In 2014, the Ministry of Human Resources and Social Security
issued the Interim Provisions on Labor Dispatching
("Provisions"), which required that dispatch employees be
limited to temporary, auxiliary, or substitute positions and
comprise no more than 10 percent of the total number of employees
of the employer. The Provisions provided for a two-year grace
period to comply with the 10 percent limitation, which expired on
February 29, 2016. Several cities and provinces have issued notices
in the past few months to reiterate the deadline, including
Sichuan, Suzhou, and Guangdong, and it is expected that local labor
authorities will carry out more frequent inspections to ensure
compliance with the limitation during the first half of 2016.
In addition to either returning excess dispatch employees to the
dispatch company or directly hiring dispatched employees, many
employers have moved from a dispatch to a service outsourcing
model. However, employers need to be careful to structure
outsourcing arrangements so that they are not considered to be
engaging dispatched employees themselves and are subject to the
There is no clear definition of "outsourcing" under
Chinese law. The Meeting Minutes of the Shanghai Municipal
Human Resources and Social Security Bureau and the Shanghai High
People's Court on Several Issues Concerning the Application of
Law in Labor Dispatching 2014 stipulate that outsourcing is a
new concept in the market and that some forms of
"outsourcing" may constitute "dispatch."
Whether this is the case will depend on various factors, including
the application of employing companies' internal policies to
such workers and management power over work conducted by such
workers. The greater the management control over outsourced workers
for the purposes of fire control, work safety, product quality, or
workplace order, the more likely that there will be a deemed
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.
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