Most Read Contributor in Hong Kong, September 2016
In line with the new PRC labour dispatch rules stipulated in the
Decision on Amending the Labour Contract Law (the "LCL
Amendment"), released by the Standing Committee of the
National People's Congress on 28 December 2012, the Ministry of
Human Resources and Social Security (MOHRSS) issued on 22 June 2013
the Implementing Measures for the Administrative Licensing of
Labour Dispatch Services (the "Measures"). Both the LCL
Amendment and the Measures came into effect on 1 July 2013.
The LCL Amendment explicitly requires that the labour contracts
and labour dispatch service agreements signed prior to the issuance
of the LCL Amendment (i.e., 28 December 2012) shall continue to be
valid until their expiry. In cases where there has been
non-compliance relating to the principle of "equal work equal
pay", the relevant items and conditions were required to have
been amended before the effective date of the LCL Amendment (i.e.,
1 July 2013).
The Measures further provide that the labour contracts and
labour dispatch service agreements concluded after 28 December 2012
shall be fully performed in accordance with the LCL Amendment. That
is, if any provision in the labour contracts or the labour dispatch
service agreements are not in compliance with the requirements on
(a) the "equal work and equal pay" principle, (b) the
nature and types of positions for dispatch arrangement, or (c) the
percentage of dispatched staff relative to the total workforce,
they shall be amended.
The Measures also emphasise that as of 1 July 2013, no entity or
individual may operate a labour dispatch business without an
administrative licence, including entities that operated such
businesses before the Measures came into effect. The MOHRSS General
Office also issued the Circular on the Implementation of
Administrative Licensing for Labour Dispatch Services to enhance
the supervision and management of labour dispatch enterprises.
Legal Consequences of Non-compliance
The LCL Amendment imposes strict penalties for breaching the
labour dispatch restrictions. An employer is required to rectify
any violation of the provisions within a period specified by the
relevant labour authority. Failure to remedy such a violation may
result in a fine of between RMB5,000 and RMB10,000 per dispatched
Since 1 July 2013, if an employer continues to employ a member
of staff through dispatch arrangement whose position cannot be
categorised as "temporary", "auxiliary" or
"substitute", that employee may claim "de-facto
employment" directly with the employer. In such a case, the
employer may incur a penalty of having to pay double wages for not
concluding a written labour contract under the Labour Contract
Points to Consider
In light of the above, companies should observe the following
Make sure the staffing agency you use is a qualified dispatch
service provider with a proper licence and registration before
making any new labour dispatch arrangements.
Review and revise the dispatch agreements particularly in
relation to (a) remuneration and benefits packages for the
dispatched employees in light of the "equal work equal
pay" provisions, (b) the nature and types of positions covered
under the dispatch arrangement, and (c) the percentage of
dispatched staff relative to the total workforce.
In order to avoid penalties and potential civil claims, ensure
that written labour contracts are entered into directly with those
dispatched staff whose positions clearly cannot be classified as
"temporary", "auxiliary" or
Please note that the statutory maximum percentage of dispatched
staff relative to the total workforce is yet to be published by the
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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
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