China: Back-to-Basics: past and present life of labor dispatch

Last Updated: 5 March 2014
Article by Jiang Junlu

At the end of 2013, the Interim Regulation on Labor Dispatch was adopted in the ministerial conference of the Ministry of Human Resources and Social Security. This regulation was promulgated before the Lunar New Year and became effective on March 1, 2014, which is expected to preclude the readjustment of labor dispatch.

  1. The Emergence and Early Development of Labor Dispatch in China

Labor dispatch emerged in China during 1980s.

At that age, China had just launched its opening-up policy and successfully attracted foreign investors. Foreign companies with an optimistic perspective started to set up Foreign-invested Enterprises in China, while the companies being relatively conservative adopted the approach of setting up representative offices (the "Rep Offices") to enter the Chinese market.

In 1980, the State Council formulated the Interim Provisions concerning the Administration for Residential Representative Offices Established by Alien Enterprises (the "Provisions"), stipulating that the Rep Offices are permitted, but their development restricted. Restrictions are imposed not only on business and operation but also on the premises leasing and employment.

In the aspect of employment, the Provisions stipulate that Rep Offices must engage government-affiliated service agencies for foreign affairs to hire employees, which are Beijing FESCO, CIIC, etc. These agencies hired employees and dispatched them to Rep Offices thereafter — this is the origin of Chinese labor dispatch.

Because of the limited number of Rep Offices and fewer dispatched employees involved, labor dispatch at its early stage did not cause much public concern.

After transformation from Rep Offices to Foreign-invested Enterprises, labor dispatch and HR agencies are still used due to the usual practice of original management policies. Such a practice extends the reign of labor dispatch from Rep Offices to enterprises, public institutions, or even governmental organs.

  1. A "Great Leap" for Labor Dispatch

The practice of engaging manpower under labor dispatch by enterprises, public institutions and governmental organs has never attracted much attention from the public for a period over 20 years. Despite a steadily growing number of people involved, labor dispatch remained unfocused by legislators.

In 2006, as the Employment Contract Law was drafting, labor dispatch came into view of the legislators. As an approach of using manpower, labor dispatch has outstood with its flexibility and seasonality. However, the discrimination on treatment of dispatched employees (compared with directly-hired employees,) as well as the abuse of labor dispatch was increasingly being concerned. In light of the above, the Employment Contract Law, effective as of 2008, permits the existence of labor dispatch, however confined to particular positions which are temporary, auxiliary or substitutable.

Going against the legislator's expectation, the restrictions set forth in the Employment Contract Law did not limit labor dispatch, instead, stimulated the growth and development of labor dispatch.

The reason is that the Employment Contract Law is completely different from the 1995 Labor Law . The Labor Law provides a lot of protections on employees, for example dismissal protection, however, it is undoubted for employers to sign short-term employment contracts so as to evade those measures. More broadly, the practice of signing short-term employment contracts basically disabled these dismissal protections. On the contrary, the Employment Contract Law strengthens the power of long-term employment contracts and makes protections on employees practicable by closing implementing loopholes, meanwhile reducing the employers' leverage on employment. At this very moment, labor dispatch stood out with its magnified employment flexibility. Furthermore, since the vagueness of restrictions imposed by Employment Contract Law, judicial practices could be difficult. Consequently, labor dispatch has achieved its "Great Leap".

  1. A New Round of Restrictions on Labor Dispatch

Within the first 5 years the Employment Contract Law being effective, the major channel for engaging employees, i.e. contract-based employment, has been severely undermined by the boost of labor dispatch. However, the legislation presented a slow response on this matter.

Laws are designed to solve social contradictions. For example, if cohabiting were popular in daily life, the legislation regarding cohabiting should be formulated to resolve possible relevant problems on property, offspring, fostering, inheriting, etc. Specifically here, when labor dispatch becomes an employee-engaging channel, the legislator shall take action to pass regulations on labor dispatch, with the purpose of solving surrounding issues in connection with discrimination, abuse of labor dispatch, trade union membership of dispatched employees, compensation for damages, etc.

In response, the Standing Committee of NPC promulgated the Decision on the Amendment to Employment Contract Law on December 28, 2012.

At the end of 2013, the Interim Regulation on Labor Dispatch was adopted in the ministerial conference of the Ministry of Human Resources and Social Security. This regulation was promulgated before the Lunar New Year and became effective on March 1, 2014, which is expected to prelude the readjustment of labor dispatch.

In my opinion, labor dispatch backs to basics by this readjustment. Considering its emergence and development history, labor dispatch as a supplementary channel should not outweigh contract-based employment. However, under the demand of flexibility in employment and the employer's desire to circumvent the law, labor dispatch has experienced a rapid expansion, tending to margin (or even replace) the major channel for engaging employees. Under such a situation, the new regulations are expected to remove the heat and flaws and purify the nature of labor dispatch, so as to accomplish corrective action.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please 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