the Labour Authority to rectify the situation within a certain time limit; if the order is not complied with, it will be fined at a rate of not less than RMB 5,000 but not more than RMB 10,000 per person dispatched. For the labour dispatch company, its administrative license may be revoked; if any loss is incurred by any dispatched employee, the labour dispatch company and the host company involved will bear joint and several liability for his/her compensation.

In terms of the penalty for the host entity in violation of the statutory "democratic process" to determine the specific "auxiliary" position of labour dispatch (see Section I above), the Interim Provisions provide that the host entity may be warned and ordered by the Labour Authority to rectify the situation within a certain time limit. If such violation causes damage to the labour dispatch staff, the host entity shall be liable for the relevant compensation.

VI. Transitional Provisions

The transitional provisions provided in the Interim Provisions are more relaxed than those in the Draft Provisions. Specifically, the Interim Provisions provide that where the number of the labour dispatch staff engaged by a host entity prior to the implementation of the Interim Provisions (i.e., 1 March 2014) exceeds 10 percent of its total workforce, the host entity shall make a proposal for adjustment, and reduce to the statutory maximum percentage (i.e., 10 percent) within two years after the effective date of the Interim Provisions (i.e., before 1 March 2016).

However, in the event any labour contract or labour dispatch service agreement was executed prior to the promulgation of the Amendment (i.e., 28 December 2012) and the date of expiry is later than two years after the effective date of the Interim Provisions (i.e., 1 March 2016), such contract or agreement may continue until its expiry. The host entity shall submit such proposal of adjustment to the competent labour authority for filing.

Furthermore, the Interim Provisions also provide that any such host entity is prohibited from using any new dispatched staff if the number of existing dispatch staff has not yet been reduced to the maximum percentage.

VII. Unsettled Matters

Apart from the above, we note that some hot issues are addressed by the Interim Provisions but without appropriate elaboration such as the following:

  • It repeats what Article 58 of the PRC Labour Contract Law provides, by emphasising that the labour dispatch company shall conclude a labour contract with a fixed term of not less than two years with the employee to be dispatched. However, it seems to intentionally avoid answering the question of whether the dispatched staff is entitled to conclude an indefinite-term labour contract with the labour dispatch company after signing two consecutive fixed-term labour contracts.
  • Without elaborating on the definition of the "equal pay for equal work" principle, the Interim Provisions simply provide that the host entity shall, according to Article 62 of the PRC Labour Contract Law, pay the labour dispatch staff the relevant welfare and benefits matching their job positions, and shall not "discriminate" against the labour dispatch staff.
  • The Interim Provisions exclude the circumstances where the employer seconds its employee to work abroad or for domestic individuals from the scope of "labour dispatch". The Interim Provisions also prohibit the employer from using a worker in the form of labour dispatch but under the name of independent contractor or outsourcing, etc. However, in the absence of the clear legal definition of "labour dispatch", this would give great flexibility of interpretation to the courts.

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 2014. 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.

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”

Mondaq Advice Centre (MACs)
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.