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Temporary Worker Loophole Eliminated by New Legislation in China


With the introduction of the Labor Contract Law in 2008, China Government created more stringent rules governing employer-employee contracts. However, the law ushered an increase of questionable employment practices like exploiting dispatch worker system to circumvent responsibility like social insurance requirements or local higher legal minimum wage requirements. There are also numerous instances that dispatched workers become the victim of such practices when labor brokers or dispatch agencies charge illegal fees to them to get a job.

As a result, the Chinese Government has passed the revisions to the Labor Contract Law on 28th December 2012. The revisions closes many of the loopholes labor brokers and dispatch agencies have exploited along with their customers.

Some of the changes to the labor contract law are as follows:

Revisions Related to Employer

1. Clearly stipulate that full-time contract workers and dispatch workers shall receive equal pay for equal work. (Revision to Article 63)

2. Clearly define the nature of dispatch worker job. (Revision to Article 66)

Change "Generally" to "Only"(i.e., the scope of the use of dispatch worker can ONLY within the three natures stated below)
Temporary: The job cannot exist more than 6 month.
Supportive: The job support the major operation of the enterprise. This means that dispatch workers are not eligible to work on key operations or major parts of a company's operations / work product.
Back-up: The existing worker in the job temporarily leave the job due to off-job training, leave, etc. and cannot return to the job in a period of time, the employer can use dispatch workers to replace the existing worker.

3. Tighten the legal responsibility of enterprise using dispatch workers illegally. (Revision to Article 92)

To accepting unit illegally using dispatch worker, labor administrative department shall order correction. Under serious circumstances, 5000RMB-10000RMB penalty per dispatch worker received is applicable.
For any damage caused to a worker due to illegal usage, the agency and the accepting unit are jointly and severally liable.

This revisions have made clear the natures and legal responsibility of using dispatch workers. To the manufacturing sector, the affected enterprises are mainly two kinds: 1. the enterprises depending on using dispatch workers to satisfy their daily labor demand; 2. those using dispatch workers as a way to minimize its labor costs (e.g. social security and minimum wages). The revisions will not greatly impact enterprises using dispatch workers to tackle minor seasonal demands. The revisions come into effective on 1st July, 2013.

The full text of the Revisions to the Labor Contract Law